Harsha Engineers International Limited

Industrials — Tools & Accessories · NSE

₹449.55+₹12.60 (+2.88%)

DalalBaazaar Score

55 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, falling profits.

In simple words: Reasonable but unspectacular business quality, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Harsha Engineers International Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Harsha Engineers International Limited engages in the manufacture and sale of precision bearing cages and high precision engineered components in India and internationally. It operates through Engineering & Others, and Solar-EPC and O&M segments.

IndustryTools & Accessories

SectorIndustrials

Employees1,745

Annual revenue₹1,617 Cr

How does it make money?

Turns over ₹1,617 Cr a year. Of every ₹100 of sales, about ₹10 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation. Each of its 1,745 employees supports ₹92.7 lakh of revenue a year, the signature of a people-led business.

EBITDA margin16.2%

Net margin9.6%

Revenue / employee₹92.7 lakh

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

LARSEN & TOUBRO LTD.P/E 30.1x · ROE 15.2%

SIEMENS LTDP/E 88.8x · ROE 10.5%

ABB INDIA LIMITEDP/E 92.6x · ROE 19.1%

What is its competitive advantage?Little sign of one

Returns on capital of 14.1% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE14.1%

ROE11.1%

Peer median ROE15.2%

What is the outlook?

4 analysts covering the stock expect revenue to grow about 13.7% and earnings to grow about 19.5% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+13.7%

Est. earnings growth+19.5%

Analysts4

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +19% while net margin moved +6% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+19%

Margin effect+6%

DalalBaazaar Score

55/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 5.8% — barely ahead of inflation
✗ Profit CAGR of only 8.0%
✗ Profit fell 1.4% in the latest year

Quality vs. Valuation

Company Quality

54/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

63/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

26.5x

3Y Median

34.0x

40 monthly readings · mean 34.4x · range 26.1x–44.1x

Sector Median

88.8x

median of 3 sector peers

🟢Current valuation is approximately 22% below its 3y median of 34.0x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 70% below the peer median of 88.8x.

vs. its own history

Cheap

34.0x median over 40 months · -22%

vs. sector peers

Cheap

88.8x median of 3 peers · -70%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

26.5x

P/B

2.92x

EV/EBITDA

16.9x

PEG

3.32

Dividend Yield

0.33%

What's Good / What's Bad

🟢 What's Going Well3

Valuation below its historical average
At 26.5x the stock trades 22% below its own median of 34.0x.
Very low debt
Debt/Equity of 0.27x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Debt is rising
Total debt is up 104% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on capital is falling
ROCE has declined from 16.6% to 14.1% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 104% over 3 years, from ₹182 Cr to ₹372 Cr.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹52 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 22% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 70% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Growth barely outpaces inflation
Revenue compounding at 5.8% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 14%✓ 16.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹52 Cr
Profit that never becomes cash eventually stops being profit.
3Revenue growth stays above 4% a year✓ 5.8% CAGR
Latest reported year was 25.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Debt / EBITDA stays below 2x✓ 1.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 11%✓ 14.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 6 neutral · 2 weak

Market Cap

₹4,093 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

26.5x

Fair

Fairly valued against the generic band

P/B Ratio

2.92x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹16.99

Profitable

Profitable on a per-share basis

ROE

11.1%

Moderate

Moderate capital efficiency

ROCE

14.1%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.27x

Low

Conservative leverage

Revenue Growth (YoY)

25.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-1.4%

Falling

Profits are shrinking

Dividend Yield

0.33%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹52 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹449.55

P/E (Forward)

18.8x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

11.7%

Average

Average margins

Net Margin

9.0%

Average

Average bottom-line conversion

Current Ratio

2.60

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.58

Defensive

Steadier than the market

52W Range Position

79%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

456.5 / 444.3

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

42.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,364 Cr	₹1,382 Cr	₹1,399 Cr	₹1,617 Cr	+5.8%
EBITDA	₹219 Cr	₹191 Cr	₹190 Cr	₹262 Cr	+6.2%
EBITDA Margin	16.1%	13.8%	13.6%	16.2%	—
PAT (Net Profit)	₹123 Cr	₹111 Cr	₹89 Cr	₹155 Cr	+8.0%
EPS	₹14.59	₹12.24	₹9.81	₹17.05	+5.3%
ROE	11.5%	9.5%	7.1%	11.1%	—
ROCE	16.6%	13.4%	10.4%	14.1%	—
Total Debt	₹182 Cr	₹177 Cr	₹200 Cr	₹372 Cr	+26.9%
Free Cash Flow	₹63 Cr	₹61 Cr	-₹3 Cr	-₹52 Cr	—

🟢 Revenue has grown at 5.8% a year over 3 years.

🟢 EBITDA has grown at 6.2% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 16.2% over 3 years.

🟢 PAT (Net Profit) has grown at 8.0% a year over 3 years.

🟢 EPS has grown at 5.3% a year over 3 years.

🟡 ROE has held roughly flat at 11.1% over 3 years.

🔴 ROCE has fallen from 16.6% to 14.1% over 3 years (-2.5 pts).

🔴 Total Debt has grown at 26.9% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹63 Cr to -₹52 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,067 Cr

Total Liabilities

₹665 Cr

Total Debt

₹372 Cr

Cash & Equivalents

₹33 Cr

Operating Cash Flow

₹68 Cr

Capex

-₹120 Cr

Shareholding (proxy)

Institutional Holding

13.9%

Insider Holding

75.0%

Corporate Actions

Dividend Rate

₹1.5

Ex-Dividend Date

09 Jul 2026

Analyst Consensus

Recommendations

4 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹517.75

+15.2% vs CMP

Target Range

₹462 – ₹587

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

2 positive4 mixed

Harsha Engineers International (NSEI:HARSHA) Stock Forecast & Analyst Predictions

Simply Wall Street, 09 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Harsha Engineers International Share Price Target 2027 2028 and 2

Univest, 07 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Harsha Engineers revenue rises 25% in Q1FY27, PAT slips on cost pressures

scanx.trade, 11 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Harsha Engineers Recommends FY26 Dividend

HDFC Sky, 08 MayCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Earnings call transcript: Harsha Engineers posts strong Q1 2026 growth, shares fall

Investing.com, 11 AugPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Harsha Engineers International Q1 Consolidated Net Profit At 374M Rupees Vs 379M YoY

Sahi, 11 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate12/20

🟢Financial HealthStrong13/20

🔴GrowthWeak7.4/20

🟡ProfitabilityModerate8.3/15

🟡ValuationFair9.5/15

🔴RiskHigh4.4/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 14%16.2%
✗Free cash flow remains positive-₹52 Cr
✓Revenue growth stays above 4% a year5.8% CAGR
✓Debt / EBITDA stays below 2x1.4x
✓ROCE stays above 11%14.1%