Hercules Investments Limited

Financial Services — Asset Management · BSE

₹112.75−₹0.75 (−0.66%)

DalalBaazaar Score

55 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

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

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

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

What does this company do?

Hercules Investments Limited, a core investment company, engages in the investment management business in India. It holds and manages investment portfolios, as well as invests in securities of group companies.

IndustryAsset Management

SectorFinancial Services

Employees3

Annual revenue₹8 Cr

How does it make money?

Turns over ₹8 Cr a year. Of every ₹100 of sales, about ₹96 reaches shareholders as profit, with ₹100 left at the operating level before interest, tax and depreciation. Each of its 3 employees supports ₹2.67 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.67 Cr

Who are its competitors?

The closest listed comparisons in its industry are BAJAJ FINANCE LIMITED, HDFC BANK LTD, ICICI BANK LTD., STATE BANK OF INDIA. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Not assessable from these ratios

For a lender, returns on capital are shaped by leverage and funding cost rather than by pricing power, so the usual financial signature of an advantage does not apply. Judge this one on deposit franchise, cost of funds and asset quality — none of which are in this data.

Peer median ROE16.5%

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 -95% while net margin moved +40% 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-95%

Margin effect+40%

DalalBaazaar Score

55/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 62.3% a year
✗ Profit has declined at 57.9% a year

Quality vs. Valuation

Company Quality

54/ 100

Average

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

Valuation

53/ 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

46.0x

3Y Median

60.0x

40 monthly readings · mean 59.6x · range 9.6x–210.1x

Sector Median

17.0x

median of 4 sector peers

🟢Current valuation is approximately 23% below its 3y median of 60.0x. 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 171% above the peer median of 17.0x.

vs. its own history

Cheap

60.0x median over 40 months · -23%

vs. sector peers

Expensive

17.0x median of 4 peers · +171%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

44.9x

PEG

1.20

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 20.0% to 100.4% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 14.6% to 1.1% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 15.7% to 1.1% — often a sign of competition or overexpansion.

Red Flags

1 item require attention · 1 watch

🟡Profit is decliningFinancial
Net profit is down 93% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 20.0% to 100.4%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 23% 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.
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?

A premium to the sector to defend
It trades 171% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 14.6% to 1.1%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
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.

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

1EBITDA margin holds above 98%✓ 100.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Return on equity stays above 8%✗ 1.1%
For a lender this is the cleanest single read on whether the book is being grown profitably.
3Valuation vs its own median of 60.0x✓ 46.0x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

6 / 11 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
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 1 neutral · 4 weak

Market Cap

₹361 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

46.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

0.52x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹2.45

Profitable

Profitable on a per-share basis

ROE

1.1%

Weak

Weak capital efficiency

ROCE

1.1%

Weak

Low return on total capital employed

Debt/Equity

0.00x

Low

Conservative leverage

Revenue Growth (YoY)

50.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

38.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

2.22%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

-₹1 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

28.6x

Improving

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

Operating Margin

48.7%

Good

Healthy core-business profitability

Net Margin

85.7%

Good

Strong bottom-line conversion

Current Ratio

168.90

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.49

Defensive

Steadier than the market

52W Range Position

22%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

111.6 / 117.4

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

48.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹149 Cr	—	₹5 Cr	₹8 Cr	-62.3%
EBITDA	₹30 Cr	₹0 Cr	₹6 Cr	₹8 Cr	-35.4%
EBITDA Margin	20.0%	—	106.3%	100.4%	—
PAT (Net Profit)	₹103 Cr	₹9 Cr	₹6 Cr	₹8 Cr	-57.9%
EPS	₹32.28	₹2.76	₹1.74	₹2.41	-57.9%
ROE	14.6%	1.2%	0.7%	1.1%	—
ROCE	15.7%	—	0.6%	1.1%	—
Total Debt	₹7 Cr	₹5 Cr	—	₹0 Cr	-86.3%
Free Cash Flow	₹7 Cr	-₹1 Cr	₹8 Cr	-₹1 Cr	—

🔴 Revenue has shrunk at 62.3% a year over 3 years.

🔴 EBITDA has shrunk at 35.4% a year over 3 years.

🟢 EBITDA Margin has risen from 20.0% to 100.4% over 3 years (+80.4 pts).

🔴 PAT (Net Profit) has shrunk at 57.9% a year over 3 years.

🔴 EPS has shrunk at 57.9% a year over 3 years.

🔴 ROE has fallen from 14.6% to 1.1% over 3 years (-13.5 pts).

🔴 ROCE has fallen from 15.7% to 1.1% over 3 years (-14.6 pts).

🟢 Total Debt has shrunk at 86.3% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹7 Cr to -₹1 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹754 Cr

Total Liabilities

₹62 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹1 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

78.0%

Corporate Actions

Dividend Rate

₹2.5

Ex-Dividend Date

06 Aug 2026

Peer Comparison

Company	P/E	ROE
BAJAJ FINANCE LIMITED	30.2x	17.8%
HDFC BANK LTD	15.9x	13.8%
ICICI BANK LTD.	18.1x	16.5%
STATE BANK OF INDIA	10.3x	15.2%

Recent News

1 positive1 mixed4 general

Hercules Investments FY26 net profit rises 38%, recommends dividend

scanx.trade, 23 SeptCapital return

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

HERCULES HOISTS Share Price

Upstox, 05 May

Hercules Capital Prices Upsized Institutional Notes Offering of $400.0 Million 6.70% Notes due 2029

Yahoo Finance, 05 Oct

Hercules Investments FY26 PAT rises 38% to ₹772.11 lakh

scanx.trade, 14 Jul

Hercules Capital (HTGC) Upsized Note Offering Puts Valuation Discount In Focus

Simply Wall Street, 10 Oct

Hercules Capital Q1 2026 slides: record earnings, 12.8% yield

Investing.com, 05 MayResults

🟡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

This is a financial-sector business: borrowing is its raw material, not leverage in the usual sense. Debt/Equity and ROCE here aren't comparable to a manufacturer's — read them alongside NIM, GNPA and capital adequacy from the company's own disclosures.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Valuation

MiddlingProfitability

WeakGrowth · Risk

Points for each in the Score ↑

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.

1 of 3 tripwires tripped — Return on equity stays above 8% · see Key things to watch ↑