Highness Microelectronics Limited

Technology — Electronic Components · BSE

₹294.95+₹5.75 (+1.99%)

DalalBaazaar Score

69 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, with modest growth. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:27 pm

Understanding the Business

Company site ↗

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

What does this company do?

Highness Microelectronics Limited engages in the design, development, integration, assembly, and manufacturing of digital imaging products in India and internationally.

IndustryElectronic Components

SectorTechnology

Employees46

Annual revenue₹14 Cr

How does it make money?

Turns over ₹14 Cr a year. Of every ₹100 of sales, about ₹18 reaches shareholders as profit, with ₹33 left at the operating level before interest, tax and depreciation. Each of its 46 employees supports ₹30.6 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹30.6 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. 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?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 41.4%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 24.8% against a peer median of 32.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE32.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 2 years revenue moved +45% while net margin moved +291% 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+45%

Margin effect+291%

DalalBaazaar Score

69/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 53.6x is demanding — it needs sustained high growth to justify
✗ P/B of 5.61x is a steep premium to book

Quality vs. Valuation

Company Quality

84/ 100

Excellent

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

Valuation

37/ 100

Expensive

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

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

53.6x

Sector Median

16.5x

median of 4 sector peers

⚠️Against its sector it trades 224% above the peer median of 16.5x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

16.5x median of 4 peers · +224%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

33.9x

PEG

0.39

What's Good / What's Bad

🟢 What's Going Well3

Return on equity is rising
ROE has improved from 26.0% to 38.1%.
High return on capital employed
ROCE of 41.4% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.29x leaves the balance sheet with plenty of headroom.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 45.7% to 41.4% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 4 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 261% over 2 years, from ₹1 Cr to ₹5 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.
🔴Receivables growing faster than salesFinancial
Receivables up 22114% against revenue up 45% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 311% against revenue up 45% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹3 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 41.4% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 22114% against revenue up 45%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 224% above the peer median. That premium needs a reason that persists, or it closes.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
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
4 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

1Revenue growth stays above 15% a year✓ 20.6% CAGR
Latest reported year was 31.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 31%✓ 32.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹3 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 38%✓ 41.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 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 · 3 neutral · 2 weak

Market Cap

₹152 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

53.6x

Expensive

Expensive — verify against sector peers

P/B Ratio

5.61x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹5.5

Profitable

Profitable on a per-share basis

ROE

24.8%

Strong

Strong capital efficiency

ROCE

41.4%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.29x

Low

Conservative leverage

Revenue Growth (YoY)

31.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

5.6%

Modest

Slow profit growth

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹1 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

ROA

11.8%

Good

Assets are working hard

Operating Margin

42.0%

Good

Healthy core-business profitability

Net Margin

25.5%

Good

Strong bottom-line conversion

Current Ratio

2.53

Comfortable

Healthy short-term liquidity

52W Range Position

100%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

254.0 / 217.6

Bullish alignment (short > long)

RSI (14)

100.0

Overbought zone

Financial Trend (3-Year)

Metric	FY23	FY24	FY25	2Y CAGR
Revenue	₹10 Cr	₹11 Cr	₹14 Cr	+20.6%
EBITDA	₹3 Cr	₹6 Cr	₹5 Cr	+18.1%
EBITDA Margin	34.4%	56.0%	32.9%	—
PAT (Net Profit)	₹0 Cr	₹2 Cr	₹3 Cr	+138.5%
EPS	₹0.86	₹4.62	—	—
ROE	26.0%	58.3%	38.1%	—
ROCE	45.7%	72.4%	41.4%	—
Total Debt	₹1 Cr	₹1 Cr	₹5 Cr	+90.1%
Free Cash Flow	₹1 Cr	₹0 Cr	-₹3 Cr	—

🟢 Revenue has grown at 20.6% a year over 2 years.

🟢 EBITDA has grown at 18.1% a year over 2 years.

🔴 EBITDA Margin has fallen from 34.4% to 32.9% over 2 years (-1.4 pts).

🟢 PAT (Net Profit) has grown at 138.5% a year over 2 years.

🟢 ROE has risen from 26.0% to 38.1% over 2 years (+12.1 pts).

🔴 ROCE has fallen from 45.7% to 41.4% over 2 years (-4.2 pts).

🔴 Total Debt has grown at 90.1% a year over 2 years.

🔴 Free Cash Flow has turned negative, from ₹1 Cr to -₹3 Cr.

Balance Sheet & Cash Flow — FY2025

Total Assets

₹14 Cr

Total Liabilities

₹8 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹1 Cr

Capex

-₹2 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

74.9%

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

6 general

Highness Microelectronics Limi Share Price

Upstox, 16 Oct

Highness Microelectronics Lower Circuit Today: Price, Data and Peers

Univest, 14 Oct

Highness Microelectronics Ltd | Stock Share Price Live

MarketSmith India, 03 Sept

HIGHNESS Stock Price and Chart — BSE:HIGHNESS

TradingView, 02 Apr

Highness Microelectronics IPO set for strong debut as GMP signals healthy listing pop

The Economic Times, 02 Apr

Highness Microelectronics showcases display tech at SEMICON India 2026

scanx.trade, 19 Sept

Watch Items

Trading very close to its 52-week high — momentum-driven entries here carry more mean-reversion risk.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability

WeakValuation · Risk

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 4 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑