H.M. Electro Mech Limited

Industrials — Engineering & Construction · BSE

₹50.00₹0.00 (0.00%)

DalalBaazaar Score

61 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

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

In simple words: Strong business and financial position, 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, 8:27 pm

Understanding the Business

Company site ↗

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

What does this company do?

H.M. Electro Mech Limited engages in the supply, installation, testing, commissioning, operation, and maintenance of pumping machineries in India.

IndustryEngineering & Construction

SectorIndustrials

Employees518

Annual revenue₹132 Cr

How does it make money?

Turns over ₹132 Cr a year. Of every ₹100 of sales, about ₹7 reaches shareholders as profit, with ₹11 left at the operating level before interest, tax and depreciation. Each of its 518 employees supports ₹25.5 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹25.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., ADANI PORT & SEZ LTD, SIEMENS 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?Some evidence

ROCE of 16.1% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE14.1%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +30% while net margin moved +24% 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+30%

Margin effect+24%

DalalBaazaar Score

61/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✓ Profits have been consistent from year to year
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

60/ 100

Average

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

Valuation

81/ 100

Cheap

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

7.0x

2Y Median

7.4x

23 monthly readings · mean 8.1x · range 4.6x–13.2x

Sector Median

30.1x

median of 3 sector peers

🟡Currently trading close to its 2y median of 7.4x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 77% below the peer median of 30.1x.

vs. its own history

Fair

7.4x median over 23 months · -5%

vs. sector peers

Cheap

30.1x median of 3 peers · -77%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

5.2x

PEG

0.40

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 8.4% to 11.0% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Very low debt
Debt/Equity of 0.20x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 25.0% to 13.0% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 29.4% to 16.1% — 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 137% over 3 years, from ₹6 Cr to ₹15 Cr.
🔴Receivables growing faster than salesFinancial
Receivables up 109% against revenue up 30% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 59% against revenue up 30% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 8.4% to 11.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 77% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹0 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
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?

Sales are being booked faster than collected
Receivables are up 109% against revenue up 30%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 25.0% to 13.0%. 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.
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 9%✓ 11.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 7% a year✓ 9.2% CAGR
Latest reported year was 29.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹0 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 13%✓ 16.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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

7 good · 3 neutral · 1 weak

Market Cap

₹68 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

7.0x

Cheap

Cheap against the generic band

P/B Ratio

0.91x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹7.12

Profitable

Profitable on a per-share basis

ROE

13.9%

Moderate

Moderate capital efficiency

ROCE

16.1%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.20x

Low

Conservative leverage

Revenue Growth (YoY)

29.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

20.2%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

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

Free Cash Flow

-₹4 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

7.6%

Average

Average asset productivity

Operating Margin

10.8%

Average

Average margins

Net Margin

7.4%

Average

Average bottom-line conversion

Current Ratio

2.15

Comfortable

Healthy short-term liquidity

52W Range Position

39%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

48.7 / 50.4

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

66.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹101 Cr	₹117 Cr	₹122 Cr	₹132 Cr	+9.2%
EBITDA	₹8 Cr	₹12 Cr	₹13 Cr	₹15 Cr	+19.7%
EBITDA Margin	8.4%	10.4%	10.5%	11.0%	—
PAT (Net Profit)	₹6 Cr	₹8 Cr	₹8 Cr	₹10 Cr	+17.5%
EPS	₹4.39	₹5.85	₹7.88	—	—
ROE	25.0%	25.0%	12.8%	13.0%	—
ROCE	29.4%	31.6%	18.0%	16.1%	—
Total Debt	₹6 Cr	₹12 Cr	₹8 Cr	₹15 Cr	+33.4%
Free Cash Flow	-₹4 Cr	₹3 Cr	-₹7 Cr	₹0 Cr	—

🟢 Revenue has grown at 9.2% a year over 3 years.

🟢 EBITDA has grown at 19.7% a year over 3 years.

🟢 EBITDA Margin has risen from 8.4% to 11.0% over 3 years (+2.6 pts).

🟢 PAT (Net Profit) has grown at 17.5% a year over 3 years.

🔴 ROE has fallen from 25.0% to 13.0% over 3 years (-12.0 pts).

🔴 ROCE has fallen from 29.4% to 16.1% over 3 years (-13.3 pts).

🔴 Total Debt has grown at 33.4% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹4 Cr to ₹0 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹137 Cr

Total Liabilities

₹62 Cr

Cash & Equivalents

₹8 Cr

Operating Cash Flow

₹1 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

76.0%

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
ADANI PORT & SEZ LTD	29.9x	14.1%
SIEMENS LTD	88.8x	10.5%

Recent News

1 mixed5 general

H.M. ELECTRO MECH LIMITED Share Price

Upstox, 14 Oct

Compare with Engineers India

Equitymaster, 16 Oct

Compare with

Equitymaster, 15 Oct

H.M. Electro Mech AGM results filed; all 10 resolutions pass unanimously

scanx.trade, 28 SeptResults

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

HM Electro Mech schedules AGM for September 28, 2026

scanx.trade, 03 Sept

H.M. Electro Mech shares list with 8% premium on BSE SME platform

Moneycontrol.com, 31 Jan

Watch Items

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

DalalBaazaar Thesis

StrongFinancial Health · Growth · Valuation

MiddlingProfitability

WeakBusiness Quality · 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. 2 high-severity red flags sit above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑