HRH Next Services Limited

Sector n/a · NSE

₹46.55−₹1.95 (−4.02%)

DalalBaazaar Score

54 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

High

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, 6:10 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

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

How does it make money?

Turns over ₹68 Cr a year. Of every ₹100 of sales, about ₹7 reaches shareholders as profit, with ₹19 left at the operating level before interest, tax and depreciation.

EBITDA margin18.8%

Net margin7.1%

What is its competitive advantage?Some evidence

ROCE of 16.8% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE16.8%

ROE11.7%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +33% while net margin moved +31% 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+33%

Margin effect+31%

DalalBaazaar Score

54/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

59/ 100

Average

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

Valuation

88/ 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.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

No P/E available

P/E (Trailing)

—

P/B

—

EV/EBITDA

5.9x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 14.5% to 18.8% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention4

Debt is rising
Total debt is up 78% 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 equity is falling
ROE has dropped from 26.6% to 11.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 42.6% to 16.8% — 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 78% over 3 years, from ₹10 Cr to ₹18 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 43% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 14.5% to 18.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
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?

Returns on shareholder capital are falling
ROE has dropped from 26.6% to 11.7%. 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

1Revenue growth stays above 8% a year✓ 10.1% CAGR
Latest reported year was 17.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 17%✓ 18.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹4 Cr
Profit that never becomes cash eventually stops being profit.
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 14%✓ 16.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 9 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
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 6 neutral · 1 weak

Market Cap

₹61 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not available

No data

Source didn't return this field

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

Not available

No data

Source didn't return this field

ROE

11.7%

Moderate

Moderate capital efficiency

ROCE

16.8%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.43x

Low

Conservative leverage

Revenue Growth (YoY)

17.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

54.9%

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

CMP

₹46.55

Gross Margin

47.1%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

7.1%

Average

Average bottom-line conversion

Current Ratio

1.02

Adequate

Adequate, but no real cushion

Technical Snapshot

SMA 20 / SMA 50

23.9 / 25.0

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

46.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹51 Cr	₹45 Cr	₹58 Cr	₹68 Cr	+10.1%
EBITDA	₹7 Cr	₹7 Cr	₹9 Cr	₹13 Cr	+20.1%
EBITDA Margin	14.5%	15.1%	15.4%	18.8%	—
PAT (Net Profit)	₹3 Cr	₹2 Cr	₹3 Cr	₹5 Cr	+20.6%
EPS	₹3.01	₹2.61	—	—	—
ROE	26.6%	8.8%	8.6%	11.7%	—
ROCE	42.6%	16.8%	13.8%	16.8%	—
Total Debt	₹10 Cr	₹10 Cr	₹10 Cr	₹18 Cr	+21.3%
Free Cash Flow	-₹5 Cr	-₹8 Cr	-₹6 Cr	-₹4 Cr	—

🟢 Revenue has grown at 10.1% a year over 3 years.

🟢 EBITDA has grown at 20.1% a year over 3 years.

🟢 EBITDA Margin has risen from 14.5% to 18.8% over 3 years (+4.3 pts).

🟢 PAT (Net Profit) has grown at 20.6% a year over 3 years.

🔴 ROE has fallen from 26.6% to 11.7% over 3 years (-14.8 pts).

🔴 ROCE has fallen from 42.6% to 16.8% over 3 years (-25.8 pts).

🔴 Total Debt has grown at 21.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹98 Cr

Total Liabilities

₹56 Cr

Total Debt

₹18 Cr

Cash & Equivalents

₹3 Cr

Operating Cash Flow

₹27 Cr

Capex

-₹31 Cr

Recent News

6 general

SRIT INDIA LTD. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 18 Oct

Top 15 Low-Price Stocks In India To Buy In October 2026

Samco, 17 Oct

HRH Next Services stock lists at 13.8% premium to IPO price on NSE SME

Moneycontrol.com, 03 Jan

HRH NEXT SERVICES LIMITED Share Price - Live NSE: HRHNEXT Stock Price & Chart

Upstox, 27 Mar

HRH Next Services (NSEI:HRHNEXT) - Stock Analysis

Simply Wall Street, 24 Jan

DOVE SOFT LTD. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 08 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Sector/industry classification unavailable — verify manually for peer comparison.
3 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

🟡Business QualityAdequate10.3/20

🟡Financial HealthAdequate10.8/20

🟢GrowthStrong16.1/20

🟡ProfitabilityModerate7.1/15

🟡ValuationFair7.5/15

🔴RiskHigh2.4/10

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

✓Revenue growth stays above 8% a year10.1% CAGR
✓EBITDA margin holds above 17%18.8%
✗Free cash flow remains positive-₹4 Cr
✓Debt / EBITDA stays below 2x1.4x
✓ROCE stays above 14%16.8%