IRM Energy Limited

Utilities — Utilities - Regulated Gas · NSE

₹259.80+₹6.45 (+2.55%)

DalalBaazaar Score

46 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, 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. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

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

What does this company do?

IRM Energy Limited, a city gas distribution company, engages in the laying, building, operating, and expanding of city and local natural gas distribution networks in India.

IndustryUtilities - Regulated Gas

SectorUtilities

Employees231

Annual revenue₹1,063 Cr

How does it make money?

Turns over ₹1,063 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹13 left at the operating level before interest, tax and depreciation. Each of its 231 employees supports ₹4.60 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹4.60 Cr

Who are its competitors?

The closest listed comparisons in its industry are NTPC LTD, POWER GRID CORP. LTD., TATA POWER CO LTD, ADANI POWER 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?Little sign of one

Returns on capital of 7.8% 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.

Peer median ROE15.8%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 17.8% and earnings to grow about 13.5% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+17.8%

Est. earnings growth+13.5%

Analysts1

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +9% while net margin moved -22% 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+9%

Margin effect-22%

DalalBaazaar Score

46/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 2.8% — barely ahead of inflation
✗ Profit has declined at 5.5% a year

Quality vs. Valuation

Company Quality

40/ 100

Weak

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

Valuation

83/ 100

Cheap

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

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

14.6x

3Y Median

23.4x

38 monthly readings · mean 99.9x · range 12.6x–363.9x

Sector Median

20.6x

median of 4 sector peers

🟢Current valuation is approximately 38% below its 3y median of 23.4x. 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 29% below the peer median of 20.6x.

vs. its own history

Cheap

23.4x median over 38 months · -38%

vs. sector peers

Cheap

20.6x median of 4 peers · -29%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

8.2x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 76% 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 18.2% to 5.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 13.2% to 7.8% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 3 high

🔴High leverageFinancial
Debt/Equity of 7.33x — earnings must service borrowings before shareholders see anything.
🔴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.
🔴Inventory building faster than salesFinancial
Inventory up 94% against revenue up 9% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 76% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 38% 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 29% 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?

Leverage amplifies any setback
Debt/Equity of 7.33x. Interest is payable whether or not the business has a good year.
Growth barely outpaces inflation
Revenue compounding at 2.8% 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.
Returns on shareholder capital are falling
ROE has dropped from 18.2% to 5.3%. 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
3 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 11%✓ 12.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹39 Cr
Profit that never becomes cash eventually stops being profit.
3Revenue growth stays above 4% a year✗ 2.8% CAGR
Latest reported year was 24.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Debt / EBITDA stays below 2x✓ 0.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✗ 7.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 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

5 good · 2 neutral · 4 weak

Market Cap

₹1,067 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

14.6x

Cheap

Cheap against the generic band

P/B Ratio

1.07x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹17.8

Profitable

Profitable on a per-share basis

ROE

5.3%

Weak

Weak capital efficiency

ROCE

7.8%

Weak

Low return on total capital employed

Debt/Equity

7.33x

High

High leverage

Revenue Growth (YoY)

24.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

142.8%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.58%

Modest

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

Free Cash Flow

-₹39 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

9.1x

Improving

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

Operating Margin

13.9%

Average

Average margins

Net Margin

6.5%

Average

Average bottom-line conversion

Current Ratio

1.83

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

2.08

High swing

Swings more than the market in both directions

52W Range Position

47%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

262.7 / 276.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

37.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹979 Cr	₹890 Cr	₹972 Cr	₹1,063 Cr	+2.8%
EBITDA	₹113 Cr	₹161 Cr	₹122 Cr	₹134 Cr	+5.9%
EBITDA Margin	11.5%	18.1%	12.5%	12.6%	—
PAT (Net Profit)	₹63 Cr	₹86 Cr	₹45 Cr	₹53 Cr	-5.5%
EPS	₹1.54	₹20.86	₹11.01	₹12.96	+103.5%
ROE	18.2%	9.2%	4.8%	5.3%	—
ROCE	13.2%	12.7%	8.4%	7.8%	—
Total Debt	₹300 Cr	₹207 Cr	₹142 Cr	₹73 Cr	-37.5%
Free Cash Flow	-₹116 Cr	-₹58 Cr	-₹36 Cr	-₹39 Cr	—

🟢 Revenue has grown at 2.8% a year over 3 years.

🟢 EBITDA has grown at 5.9% a year over 3 years.

🟢 EBITDA Margin has risen from 11.5% to 12.6% over 3 years (+1.1 pts).

🔴 PAT (Net Profit) has shrunk at 5.5% a year over 3 years.

🟢 EPS has grown at 103.5% a year over 3 years.

🔴 ROE has fallen from 18.2% to 5.3% over 3 years (-12.9 pts).

🔴 ROCE has fallen from 13.2% to 7.8% over 3 years (-5.4 pts).

🟢 Total Debt has shrunk at 37.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,296 Cr

Total Liabilities

₹299 Cr

Cash & Equivalents

₹39 Cr

Operating Cash Flow

₹143 Cr

Capex

-₹182 Cr

Shareholding (proxy)

Institutional Holding

1.0%

Insider Holding

75.4%

Corporate Actions

Dividend Rate

₹1.5

Ex-Dividend Date

11 Sept 2026

Analyst Consensus

Recommendations

1 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹369

+42.0% vs CMP

Target Range

₹369 – ₹369

Peer Comparison

Company	P/E	ROE
NTPC LTD	11.0x	13.7%
POWER GRID CORP. LTD.	14.6x	15.8%
TATA POWER CO LTD	29.3x	9.8%
ADANI POWER LTD	26.5x	21.9%

Recent News

1 mixed5 general

Irm Energy Limited Actuals & Estimates (NSE:IRMENERGY)

TradingView, 01 Aug

Why Is IRM Energy Share Price Falling Key Reasons 2026

Univest, 18 JunPrice 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.

The IRM Energy Story: How AI Signaled an Exit on May 1

Investing.com India, 19 May

Market Still Lacking Some Conviction On IRM Energy Limited (NSE:IRMENERGY)

Simply Wall Street, 21 Jan

IRM Energy PAT Surges 190% in Q4FY26, Files Transcript

scanx.trade, 08 May

IRM Energy - Castrol India, IGL among 5 energy stocks that hit 52-week lows; slip up to 24% in a month

The Economic Times, 24 Mar

Watch Items

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

DalalBaazaar Thesis

StrongValuation

MiddlingFinancial Health

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 3 high-severity red flags sit above this conclusion and should be read first.

3 of 5 tripwires tripped — Free cash flow remains positive; Revenue growth stays above 4% a year; ROCE stays above 8% · see Key things to watch ↑