Isgec Heavy Engineering Limited

Industrials — Specialty Industrial Machinery · NSE

₹902.50−₹15.55 (−1.69%)

DalalBaazaar Score

50 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Low

Driven by small-cap size, which brings sharper price swings, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. The direction of profits is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 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

Company site ↗

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

What does this company do?

Isgec Heavy Engineering Limited provides engineering solutions worldwide. It operates in two segments, Manufacturing of Machinery & Equipment; and Industrial Projects.

IndustrySpecialty Industrial Machinery

SectorIndustrials

Employees3,396

Annual revenue₹6,688 Cr

How does it make money?

Turns over ₹6,688 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 3,396 employees supports ₹1.97 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin10.2%

Net margin1.6%

Revenue / employee₹1.97 Cr

Who are its competitors?

The closest listed comparisons in its industry are SIEMENS LTD, ABB INDIA LIMITED, LARSEN & TOUBRO LTD., HAVELLS INDIA LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

SIEMENS LTDP/E 88.8x · ROE 10.5%

ABB INDIA LIMITEDP/E 92.6x · ROE 19.1%

LARSEN & TOUBRO LTD.P/E 30.1x · ROE 15.2%

HAVELLS INDIA LIMITEDP/E 43.5x · ROE 17.1%

What is its competitive advantage?Little sign of one

Returns on capital of 10.4% 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.

ROCE10.4%

ROE4.0%

Peer median ROE17.1%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +6% while net margin moved -48% 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+6%

Margin effect-48%

DalalBaazaar Score

50/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 2.0% — barely ahead of inflation
✗ Profit has declined at 17.9% a year
✗ Profit fell 82.8% in the latest year

Quality vs. Valuation

Company Quality

45/ 100

Average

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

Valuation

75/ 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

25.0x

3Y Median

36.1x

40 monthly readings · mean 38.5x · range 25.2x–60.9x

Sector Median

66.2x

median of 4 sector peers

🟢Current valuation is approximately 31% below its 3y median of 36.1x. 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 62% below the peer median of 66.2x.

vs. its own history

Cheap

36.1x median over 40 months · -31%

vs. sector peers

Cheap

66.2x median of 4 peers · -62%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

25.0x

P/B

2.42x

EV/EBITDA

10.7x

PEG

—

Dividend Yield

0.66%

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 7.3% to 10.2% over 3 years.
Debt is being paid down
Total debt is down 23% over 3 years.
Cash generation is improving
Free cash flow is up 1097% over 3 years.
Valuation below its historical average
At 25.0x the stock trades 31% below its own median of 36.1x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 8.5% to 4.0% — each rupee of shareholder capital earns less than it did.
Inventory building faster than sales
Inventory is up 42% against revenue growth of 6% — stock may not be moving.

Red Flags

2 items require attention · 2 watch

🟡Profit is decliningFinancial
Net profit is down 45% over 3 years.
🟡Inventory building faster than salesFinancial
Inventory up 42% against revenue up 6% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 7.3% to 10.2%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 23% 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 31% 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 62% 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 ₹597 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Growth barely outpaces inflation
Revenue compounding at 2.0% 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 8.5% to 4.0%. 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
Small 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 8%✓ 10.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✗ 2.0% CAGR
Latest reported year was 47.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹597 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 8%✓ 10.4%
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

4 good · 5 neutral · 2 weak

Market Cap

₹6,636 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

25.0x

Fair

Fairly valued against the generic band

P/B Ratio

2.42x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹36.09

Profitable

Profitable on a per-share basis

ROE

4.0%

Weak

Weak capital efficiency

ROCE

10.4%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.33x

Low

Conservative leverage

Revenue Growth (YoY)

47.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-82.8%

Falling

Profits are shrinking

Dividend Yield

0.66%

Modest

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

Free Cash Flow

₹597 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹902.5

Operating Margin

3.0%

Weak

Thin margins leave little room for error

Net Margin

1.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.39

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.32

Defensive

Steadier than the market

52W Range Position

51%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

887.7 / 821.6

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

52.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹6,306 Cr	₹6,166 Cr	₹6,371 Cr	₹6,688 Cr	+2.0%
EBITDA	₹462 Cr	₹540 Cr	₹561 Cr	₹680 Cr	+13.7%
EBITDA Margin	7.3%	8.8%	8.8%	10.2%	—
PAT (Net Profit)	₹196 Cr	₹244 Cr	₹190 Cr	₹109 Cr	-17.9%
EPS	₹26.72	₹33.14	₹25.79	₹14.81	-17.9%
ROE	8.5%	9.7%	7.1%	4.0%	—
ROCE	11.3%	13.2%	10.9%	10.4%	—
Total Debt	₹1,235 Cr	₹814 Cr	₹1,098 Cr	₹951 Cr	-8.4%
Free Cash Flow	₹50 Cr	₹490 Cr	-₹125 Cr	₹597 Cr	+128.8%

🟡 Revenue has been broadly flat over 3 years (2.0% a year).

🟢 EBITDA has grown at 13.7% a year over 3 years.

🟢 EBITDA Margin has risen from 7.3% to 10.2% over 3 years (+2.8 pts).

🔴 PAT (Net Profit) has shrunk at 17.9% a year over 3 years.

🔴 EPS has shrunk at 17.9% a year over 3 years.

🔴 ROE has fallen from 8.5% to 4.0% over 3 years (-4.5 pts).

🟡 ROCE has held roughly flat at 10.4% over 3 years.

🟢 Total Debt has shrunk at 8.4% a year over 3 years.

🟢 Free Cash Flow has grown at 128.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹8,077 Cr

Total Liabilities

₹5,189 Cr

Total Debt

₹951 Cr

Cash & Equivalents

₹324 Cr

Operating Cash Flow

₹765 Cr

Capex

-₹168 Cr

Shareholding (proxy)

Institutional Holding

11.7%

Insider Holding

63.2%

Corporate Actions

Dividend Rate

₹6

Ex-Dividend Date

21 Sept 2026

Analyst Consensus

Target Price (Mean)

₹1,700

+88.4% vs CMP

Target Range

₹1,700 – ₹1,700

Peer Comparison

Company	P/E	ROE
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%
LARSEN & TOUBRO LTD.	30.1x	15.2%
HAVELLS INDIA LIMITED	43.5x	17.1%

Recent News

2 positive2 mixed2 general

ISGEC Forecast — Price Target — Prediction for 2027

TradingView, 17 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Isgec Heavy Engineering Share Price Target 2027, 2028 and 2030: Long Term Analyst Forecast

Univest, 13 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

ISGEC Heavy Engineering Ltd. Share Price Live Today

CNBC TV18, 09 Oct

Is Isgec Heavy Engineering (NSE:ISGEC) A Risky Investment?

Simply Wall Street, 10 Jan

ISGEC Heavy Engineering consolidated net profit rises 29.15% in the June 2026 quarter

Business Standard, 11 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Isgec Heavy Engineering FY26 profit rises, eyes FY27 growth

scanx.trade, 21 MayResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

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

DalalBaazaar Thesis

🟡Business QualityAdequate9/20

🟢Financial HealthStrong15.4/20

🔴GrowthWeak5/20

🔴ProfitabilityWeak4.6/15

🟡ValuationFair9.5/15

🟡RiskModerate6/10

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.

This thesis breaks if

✓EBITDA margin holds above 8%10.2%
✗Revenue growth stays above 4% a year2.0% CAGR
✓Free cash flow remains positive₹597 Cr
✓Debt / EBITDA stays below 2x1.4x
✓ROCE stays above 8%10.4%