Kapston Services Limited

Industrials — Specialty Business Services · NSE

₹537.15+₹7.55 (+1.43%)

DalalBaazaar Score

57 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, 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 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, 7:46 pm

Understanding the Business

Company site ↗

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

What does this company do?

Kapston Services Limited operates as a human capital solutions provider company in India.

IndustrySpecialty Business Services

SectorIndustrials

Employees452

Annual revenue₹829 Cr

How does it make money?

Turns over ₹829 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹5 left at the operating level before interest, tax and depreciation. Each of its 452 employees supports ₹1.83 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.83 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. 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 25.6%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 24.2% against a peer median of 15.2% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE15.2%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +109% while net margin moved +165% 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+109%

Margin effect+165%

DalalBaazaar Score

57/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 53.6x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 59.6x
✗ P/B of 14.05x is a steep premium to book

Quality vs. Valuation

Company Quality

64/ 100

Average

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

Valuation

57/ 100

Fair

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

53.6x

3Y Median

59.6x

40 monthly readings · mean 64.4x · range 41.3x–125.4x

Sector Median

88.8x

median of 3 sector peers

🟡Currently trading close to its 3y median of 59.6x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 40% below the peer median of 88.8x.

vs. its own history

Fair

59.6x median over 40 months · -10%

vs. sector peers

Cheap

88.8x median of 3 peers · -40%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

40.0x

PEG

0.70

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 3.9% to 5.5% over 3 years.
Cash generation is improving
Free cash flow is up 1442% over 3 years.
Return on equity is rising
ROE has improved from 8.6% to 24.2%.
Return on capital is rising
ROCE has improved from 15.6% to 25.6%.
High return on capital employed
ROCE of 25.6% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

2 items require attention · 2 high

🔴Debt has risen sharplyFinancial
Total debt is up 100% over 3 years, from ₹92 Cr to ₹184 Cr.
🔴High leverageFinancial
Debt/Equity of 1.58x — earnings must service borrowings before shareholders see anything.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 25.6% 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.
Margin expansion has further to run
EBITDA margin has risen from 3.9% to 5.5%. 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 40% 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?

The debt load needs earnings to hold up
Debt is 4.1x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
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
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 21% a year✓ 27.9% CAGR
Latest reported year was 16.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 3%✓ 5.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 4.1x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Interest cover stays above 3x✗ 2.9x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹3 Cr
Profit that never becomes cash eventually stops being profit.

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

6 good · 2 neutral · 3 weak

Market Cap

₹1,635 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

14.05x

Rich

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

EPS (TTM)

₹10.02

Profitable

Profitable on a per-share basis

ROE

24.2%

Strong

Strong capital efficiency

ROCE

25.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.58x

High

High leverage

Revenue Growth (YoY)

16.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

38.6%

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

₹3 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

6.1%

Average

Average margins

Net Margin

3.5%

Average

Average bottom-line conversion

Current Ratio

1.43

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.10

Defensive

Steadier than the market

52W Range Position

79%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

549.5 / 552.5

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

52.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹397 Cr	₹519 Cr	₹689 Cr	₹829 Cr	+27.9%
EBITDA	₹15 Cr	₹24 Cr	₹32 Cr	₹45 Cr	+43.6%
EBITDA Margin	3.9%	4.6%	4.6%	5.5%	—
PAT (Net Profit)	₹5 Cr	₹13 Cr	₹18 Cr	₹28 Cr	+77.0%
EPS	₹1.67	₹4.13	₹5.86	₹9.24	+77.0%
ROE	8.6%	17.6%	20.1%	24.2%	—
ROCE	15.6%	25.2%	20.3%	25.6%	—
Total Debt	₹92 Cr	₹102 Cr	₹169 Cr	₹184 Cr	+25.9%
Free Cash Flow	₹0 Cr	₹2 Cr	-₹47 Cr	₹3 Cr	+148.9%

🟢 Revenue has grown at 27.9% a year over 3 years.

🟢 EBITDA has grown at 43.6% a year over 3 years.

🟢 EBITDA Margin has risen from 3.9% to 5.5% over 3 years (+1.6 pts).

🟢 PAT (Net Profit) has grown at 77.0% a year over 3 years.

🟢 EPS has grown at 77.0% a year over 3 years.

🟢 ROE has risen from 8.6% to 24.2% over 3 years (+15.5 pts).

🟢 ROCE has risen from 15.6% to 25.6% over 3 years (+10.0 pts).

🔴 Total Debt has grown at 25.9% a year over 3 years.

🟢 Free Cash Flow has grown at 148.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹349 Cr

Total Liabilities

₹233 Cr

Cash & Equivalents

₹3 Cr

Operating Cash Flow

₹9 Cr

Capex

-₹6 Cr

Corporate Actions

Ex-Dividend Date

17 Nov 2020

Peer Comparison

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

Recent News

1 positive1 mixed4 general

Kapston Services (KAPSTON) Share/Stock Price Live, NSE

TechGraph, 09 Oct

Kapston Services' (NSE:KAPSTON) five-year earnings growth trails the 50% YoY shareholder returns

Simply Wall Street, 23 JanResults

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

Kapston Services consolidated net profit rises 38.50% 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.

Kapston Services Limited Appoints K. Ramesha as Company Secretary and Compliance Officer

scanx.trade, 24 Apr

Investors Appear Satisfied With Kapston Services Limited's (NSE:KAPSTON) Prospects As Shares Rocket 38%

Simply Wall Street, 05 Feb

Kapston Services vs Nifty 50: Share Price Performance Compared

Univest, 01 Oct

Watch Items

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

DalalBaazaar Thesis

StrongGrowth · Profitability

MiddlingBusiness Quality · Financial Health

WeakValuation · 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.

2 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Interest cover stays above 3x · see Key things to watch ↑