Karbonsteel Engineering Limited

Industrials — Metal Fabrication · BSE

₹110.00−₹2.45 (−2.18%)

DalalBaazaar Score

53 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

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

In simple words: Strong business and financial position, but sales are shrinking. Cash generation is currently 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 Karbonsteel Engineering Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Karbonsteel Engineering Limited engages in the design, manufacture, fabrication, and assembly of heavy and precision steel structures for industrial and infrastructure sectors in India.

IndustryMetal Fabrication

SectorIndustrials

Annual revenue₹301 Cr

How does it make money?

Turns over ₹301 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹9 left at the operating level before interest, tax and depreciation.

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, HINDALCO INDUSTRIES LTD, VEDANTA 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?Some evidence

ROCE of 17.6% 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 ROE18.7%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +93% while net margin moved +6% 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+93%

Margin effect+6%

DalalBaazaar Score

53/ 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

52/ 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

13.4x

1.3Y Median

13.1x

15 monthly readings · mean 14.0x · range 10.0x–19.1x

Sector Median

12.2x

median of 4 sector peers

🟡Currently trading close to its 1.3y median of 13.1x — the market is paying about what it usually pays for this company.

🟡Against its sector it is priced broadly in line with the peer median of 12.2x.

vs. its own history

Fair

13.1x median over 15 months · +2%

vs. sector peers

Fair

12.2x median of 4 peers · +10%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

7.8x

PEG

0.49

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 17.8% to 9.1% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 24.0% to 17.6% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🟡Receivables growing faster than salesFinancial
Receivables up 136% against revenue up 93% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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 136% against revenue up 93%. 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 17.8% to 9.1%. 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.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 18% a year✓ 24.6% CAGR
Latest reported year was -3.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 7%✓ 9.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Free cash flow remains positive✗ -₹10 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 2.9x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

5 / 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 · 4 neutral · 3 weak

Market Cap

₹156 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

13.4x

Cheap

Cheap against the generic band

P/B Ratio

1.35x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹8.22

Profitable

Profitable on a per-share basis

ROE

12.0%

Moderate

Moderate capital efficiency

ROCE

17.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.16x

Moderate

Moderate leverage

Revenue Growth (YoY)

-3.5%

Shrinking

Sales are contracting

Profit Growth (YoY)

-53.2%

Falling

Profits are shrinking

Dividend Yield

None

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

Free Cash Flow

-₹23 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

7.6%

Average

Average asset productivity

Operating Margin

7.6%

Average

Average margins

Net Margin

3.5%

Average

Average bottom-line conversion

Current Ratio

1.46

Comfortable

Healthy short-term liquidity

52W Range Position

16%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

118.9 / 113.3

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

33.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹156 Cr	₹218 Cr	₹273 Cr	₹301 Cr	+24.6%
EBITDA	₹14 Cr	₹24 Cr	₹31 Cr	₹28 Cr	+25.4%
EBITDA Margin	9.0%	10.8%	11.3%	9.2%	—
PAT (Net Profit)	₹5 Cr	₹9 Cr	₹14 Cr	₹11 Cr	+27.2%
EPS	₹3.61	₹6.66	₹10.01	—	—
ROE	17.8%	21.5%	23.5%	9.1%	—
ROCE	24.0%	30.6%	36.1%	17.6%	—
Total Debt	₹49 Cr	₹60 Cr	₹79 Cr	₹60 Cr	+7.4%
Free Cash Flow	₹9 Cr	-₹4 Cr	-₹3 Cr	-₹10 Cr	—

🟢 Revenue has grown at 24.6% a year over 3 years.

🟢 EBITDA has grown at 25.4% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 9.2% over 3 years.

🟢 PAT (Net Profit) has grown at 27.2% a year over 3 years.

🔴 ROE has fallen from 17.8% to 9.1% over 3 years (-8.6 pts).

🔴 ROCE has fallen from 24.0% to 17.6% over 3 years (-6.4 pts).

🔴 Total Debt has grown at 7.4% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹9 Cr to -₹10 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹257 Cr

Total Liabilities

₹142 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹23 Cr

Capex

-₹33 Cr

Shareholding (proxy)

Institutional Holding

1.8%

Insider Holding

74.1%

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
HINDALCO INDUSTRIES LTD	12.3x	12.0%
VEDANTA LIMITED	10.4x	18.7%

Recent News

1 positive5 general

Karbonsteel Engineering Limite Share Price in sector context

Univest, 16 Oct

Karbonsteel Engineering Limite Share Price

Upstox, 05 May

Karbonsteel Engineering Ltd Key Financial Ratios – Valuation, Profitability & More

Value Research, 30 Aug

Compare with

Equitymaster, 08 Oct

Karbonsteel Engineering to host virtual investor meet on September 25

scanx.trade, 22 Sept

Karbonsteel Engineering shares in focus after bagging ₹51.96 Cr orders; order book beats last year revenue

Alice Blue, 19 FebOrder win

🟢Potentially positiveOrder wins add to future revenue, though the effect depends on the contract's size against annual sales and on when it is executed.

Watch Items

Revenue growth is negative (-3.5%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongGrowth · Valuation

MiddlingFinancial Health

WeakBusiness Quality · Profitability · 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. 1 high-severity red flag sits above this conclusion and should be read first.

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