Karma Energy Limited

Utilities — Utilities - Renewable · NSE

₹35.50−₹1.81 (−4.85%)

DalalBaazaar Score

40 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity, 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. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:28 pm

Understanding the Business

Company site ↗

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

What does this company do?

Karma Energy Limited generates and sells power from renewable sources in India. The company develops and operates wind farms with a capacity of 33 MW in the states of Andhra Pradesh, Maharashtra, and Tamil Nadu.

IndustryUtilities - Renewable

SectorUtilities

Annual revenue₹10 Cr

How does it make money?

Turns over ₹10 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹-19 left at the operating level before interest, tax and depreciation.

Who are its competitors?

The closest listed comparisons in its industry are NTPC LTD, POWER GRID CORP. LTD., TATA POWER CO 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 -1.7% 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 ROE13.7%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -24% while net margin moved -77% 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-24%

Margin effect-77%

DalalBaazaar Score

40/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 8.7% a year
✗ Profit has declined at 43.7% a year
✗ Profit fell 28.3% in the latest year

Quality vs. Valuation

Company Quality

36/ 100

Weak

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

Valuation

44/ 100

Expensive

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

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

46.1x

3Y Median

41.1x

40 monthly readings · mean 196.4x · range 8.7x–780.2x

Sector Median

14.6x

median of 3 sector peers

⚠️Current valuation is approximately 12% above its 3y median of 41.1x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 215% above the peer median of 14.6x.

vs. its own history

Fair

41.1x median over 40 months · +12%

vs. sector peers

Expensive

14.6x median of 3 peers · +215%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

—

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 15.3% to 2.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 18.4% to -1.7% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 3 high · 2 watch

🔴High leverageFinancial
Debt/Equity of 3.74x — earnings must service borrowings before shareholders see anything.
🔴Thin interest coverageFinancial
Operating profit covers interest only -4.8x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 53.1 points, from 34.6% to -18.6%.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 10.4x to -4.8x.
🟡Profit is decliningFinancial
Net profit is down 82% over 3 years.

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.
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?

Margins are being competed away
EBITDA margin has fallen from 34.6% to -18.6%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 3.74x. Interest is payable whether or not the business has a good year.
A premium to the sector to defend
It trades 215% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 15.3% to 2.6%. 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.
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.

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

1EBITDA margin holds above -21%✓ -18.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Interest cover stays above 3x✗ -4.8x
How much operating profit can fall before interest stops being comfortably covered.
3Free cash flow remains positive✓ ₹0 Cr
Profit that never becomes cash eventually stops being profit.
4ROCE stays above 8%✗ -1.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Valuation vs its own median of 41.1x✓ 46.1x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

4 / 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

3 good · 3 neutral · 5 weak

Market Cap

₹41 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

46.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

1.01x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.77

Profitable

Profitable on a per-share basis

ROE

2.6%

Weak

Weak capital efficiency

ROCE

-1.7%

Weak

Low return on total capital employed

Debt/Equity

3.74x

High

High leverage

Revenue Growth (YoY)

4.8%

Modest

Modest growth

Profit Growth (YoY)

-28.3%

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

₹0 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

4.7%

Weak

Thin margins leave little room for error

Net Margin

8.9%

Average

Average bottom-line conversion

Current Ratio

13.36

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.57

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

37.2 / 38.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

34.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹13 Cr	₹12 Cr	₹9 Cr	₹10 Cr	-8.7%
EBITDA	₹4 Cr	₹3 Cr	₹1 Cr	-₹2 Cr	—
EBITDA Margin	34.6%	27.2%	14.9%	-18.6%	—
PAT (Net Profit)	₹6 Cr	₹0 Cr	₹1 Cr	₹1 Cr	-43.7%
EPS	₹5.09	₹0.11	₹1.21	₹0.91	-43.7%
ROE	15.3%	0.3%	3.5%	2.6%	—
ROCE	18.4%	0.2%	3.4%	-1.7%	—
Total Debt	₹6 Cr	₹1 Cr	₹2 Cr	₹2 Cr	-37.6%
Free Cash Flow	₹5 Cr	₹4 Cr	₹0 Cr	₹0 Cr	-59.8%

🔴 Revenue has shrunk at 8.7% a year over 3 years.

🔴 EBITDA has turned negative, from ₹4 Cr to -₹2 Cr.

🔴 EBITDA Margin has fallen from 34.6% to -18.6% over 3 years (-53.1 pts).

🔴 PAT (Net Profit) has shrunk at 43.7% a year over 3 years.

🔴 EPS has shrunk at 43.7% a year over 3 years.

🔴 ROE has fallen from 15.3% to 2.6% over 3 years (-12.7 pts).

🔴 ROCE has fallen from 18.4% to -1.7% over 3 years (-20.1 pts).

🟢 Total Debt has shrunk at 37.6% a year over 3 years.

🔴 Free Cash Flow has shrunk at 59.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹47 Cr

Total Liabilities

₹6 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹2 Cr

Capex

-₹2 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

80.8%

Corporate Actions

Ex-Dividend Date

04 Sept 2014

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%

Recent News

2 mixed4 general

Karma Energy vs Nifty 50: Share Price Performance Compared

Univest, 01 Oct

Karma Energy Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Suzlon Energy shares drop 30% in a year, but Motilal Oswal screams Buy. Here's why it sees 73% upside

The Economic Times, 12 OctPrice 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.

Karma Energy Q1 Results: Board approves unaudited financials for June 2026

scanx.trade, 14 AugResults

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

Karma Energy Share Price Forecast: 3 Year Outlook to 2030

Univest, 20 Jul

EKI Stock Price and Chart — NSE:EKI

TradingView, 18 Aug

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

MiddlingFinancial Health · Valuation

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 3 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑