Kinetic Engineering Limited

Consumer Cyclical — Auto Parts · BSE

₹246.35−₹1.40 (−0.57%)

DalalBaazaar Score

34 / 100

🔴 Weak

Verdict

CAUTION

Risk

Very High

Driven by negative free cash flow, the company is currently loss-making, micro-cap size, which brings thin liquidity.

In simple words: The company is currently losing money, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:00 pm

Understanding the Business

Company site ↗

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

What does this company do?

Kinetic Engineering Limited manufactures and supplies automotive components for two-wheelers, three-wheelers and commercial vehicles in India and internationally.

IndustryAuto Parts

SectorConsumer Cyclical

Employees547

Annual revenue₹157 Cr

How does it make money?

Turns over ₹157 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 547 employees supports ₹28.8 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹28.8 lakh

Who are its competitors?

The closest listed comparisons in its industry are BOSCH LIMITED, MARUTI SUZUKI INDIA LTD., TVS MOTOR COMPANY LTD, EICHER MOTORS 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 3.0% 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 ROE23.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +16% while net margin moved -71% 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+16%

Margin effect-71%

DalalBaazaar Score

34/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ ROE of 0.7% is weak
✗ ROE has fallen by 10.1 points over the period

Quality vs. Valuation

Company Quality

33/ 100

Weak

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

Valuation

25/ 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.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

N/A

No P/E — the company is lossmaking

EV/EBITDA

91.2x

PEG

—

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 10.7% to 0.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 14.2% to 3.0% — often a sign of competition or overexpansion.

Red Flags

8 items require attention · 2 high · 6 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.2x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 6.0 points, from 11.6% to 5.6%.
🟡Debt is increasingFinancial
Total debt is up 29% over 3 years.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 2.3x to 1.2x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹56 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 66% over 3 years.
🟡Inventory building faster than salesFinancial
Inventory up 55% against revenue up 16% — stock may not be moving.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 35% over 3 years — each existing share owns a smaller slice of the company.

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?

Margins are being competed away
EBITDA margin has fallen from 11.6% to 5.6%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 8.2x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Growth barely outpaces inflation
Revenue compounding at 5.2% 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 10.7% to 0.7%. 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

1EBITDA margin holds above 4%✓ 5.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 8.2x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹56 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.2x
How much operating profit can fall before interest stops being comfortably covered.
5Revenue growth stays above 4% a year✓ 5.2% CAGR
Latest reported year was 43.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.

Investment Checklist

6 / 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

2 good · 3 neutral · 6 weak

Market Cap

₹773 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not meaningful

Loss-making

Earnings are negative, so a P/E multiple can't be read here

P/B Ratio

4.06x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹-4.67

Loss-making

Negative earnings per share — the business is losing money

ROE

0.7%

Weak

Weak capital efficiency

ROCE

3.0%

Weak

Low return on total capital employed

Debt/Equity

0.43x

Low

Conservative leverage

Revenue Growth (YoY)

43.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-83.9%

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

-₹56 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

-26.4%

Weak

Thin margins leave little room for error

Net Margin

-6.4%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.03

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.83

Market-like

Moves roughly in line with the market

52W Range Position

38%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

238.4 / 234.0

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

60.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹135 Cr	₹143 Cr	₹142 Cr	₹157 Cr	+5.2%
EBITDA	₹16 Cr	₹10 Cr	₹7 Cr	₹9 Cr	-17.4%
EBITDA Margin	11.6%	6.7%	4.9%	5.6%	—
PAT (Net Profit)	₹3 Cr	₹5 Cr	₹6 Cr	₹1 Cr	-30.5%
EPS	₹1.55	₹2.35	₹2.86	₹0.42	-35.3%
ROE	10.7%	8.7%	6.2%	0.7%	—
ROCE	14.2%	10.4%	6.7%	3.0%	—
Total Debt	₹57 Cr	₹37 Cr	₹61 Cr	₹73 Cr	+8.8%
Free Cash Flow	₹10 Cr	₹2 Cr	-₹63 Cr	-₹56 Cr	—

🟢 Revenue has grown at 5.2% a year over 3 years.

🔴 EBITDA has shrunk at 17.4% a year over 3 years.

🔴 EBITDA Margin has fallen from 11.6% to 5.6% over 3 years (-6.0 pts).

🔴 PAT (Net Profit) has shrunk at 30.5% a year over 3 years.

🔴 EPS has shrunk at 35.3% a year over 3 years.

🔴 ROE has fallen from 10.7% to 0.7% over 3 years (-10.1 pts).

🔴 ROCE has fallen from 14.2% to 3.0% over 3 years (-11.2 pts).

🔴 Total Debt has grown at 8.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹10 Cr to -₹56 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹293 Cr

Total Liabilities

₹130 Cr

Cash & Equivalents

₹39 Cr

Operating Cash Flow

-₹19 Cr

Capex

-₹37 Cr

Shareholding (proxy)

Institutional Holding

7.3%

Insider Holding

80.8%

Corporate Actions

Ex-Dividend Date

11 Sept 2002

Peer Comparison

Company	P/E	ROE
BOSCH LIMITED	56.9x	15.9%
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TVS MOTOR COMPANY LTD	56.8x	35.8%
EICHER MOTORS LTD	34.7x	23.0%

Recent News

2 mixed4 general

Kinetic Engineering reports Q4FY26 sales growth of 16.1%

scanx.trade, 14 Oct

Volume buzzers: Paisalo Digital, Rel Power, Kinetic Engg zoom up to 20%

Business Standard, 01 Jul

Kinetic Engineering Q1 FY27 Results Preview

Univest, 08 JulResults

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

Kinetic Engineering to Invest ₹57 Cr in EV Expansion

HDFC Sky, 25 SeptCapacity

🟡Mixed / dependsCapacity additions can raise revenue over two to three years, but the capital spend usually pressures free cash flow first. Worth checking whether the capex is funded from operations or from borrowing.

Kinetic Engineering Ltd

Equitypandit, 28 Nov

Kinetic Engineering promoter stake rises to 69.27% after warrant conversion

scanx.trade, 25 Sept

Watch Items

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

DalalBaazaar Thesis

MiddlingFinancial Health

WeakBusiness Quality · Growth · Profitability · Valuation · 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. 2 high-severity red flags sit above this conclusion and should be read first.

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