LGB Forge Limited

Industrials — Metal Fabrication · BSE

₹4.98+₹0.03 (+0.61%)

DalalBaazaar Score

44 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:47 pm

Understanding the Business

Company site ↗

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

What does this company do?

LGB Forge Limited engages in the manufacture and sale of forged and machined components in India.

IndustryMetal Fabrication

SectorIndustrials

Employees221

Annual revenue₹96 Cr

How does it make money?

Turns over ₹96 Cr a year. Of every ₹100 of sales, about ₹-2 reaches shareholders as profit, with ₹4 left at the operating level before interest, tax and depreciation. Each of its 221 employees supports ₹43.7 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹43.7 lakh

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?Little sign of one

Returns on capital of 1.9% 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 ROE18.7%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +13% while net margin moved -79% 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+13%

Margin effect-79%

DalalBaazaar Score

44/ 100

Moderate

Weighted across six categories. Every point is explained below.

• Beta of 0.87 — moves roughly with the market
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings

Quality vs. Valuation

Company Quality

46/ 100

Average

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

Valuation

32/ 100

Expensive

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

16.6x

Sector Median

12.2x

median of 4 sector peers

⚠️Against its sector it trades 37% above the peer median of 12.2x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

12.2x median of 4 peers · +37%

vs. generic bands

Fair

15x–35x

EV/EBITDA

35.2x

PEG

—

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from -4.3% to 4.3% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from -30.8% to -13.6%.
Return on capital is rising
ROCE has improved from -19.7% to 1.9%.

🔴 What Needs Attention0

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

Red Flags

4 items require attention · 3 high · 1 watch

🔴High leverageFinancial
Debt/Equity of 1.70x — earnings must service borrowings before shareholders see anything.
🔴Thin interest coverageFinancial
Operating profit covers interest only 0.2x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹2 Cr in the latest reported year.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 0.5x to 0.2x.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -4.3% to 4.3%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 6.6x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
A premium to the sector to defend
It trades 37% above the peer median. That premium needs a reason that persists, or it closes.
Growth barely outpaces inflation
Revenue compounding at 4.2% 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.
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
3 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

1EBITDA margin holds above 2%✓ 4.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 6.6x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Interest cover stays above 3x✗ 0.2x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✓ 4.2% CAGR
Latest reported year was -1.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹1 Cr
Profit that never becomes cash eventually stops being profit.

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

3 good · 3 neutral · 5 weak

Market Cap

₹119 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

16.6x

Fair

Fairly valued against the generic band

P/B Ratio

7.29x

Rich

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

EPS (TTM)

₹0.3

Profitable

Profitable on a per-share basis

ROE

-13.6%

Weak

Weak capital efficiency

ROCE

1.9%

Weak

Low return on total capital employed

Debt/Equity

1.70x

High

High leverage

Revenue Growth (YoY)

-1.4%

Shrinking

Sales are contracting

Profit Growth (YoY)

975.0%

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

₹1 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

2.1%

Weak

Thin margins leave little room for error

Net Margin

6.9%

Average

Average bottom-line conversion

Current Ratio

1.53

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.87

Market-like

Moves roughly in line with the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

5.0 / 5.6

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

37.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹85 Cr	₹82 Cr	₹87 Cr	₹96 Cr	+4.2%
EBITDA	-₹4 Cr	₹0 Cr	₹2 Cr	₹4 Cr	—
EBITDA Margin	-4.3%	0.4%	2.5%	4.3%	—
PAT (Net Profit)	-₹9 Cr	-₹10 Cr	-₹1 Cr	-₹2 Cr	—
EPS	₹-0.39	₹-0.41	₹-0.05	₹-0.09	—
ROE	-30.8%	-48.9%	-6.7%	-13.6%	—
ROCE	-19.7%	-7.2%	3.3%	1.9%	—
Total Debt	₹27 Cr	₹30 Cr	₹27 Cr	₹28 Cr	+0.7%
Free Cash Flow	-₹7 Cr	₹1 Cr	₹7 Cr	₹1 Cr	—

🟢 Revenue has grown at 4.2% a year over 3 years.

🟢 EBITDA has turned positive, from -₹4 Cr to ₹4 Cr.

🟢 EBITDA Margin has risen from -4.3% to 4.3% over 3 years (+8.7 pts).

🟢 ROE has risen from -30.8% to -13.6% over 3 years (+17.2 pts).

🟢 ROCE has risen from -19.7% to 1.9% over 3 years (+21.6 pts).

🟡 Total Debt has been broadly flat over 3 years (0.7% a year).

🟢 Free Cash Flow has turned positive, from -₹7 Cr to ₹1 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹63 Cr

Total Liabilities

₹47 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹5 Cr

Capex

-₹4 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

70.8%

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

6 general

LGB Forge Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

LGB Forge Upper Circuit Today: Price, Data and Peers

Univest, 08 Oct

LGB Forge seeks nod for ₹75 crore related party deals at AGM

scanx.trade, 20 Jul

LGB Forge Standalone June 2026 Net Sales at Rs 28.07 crore, up 1.54% Y-o-Y

Moneycontrol.com, 18 Aug

Compare LGB FORGE with ADITYA FORGE

Equitymaster, 08 Oct

LGB Forge Ltd. Lower Circuit Today: Price, Data and Peers

Univest, 01 Oct

Watch Items

Revenue growth is negative (-1.4%) on the latest reported period — check if this is one-off or a trend.
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 · Profitability · Valuation

WeakBusiness Quality · Growth · 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. 3 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 ↑