Magellanic Cloud Limited

Technology — Information Technology Services · NSE

₹24.53+₹0.86 (+3.63%)

DalalBaazaar Score

76 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. The direction of profits 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 Magellanic Cloud Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Magellanic Cloud Limited provides IT solutions in India. It operates through IT-Surveillance, IT/ITES Services, and Drone segments. The company offers artificial intelligence, cloud computing, data engineering, platform development, and digital transformation.

IndustryInformation Technology Services

SectorTechnology

Employees150

Annual revenue₹698 Cr

How does it make money?

Turns over ₹698 Cr a year. Of every ₹100 of sales, about ₹16 reaches shareholders as profit, with ₹32 left at the operating level before interest, tax and depreciation. Each of its 150 employees supports ₹4.65 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹4.65 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO 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?Some evidence

ROCE of 19.4% 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 ROE32.0%

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 +63% while net margin moved -5% 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+63%

Margin effect-5%

DalalBaazaar Score

76/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.05 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✓ Profits have been consistent from year to year

Quality vs. Valuation

Company Quality

77/ 100

Good

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

Valuation

86/ 100

Cheap

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

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

13.0x

2Y Median

17.0x

22 monthly readings · mean 25.0x · range 11.2x–48.0x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 23% below its 2y median of 17.0x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 21% below the peer median of 16.5x.

vs. its own history

Cheap

17.0x median over 22 months · -23%

vs. sector peers

Cheap

16.5x median of 4 peers · -21%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

7.6x

PEG

0.83

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 29.8% to 32.1% 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 24.9% to 16.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 21.8% to 19.4% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Receivables growing faster than salesFinancial
Receivables up 418% against revenue up 63% — sales are being booked faster than they are collected.
🟡Debt is increasingFinancial
Total debt is up 35% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 19.4% 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 29.8% to 32.1%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 23% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 21% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹27 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 418% against revenue up 63%. 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 24.9% to 16.6%. 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.
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 13% a year✓ 17.7% CAGR
Latest reported year was 10.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 30%✓ 32.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹27 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 16%✓ 19.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 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

7 good · 3 neutral · 1 weak

Market Cap

₹1,445 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

13.0x

Cheap

Cheap against the generic band

P/B Ratio

2.10x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹1.88

Profitable

Profitable on a per-share basis

ROE

16.6%

Strong

Strong capital efficiency

ROCE

19.4%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.43x

Low

Conservative leverage

Revenue Growth (YoY)

10.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-14.9%

Falling

Profits are shrinking

Dividend Yield

0.12%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹27 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

20.0%

Good

Healthy core-business profitability

Net Margin

15.4%

Good

Strong bottom-line conversion

Current Ratio

2.00

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.05

Defensive

Steadier than the market

52W Range Position

10%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

24.6 / 26.4

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

50.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹427 Cr	₹560 Cr	₹597 Cr	₹698 Cr	+17.7%
EBITDA	₹127 Cr	₹201 Cr	₹211 Cr	₹224 Cr	+20.7%
EBITDA Margin	29.8%	35.8%	35.3%	32.1%	—
PAT (Net Profit)	₹74 Cr	₹103 Cr	₹103 Cr	₹114 Cr	+15.6%
EPS	₹1.32	₹1.76	₹1.76	₹1.94	+13.6%
ROE	24.9%	25.3%	19.8%	16.6%	—
ROCE	21.8%	25.8%	25.5%	19.4%	—
Total Debt	₹216 Cr	₹279 Cr	₹257 Cr	₹292 Cr	+10.6%
Free Cash Flow	₹52 Cr	-₹45 Cr	₹84 Cr	₹27 Cr	-18.9%

🟢 Revenue has grown at 17.7% a year over 3 years.

🟢 EBITDA has grown at 20.7% a year over 3 years.

🟢 EBITDA Margin has risen from 29.8% to 32.1% over 3 years (+2.3 pts).

🟢 PAT (Net Profit) has grown at 15.6% a year over 3 years.

🟢 EPS has grown at 13.6% a year over 3 years.

🔴 ROE has fallen from 24.9% to 16.6% over 3 years (-8.2 pts).

🔴 ROCE has fallen from 21.8% to 19.4% over 3 years (-2.4 pts).

🔴 Total Debt has grown at 10.6% a year over 3 years.

🔴 Free Cash Flow has shrunk at 18.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,153 Cr

Total Liabilities

₹466 Cr

Cash & Equivalents

₹41 Cr

Operating Cash Flow

₹92 Cr

Capex

-₹65 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

69.9%

Corporate Actions

Dividend Rate

₹0.03

Ex-Dividend Date

12 Sept 2025

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

2 mixed4 general

Magellanic Cloud Publishes EGM Notice for ₹492.39 Crore Fund Raise on July 24

scanx.trade, 18 Oct

Insiders Could Have Profited By Holding onto Magellanic Cloud Shares Despite 12% Drop

Simply Wall Street, 12 JunPrice 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.

Magellanic Cloud vs Nifty 50: Share Price Performance Compared

Univest, 05 Oct

Magellanic Cloud Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

Magellanic Cloud Subsidiary Wins ₹127.62 Crore GAIL Order

HDFC Sky, 30 Jul

Price Action | BHEL slips as LIC cut stake, Magellanic Cloud shares jumps 6% on contract win

TradingView, 17 AugPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Watch Items

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

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Valuation

MiddlingProfitability · Risk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 2 high-severity red flags sit above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑