Modern Engineering and Projects Limited

Industrials — Engineering & Construction · BSE

₹28.56+₹1.07 (+3.89%)

DalalBaazaar Score

60 / 100

🟢 Good

Verdict

CAUTION

Risk

High

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, falling profits.

In simple words: Reasonable but unspectacular business quality, 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, 6:57 pm

Understanding the Business

Company site ↗

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

What does this company do?

Modern Engineering and Projects Limited engages in the construction and development of infrastructure projects in India. It undertakes contracts for various infrastructure projects, including transportation engineering, civil construction, other works, etc.

IndustryEngineering & Construction

SectorIndustrials

Employees71

Annual revenue₹120 Cr

How does it make money?

Turns over ₹120 Cr a year. Of every ₹100 of sales, about ₹7 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 71 employees supports ₹1.69 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.69 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., ADANI PORT & SEZ LTD, SIEMENS 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 13.5% 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 ROE14.1%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +77% while net margin moved -281% 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+77%

Margin effect-281%

DalalBaazaar Score

60/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.57 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

59/ 100

Average

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

Valuation

80/ 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

6.0x

2Y Median

5.4x

28 monthly readings · mean 6.6x · range 3.4x–18.3x

Sector Median

30.1x

median of 3 sector peers

⚠️Current valuation is approximately 11% above its 2y median of 5.4x. 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 80% below the peer median of 30.1x.

vs. its own history

Fair

5.4x median over 28 months · +11%

vs. sector peers

Cheap

30.1x median of 3 peers · -80%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

5.3x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from -1.6% to 12.0% over 3 years.
Return on capital is rising
ROCE has improved from -69.0% to 13.5%.

🔴 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

🔴Debt has risen sharplyFinancial
Total debt is up 424% over 3 years, from ₹7 Cr to ₹36 Cr.
🔴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 2493% against revenue up 77% — sales are being booked faster than they are collected.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 85% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -1.6% to 12.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 80% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 2493% against revenue up 77%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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.
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

1Revenue growth stays above 16% a year✓ 20.9% CAGR
Latest reported year was -59.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 10%✓ 12.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Free cash flow remains positive✗ -₹16 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 10%✓ 13.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

4 good · 4 neutral · 3 weak

Market Cap

₹44 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

6.0x

Cheap

Cheap against the generic band

P/B Ratio

0.68x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹4.75

Profitable

Profitable on a per-share basis

ROE

13.2%

Moderate

Moderate capital efficiency

ROCE

13.5%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.55x

Low

Conservative leverage

Revenue Growth (YoY)

-59.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

-62.4%

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

-₹16 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

14.1%

Average

Average margins

Net Margin

7.1%

Average

Average bottom-line conversion

Current Ratio

1.47

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.57

Defensive

Steadier than the market

52W Range Position

26%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

26.4 / 26.5

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

53.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹68 Cr	₹93 Cr	₹96 Cr	₹120 Cr	+20.9%
EBITDA	-₹1 Cr	₹10 Cr	₹9 Cr	₹14 Cr	—
EBITDA Margin	-1.6%	11.3%	8.9%	12.0%	—
PAT (Net Profit)	-₹3 Cr	₹4 Cr	₹7 Cr	₹8 Cr	—
EPS	₹-3.17	₹4.37	₹7.85	₹5.49	—
ROE	—	—	13.0%	13.2%	—
ROCE	-69.0%	80.4%	12.7%	13.5%	—
Total Debt	₹7 Cr	₹12 Cr	₹8 Cr	₹36 Cr	+73.7%
Free Cash Flow	₹3 Cr	-₹1 Cr	-₹40 Cr	-₹16 Cr	—

🟢 Revenue has grown at 20.9% a year over 3 years.

🟢 EBITDA has turned positive, from -₹1 Cr to ₹14 Cr.

🟢 EBITDA Margin has risen from -1.6% to 12.0% over 3 years (+13.7 pts).

🟢 PAT (Net Profit) has turned positive, from -₹3 Cr to ₹8 Cr.

🟢 EPS has turned positive, from ₹-3.17 to ₹5.49.

🟡 ROE has held roughly flat at 13.2% over 3 years.

🟢 ROCE has risen from -69.0% to 13.5% over 3 years (+82.5 pts).

🔴 Total Debt has grown at 73.7% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹3 Cr to -₹16 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹172 Cr

Total Liabilities

₹108 Cr

Cash & Equivalents

₹3 Cr

Operating Cash Flow

-₹15 Cr

Capex

-₹2 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

43.6%

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
ADANI PORT & SEZ LTD	29.9x	14.1%
SIEMENS LTD	88.8x	10.5%

Recent News

1 positive5 general

Modern Engineering & Projects Ltd. Share Price Live Today

CNBC TV18, 14 Oct

Modern Engineering & Projects wins Rs 113.26 crore work order from Neelachal Ispat Nigam Limited

scanx.trade, 07 Oct

Modern Engineering And Projects Ltd. Peer Comparison – Compare with Others

Value Research, 31 Aug

Low PE High ROE Stocks: Micro-Cap Modern Engineering and Projects Ltd bags Rs 60 crore Tata Steel work order

Dalal Street Investment Journal, 11 AprOrder win

🟢Potentially positiveAn order or contract win, which adds to future revenue. How much depends on its size against annual sales and on when it is executed.

ELEVATE CAMPUSES LTD. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 14 Oct

Modern Engineering and Projects Limited Announces Resignation of Navraj Bhatt as Chief Financial Officer, Effective September 30, 2026

marketscreener.com, 30 Sept

Watch Items

Revenue growth is negative (-59.2%) 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

MiddlingBusiness Quality · Financial Health · Profitability

WeakRisk

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 stays below 2x; Free cash flow remains positive · see Key things to watch ↑