Methodhub Software Limited

Technology — Information Technology Services · BSE

₹75.52+₹3.59 (+4.99%)

DalalBaazaar Score

64 / 100

🟢 Good

Verdict

REASONABLE

Risk

High

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

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:27 pm

Understanding the Business

Company site ↗

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

What does this company do?

Methodhub Software Limited provides information technology (IT) and consulting services in India, the United States, Mexico, Costa Rica, and Canada.

IndustryInformation Technology Services

SectorTechnology

Employees296

Annual revenue₹330 Cr

How does it make money?

Turns over ₹330 Cr a year. Of every ₹100 of sales, about ₹10 reaches shareholders as profit, with ₹19 left at the operating level before interest, tax and depreciation. Each of its 296 employees supports ₹1.11 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.11 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?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 34.2%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 37.9% against a peer median of 32.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

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 +830% while net margin moved +155% 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+830%

Margin effect+155%

DalalBaazaar Score

64/ 100

Good

Weighted across six categories. Every point is explained below.

✗ 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

64/ 100

Average

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

Valuation

88/ 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

3.7x

1.0Y Median

13.5x

12 monthly readings · mean 14.6x · range 10.7x–24.1x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 73% below its 1.0y median of 13.5x. 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 78% below the peer median of 16.5x.

vs. its own history

Cheap

13.5x median over 12 months · -73%

vs. sector peers

Cheap

16.5x median of 4 peers · -78%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

3.1x

PEG

0.02

What's Good / What's Bad

🟢 What's Going Well2

High return on capital employed
ROCE of 34.2% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on equity is falling
ROE has dropped from 34.2% to 20.8% — each rupee of shareholder capital earns less than it did.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 345% over 3 years, from ₹26 Cr to ₹113 Cr.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹56 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 34.2% 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.
Priced below its own history
The stock trades 73% 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 78% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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?

Returns on shareholder capital are falling
ROE has dropped from 34.2% to 20.8%. 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.
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

1Revenue growth stays above 83% a year✓ 110.3% CAGR
Latest reported year was 98.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 17%✓ 19.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹56 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 31%✓ 34.2%
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

₹142 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

3.7x

Cheap

Cheap against the generic band

P/B Ratio

0.93x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹20.48

Profitable

Profitable on a per-share basis

ROE

37.9%

Strong

Strong capital efficiency

ROCE

34.2%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.70x

Moderate

Moderate leverage

Revenue Growth (YoY)

98.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

25.9%

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

-₹76 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

18.0%

Good

Assets are working hard

Operating Margin

19.2%

Good

Healthy core-business profitability

Net Margin

9.6%

Average

Average bottom-line conversion

Current Ratio

1.33

Comfortable

Healthy short-term liquidity

52W Range Position

15%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

71.1 / 69.3

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

51.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹35 Cr	₹57 Cr	₹135 Cr	₹330 Cr	+110.3%
EBITDA	₹7 Cr	₹9 Cr	₹17 Cr	₹64 Cr	+112.6%
EBITDA Margin	18.8%	16.5%	12.7%	19.5%	—
PAT (Net Profit)	₹1 Cr	₹5 Cr	₹12 Cr	₹32 Cr	+187.2%
EPS	₹0.71	₹2.87	₹6.1	—	—
ROE	34.2%	47.8%	26.9%	20.8%	—
ROCE	35.2%	35.1%	32.8%	34.2%	—
Total Debt	₹26 Cr	₹29 Cr	₹32 Cr	₹113 Cr	+64.5%
Free Cash Flow	₹7 Cr	₹4 Cr	-₹8 Cr	-₹56 Cr	—

🟢 Revenue has grown at 110.3% a year over 3 years.

🟢 EBITDA has grown at 112.6% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 19.5% over 3 years.

🟢 PAT (Net Profit) has grown at 187.2% a year over 3 years.

🔴 ROE has fallen from 34.2% to 20.8% over 3 years (-13.4 pts).

🔴 ROCE has fallen from 35.2% to 34.2% over 3 years (-1.1 pts).

🔴 Total Debt has grown at 64.5% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹7 Cr to -₹56 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹344 Cr

Total Liabilities

₹181 Cr

Cash & Equivalents

₹56 Cr

Operating Cash Flow

₹6 Cr

Capex

-₹62 Cr

Shareholding (proxy)

Institutional Holding

2.3%

Insider Holding

59.1%

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

1 positive5 general

MethodHub Software FY26 Results: Revenue up 145% to ₹3,346 million

scanx.trade, 16 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Methodhub Software Share Price Near Low: Valuation Check

Univest, 18 Sept

Methodhub Software Limited Share Price

Upstox, 05 May

METHODHUB Stock Price and Chart — BSE:METHODHUB

TradingView, 12 Dec

Methodhub Software Ltd. IPO Allotment Status: Check Overall Subscription & Steps to Verify Status

Groww, 10 Dec

Methodhub Software IPO Listing: Stock Opens 20% Lower At ₹155.20

Samco, 12 Dec

Watch Items

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

DalalBaazaar Thesis

StrongBusiness Quality · Growth · Valuation

MiddlingFinancial 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. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑