Merritronix Limited

Technology — Electronic Components · BSE

₹420.00−₹8.00 (−1.87%)

DalalBaazaar Score

61 / 100

🟢 Good

Verdict

CAUTION

Risk

High

Driven by moderate debt load, 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, 6:07 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

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

What does this company do?

Merritronix Limited engages in Electronics Systems Design and Manufacturing (ESDM) activities of electronic assemblies and systems for defence, aerospace, telecommunications and specialized industrial electronics.

IndustryElectronic Components

SectorTechnology

Employees57

Annual revenue₹156 Cr

How does it make money?

Turns over ₹156 Cr a year. Of every ₹100 of sales, about ₹10 reaches shareholders as profit, with ₹17 left at the operating level before interest, tax and depreciation. Each of its 57 employees supports ₹2.74 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin16.6%

Net margin10.3%

Revenue / employee₹2.74 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.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?Some evidence

ROCE of 43.0% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE43.0%

ROE46.0%

Peer median ROE32.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +193% while net margin moved +1211% 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+193%

Margin effect+1211%

DalalBaazaar Score

61/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 45.6x is demanding — it needs sustained high growth to justify
✗ P/B of 10.11x is a steep premium to book

Quality vs. Valuation

Company Quality

73/ 100

Good

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

Valuation

37/ 100

Expensive

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

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

45.6x

Sector Median

16.5x

median of 4 sector peers

⚠️Against its sector it trades 176% above the peer median of 16.5x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

16.5x median of 4 peers · +176%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

45.6x

P/B

10.11x

EV/EBITDA

29.4x

PEG

0.19

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 3.4% to 16.6% over 3 years.
Return on equity is rising
ROE has improved from 8.2% to 30.3%.
Return on capital is rising
ROCE has improved from 12.3% to 43.0%.
High return on capital employed
ROCE of 43.0% 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 Attention3

Debt is rising
Total debt is up 220% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Inventory building faster than sales
Inventory is up 625% against revenue growth of 193% — stock may not be moving.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 220% over 3 years, from ₹14 Cr to ₹43 Cr.
🔴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.
🔴Inventory building faster than salesFinancial
Inventory up 625% against revenue up 193% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹26 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 43.0% 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 3.4% to 16.6%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
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?

A premium to the sector to defend
It trades 176% above the peer median. That premium needs a reason that persists, or it closes.
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 32% a year✓ 43.1% CAGR
Latest reported year was 37.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 15%✓ 16.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹26 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 40%✓ 43.0%
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

5 good · 3 neutral · 3 weak

Market Cap

₹734 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

45.6x

Expensive

Expensive — verify against sector peers

P/B Ratio

10.11x

Rich

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

EPS (TTM)

₹9.21

Profitable

Profitable on a per-share basis

ROE

46.0%

Strong

Strong capital efficiency

ROCE

43.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.81x

Moderate

Moderate leverage

Revenue Growth (YoY)

37.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

86.0%

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

-₹23 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹420

ROA

14.7%

Good

Assets are working hard

Operating Margin

19.1%

Good

Healthy core-business profitability

Net Margin

10.3%

Good

Strong bottom-line conversion

Current Ratio

1.56

Comfortable

Healthy short-term liquidity

52W Range Position

61%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

416.8 / 368.7

Bullish alignment (short > long)

RSI (14)

46.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹53 Cr	₹86 Cr	₹114 Cr	₹156 Cr	+43.1%
EBITDA	₹2 Cr	₹6 Cr	₹15 Cr	₹26 Cr	+143.5%
EBITDA Margin	3.4%	7.4%	13.1%	16.6%	—
PAT (Net Profit)	₹0 Cr	₹3 Cr	₹9 Cr	₹16 Cr	+237.4%
EPS	₹0.24	₹1.74	₹4.95	—	—
ROE	8.2%	37.3%	51.4%	30.3%	—
ROCE	12.3%	40.4%	65.0%	43.0%	—
Total Debt	₹14 Cr	₹16 Cr	₹19 Cr	₹43 Cr	+47.3%
Free Cash Flow	-₹4 Cr	₹2 Cr	-₹7 Cr	-₹26 Cr	—

🟢 Revenue has grown at 43.1% a year over 3 years.

🟢 EBITDA has grown at 143.5% a year over 3 years.

🟢 EBITDA Margin has risen from 3.4% to 16.6% over 3 years (+13.2 pts).

🟢 PAT (Net Profit) has grown at 237.4% a year over 3 years.

🟢 ROE has risen from 8.2% to 30.3% over 3 years (+22.1 pts).

🟢 ROCE has risen from 12.3% to 43.0% over 3 years (+30.7 pts).

🔴 Total Debt has grown at 47.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹154 Cr

Total Liabilities

₹101 Cr

Total Debt

₹43 Cr

Cash & Equivalents

₹17 Cr

Operating Cash Flow

-₹23 Cr

Capex

-₹3 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

67.6%

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

6 general

Merritronix Ltd. (MRTX) Share Price Near 52-Week High After 4.59% Gain

Univest, 30 Sept

Stellar debut! Merritronix shares list at 90% premium on BSE SME platform

The Economic Times, 08 Jun

Compare with

Equitymaster, 16 Oct

Merritronix Limited Share Price

Upstox, 06 Jun

Merritronix (BSE:544773) - Stock Analysis

Simply Wall Street, 09 Jul

Merritronix share price hits in 5% upper circuit after a blockbuster debut

Livemint, 08 Jun

Watch Items

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

DalalBaazaar Thesis

🟢Business QualityStrong15.4/20

🟡Financial HealthAdequate12/20

🟢GrowthStrong14.9/20

🟢ProfitabilityStrong12.9/15

🔴ValuationDemanding3.2/15

🔴RiskHigh2.5/10

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 32% a year43.1% CAGR
✓EBITDA margin holds above 15%16.6%
✗Free cash flow remains positive-₹26 Cr
✓Debt / EBITDA stays below 2x1.7x
✓ROCE stays above 40%43.0%