Naapbooks Limited

Technology — Information Technology Services · BSE

₹155.00₹0.00 (0.00%)

DalalBaazaar Score

71 / 100

🟢 Good

Verdict

NEUTRAL

Risk

High

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

In simple words: Strong business and financial position, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:59 pm

Understanding the Business

Company site ↗

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

What does this company do?

Naapbooks Limited develops and provides information technology solutions to corporates in India.

IndustryInformation Technology Services

SectorTechnology

Employees45

Annual revenue₹18 Cr

How does it make money?

Turns over ₹18 Cr a year. Of every ₹100 of sales, about ₹47 reaches shareholders as profit, with ₹67 left at the operating level before interest, tax and depreciation. Each of its 45 employees supports ₹39.0 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹39.0 lakh

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 24.9% 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?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +237% while net margin moved +293% 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+237%

Margin effect+293%

DalalBaazaar Score

71/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of -1.16 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ 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

75/ 100

Good

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

Valuation

59/ 100

Fair

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

20.2x

3Y Median

29.4x

40 monthly readings · mean 47.9x · range 11.0x–204.1x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 31% below its 3y median of 29.4x. 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 22% above the peer median of 16.5x.

vs. its own history

Cheap

29.4x median over 40 months · -31%

vs. sector peers

Expensive

16.5x median of 4 peers · +22%

vs. generic bands

Fair

15x–35x

EV/EBITDA

15.7x

PEG

0.15

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 27.2% to 67.2% over 3 years.
Return on equity is rising
ROE has improved from 8.3% to 18.6%.
Return on capital is rising
ROCE has improved from 11.6% to 24.9%.
High return on capital employed
ROCE of 24.9% 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 Attention0

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

Red Flags

5 items require attention · 4 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 66% over 3 years, from ₹1 Cr to ₹1 Cr.
🔴High leverageFinancial
Debt/Equity of 2.98x — earnings must service borrowings before shareholders see anything.
🔴Free cash flow negative for 4 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 1089% against revenue up 237% — 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?

Capital compounds at a high rate
ROCE of 24.9% 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 27.2% to 67.2%. 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 31% 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.
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?

Leverage amplifies any setback
Debt/Equity of 2.98x. Interest is payable whether or not the business has a good year.
Sales are being booked faster than collected
Receivables are up 1089% against revenue up 237%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 22% 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.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 37% a year✓ 49.9% CAGR
Latest reported year was -6.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 65%✓ 67.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹1 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 22%✓ 24.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 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

₹184 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

20.2x

Fair

Fairly valued against the generic band

P/B Ratio

3.76x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹7.66

Profitable

Profitable on a per-share basis

ROE

20.7%

Strong

Strong capital efficiency

ROCE

24.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

2.98x

High

High leverage

Revenue Growth (YoY)

-6.9%

Shrinking

Sales are contracting

Profit Growth (YoY)

42.4%

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

-₹3 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

14.2%

Good

Assets are working hard

Operating Margin

83.4%

Good

Healthy core-business profitability

Net Margin

47.3%

Good

Strong bottom-line conversion

Current Ratio

2.53

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-1.16

Defensive

Steadier than the market

52W Range Position

89%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

151.3 / 143.8

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

53.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹5 Cr	₹8 Cr	₹12 Cr	₹18 Cr	+49.9%
EBITDA	₹1 Cr	₹3 Cr	₹7 Cr	₹12 Cr	+102.6%
EBITDA Margin	27.2%	36.1%	58.2%	67.2%	—
PAT (Net Profit)	₹1 Cr	₹2 Cr	₹4 Cr	₹8 Cr	+136.6%
EPS	₹1.13	₹5.53	₹4.7	—	—
ROE	8.3%	9.9%	12.6%	18.6%	—
ROCE	11.6%	13.4%	17.9%	24.9%	—
Total Debt	₹1 Cr	₹2 Cr	₹1 Cr	₹1 Cr	+18.4%
Free Cash Flow	-₹0 Cr	-₹5 Cr	-₹14 Cr	-₹1 Cr	—

🟢 Revenue has grown at 49.9% a year over 3 years.

🟢 EBITDA has grown at 102.6% a year over 3 years.

🟢 EBITDA Margin has risen from 27.2% to 67.2% over 3 years (+40.0 pts).

🟢 PAT (Net Profit) has grown at 136.6% a year over 3 years.

🟢 ROE has risen from 8.3% to 18.6% over 3 years (+10.3 pts).

🟢 ROCE has risen from 11.6% to 24.9% over 3 years (+13.3 pts).

🔴 Total Debt has grown at 18.4% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹53 Cr

Total Liabilities

₹9 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹19 Cr

Capex

-₹20 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

65.7%

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 mixed5 general

Compare with

Equitymaster, 08 Oct

Naapbooks shareholders approve FY26 financials and director reappointment

scanx.trade, 30 Sept

Naapbooks Ltd. Financials – Balance Sheet, Profit & Loss, Cash Flow

Value Research, 30 Aug

Naapbooks Limited Schedules Board Meeting for January 22, 2026 to Consider Commercial Property Sale

scanx.trade, 22 Jan

Naapbooks Ltd

Equitypandit, 06 Aug

Naapbooks closes trading window ahead of H1FY27 results declaration

scanx.trade, 29 SeptResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Watch Items

Revenue growth is negative (-6.9%) 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

StrongBusiness Quality · Growth · Profitability · Valuation

MiddlingFinancial Health

WeakRisk

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 4 high-severity red flags sit above this conclusion and should be read first.

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