Nelco Limited

Technology — Communication Equipment · NSE

₹826.50−₹4.90 (−0.59%)

DalalBaazaar Score

27 / 100

🔴 Weak

Verdict

HIGH RISK

Risk

High

Driven by short-term liabilities exceed short-term assets, negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with modest growth. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

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

What does this company do?

Nelco Limited provides satellite communication connectivity systems and solutions.

IndustryCommunication Equipment

SectorTechnology

Employees206

Annual revenue₹307 Cr

How does it make money?

Turns over ₹307 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 206 employees supports ₹1.49 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.49 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?Little sign of one

Returns on capital of 6.8% 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 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 -2% while net margin moved -83% 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-2%

Margin effect-83%

DalalBaazaar Score

27/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 0.7% a year
✗ Profit has declined at 44.9% a year

Quality vs. Valuation

Company Quality

26/ 100

Weak

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

Valuation

23/ 100

Expensive

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

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

489.1x

3Y Median

100.4x

40 monthly readings · mean 170.5x · range 72.7x–656.2x

Sector Median

16.5x

median of 4 sector peers

⚠️Current valuation is approximately 387% above its 3y median of 100.4x. 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 2855% above the peer median of 16.5x.

vs. its own history

Expensive

100.4x median over 40 months · +387%

vs. sector peers

Expensive

16.5x median of 4 peers · +2855%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

60.9x

PEG

16.81

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 19.0% to 2.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 24.8% to 6.8% — often a sign of competition or overexpansion.

Red Flags

8 items require attention · 3 high · 5 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.9x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 10.3 points, from 20.7% to 10.4%.
🔴Inventory building faster than salesFinancial
Inventory up 70% against revenue up -2% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 4.6x to 1.9x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹8 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 83% over 3 years.
🟡Receivables growing faster than salesFinancial
Receivables up 25% against revenue up -2% — sales are being booked faster than they are collected.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.88 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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?

Margins are being competed away
EBITDA margin has fallen from 20.7% to 10.4%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Sales are being booked faster than collected
Receivables are up 25% against revenue up -2%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
The price already assumes success
The stock trades 387% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 19.0% to 2.6%. 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.

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

1EBITDA margin holds above 8%✓ 10.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 2.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Free cash flow remains positive✗ -₹8 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.9x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 8%✗ 6.8%
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

3 good · 3 neutral · 5 weak

Market Cap

₹1,886 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

489.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

14.64x

Rich

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

EPS (TTM)

₹1.69

Profitable

Profitable on a per-share basis

ROE

2.6%

Weak

Weak capital efficiency

ROCE

6.8%

Weak

Low return on total capital employed

Debt/Equity

0.57x

Low

Conservative leverage

Revenue Growth (YoY)

6.7%

Modest

Modest growth

Profit Growth (YoY)

29.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.12%

Modest

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

Free Cash Flow

-₹8 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

4.0%

Weak

Thin margins leave little room for error

Net Margin

1.2%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.88

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.42

Defensive

Steadier than the market

52W Range Position

53%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

914.6 / 939.4

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

18.6

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹313 Cr	₹320 Cr	₹305 Cr	₹307 Cr	-0.7%
EBITDA	₹65 Cr	₹62 Cr	₹47 Cr	₹32 Cr	-21.1%
EBITDA Margin	20.7%	19.4%	15.4%	10.4%	—
PAT (Net Profit)	₹20 Cr	₹24 Cr	₹10 Cr	₹3 Cr	-44.9%
EPS	₹8.7	₹10.37	₹4.18	₹1.45	-45.0%
ROE	19.0%	19.2%	7.5%	2.6%	—
ROCE	24.8%	28.1%	18.7%	6.8%	—
Total Debt	₹63 Cr	₹57 Cr	₹53 Cr	₹73 Cr	+4.9%
Free Cash Flow	₹33 Cr	₹29 Cr	₹3 Cr	-₹8 Cr	—

🟡 Revenue has been broadly flat over 3 years (-0.7% a year).

🔴 EBITDA has shrunk at 21.1% a year over 3 years.

🔴 EBITDA Margin has fallen from 20.7% to 10.4% over 3 years (-10.3 pts).

🔴 PAT (Net Profit) has shrunk at 44.9% a year over 3 years.

🔴 EPS has shrunk at 45.0% a year over 3 years.

🔴 ROE has fallen from 19.0% to 2.6% over 3 years (-16.4 pts).

🔴 ROCE has fallen from 24.8% to 6.8% over 3 years (-18.1 pts).

🔴 Total Debt has grown at 4.9% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹33 Cr to -₹8 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹347 Cr

Total Liabilities

₹219 Cr

Cash & Equivalents

₹19 Cr

Operating Cash Flow

₹15 Cr

Capex

-₹23 Cr

Shareholding (proxy)

Institutional Holding

0.7%

Insider Holding

56.3%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

09 Jun 2026

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

3 mixed3 general

Nelco Share Price Falls over 12%: Why the $20 Million Elveo Investment Has Investors Worried

India Infoline, 18 AugPrice 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.

NELCO (NELCO) Share/Stock Price Live, NSE

TechGraph, 09 Oct

Nelco invests $20 mn in US-based Elveo for satellite connectivity; shares fall 12%

Upstox, 18 AugPrice 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.

NELCO Q2 FY27 Preview: Valuation Check

Univest, 17 SeptResults

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

Tata Group stock: Nelco zooms 108% from March low; hits 52-week high

Business Standard, 13 Aug

Nelco Aims For 2028 Direct-To-Device Satellite Launch With $20 Million Investment

Sahi, 19 Aug

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

WeakBusiness Quality · Financial Health · Growth · Profitability · Valuation · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 3 high-severity red flags sit above this conclusion and should be read first.

4 of 5 tripwires tripped — Debt / EBITDA stays below 2x; Free cash flow remains positive; Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑