Pace Digitek Limited

Technology — Communication Equipment · NSE

₹163.60−₹0.64 (−0.39%)

DalalBaazaar Score

67 / 100

🟢 Good

Verdict

REASONABLE

Risk

High

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

In simple words: Strong business and financial position, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

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

What does this company do?

Pace Digitek Limited operates as a service providers in power management, optic fiber laying, and energy management solutions in India and internationally. It operates through three segments: Telecom, Energy, and Others.

IndustryCommunication Equipment

SectorTechnology

Employees1,537

Annual revenue₹2,641 Cr

How does it make money?

Turns over ₹2,641 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹19 left at the operating level before interest, tax and depreciation. Each of its 1,537 employees supports ₹1.72 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.72 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?Some evidence

ROCE of 16.1% 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 +426% while net margin moved +296% 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+426%

Margin effect+296%

DalalBaazaar Score

67/ 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

71/ 100

Good

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

Valuation

77/ 100

Cheap

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

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

10.6x

1.2Y Median

11.4x

14 monthly readings · mean 11.3x · range 8.7x–13.2x

Sector Median

16.5x

median of 4 sector peers

🟡Currently trading close to its 1.2y median of 11.4x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 36% below the peer median of 16.5x.

vs. its own history

Fair

11.4x median over 14 months · -7%

vs. sector peers

Cheap

16.5x median of 4 peers · -36%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

8.6x

PEG

0.06

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 7.9% to 18.6% over 3 years.
Return on equity is rising
ROE has improved from 4.5% to 13.5%.
Return on capital is rising
ROCE has improved from 8.8% to 16.1%.
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 · 3 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 411% over 3 years, from ₹192 Cr to ₹981 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 803% against revenue up 426% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹932 Cr in the latest year.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 21% 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 7.9% to 18.6%. 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 36% 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?

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 55% a year✓ 73.9% CAGR
Latest reported year was 51.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 17%✓ 18.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹932 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 2.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 13%✓ 16.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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

6 good · 3 neutral · 2 weak

Market Cap

₹3,531 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

10.6x

Cheap

Cheap against the generic band

P/B Ratio

1.46x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹15.48

Profitable

Profitable on a per-share basis

ROE

13.5%

Moderate

Moderate capital efficiency

ROCE

16.1%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.44x

Low

Conservative leverage

Revenue Growth (YoY)

51.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-6.3%

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

-₹932 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

7.5x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

14.7%

Average

Average margins

Net Margin

10.8%

Good

Strong bottom-line conversion

Current Ratio

1.69

Comfortable

Healthy short-term liquidity

52W Range Position

26%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

163.9 / 168.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

44.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹503 Cr	₹2,433 Cr	₹2,439 Cr	₹2,641 Cr	+73.9%
EBITDA	₹40 Cr	₹396 Cr	₹512 Cr	₹492 Cr	+131.7%
EBITDA Margin	7.9%	16.3%	21.0%	18.6%	—
PAT (Net Profit)	₹14 Cr	₹219 Cr	₹268 Cr	₹298 Cr	+175.1%
EPS	₹0.8	₹12.31	₹16.3	₹15.11	+166.1%
ROE	4.5%	40.7%	22.9%	13.5%	—
ROCE	8.8%	61.3%	37.4%	16.1%	—
Total Debt	₹192 Cr	₹494 Cr	₹162 Cr	₹981 Cr	+72.2%
Free Cash Flow	-₹50 Cr	₹208 Cr	-₹212 Cr	-₹932 Cr	—

🟢 Revenue has grown at 73.9% a year over 3 years.

🟢 EBITDA has grown at 131.7% a year over 3 years.

🟢 EBITDA Margin has risen from 7.9% to 18.6% over 3 years (+10.8 pts).

🟢 PAT (Net Profit) has grown at 175.1% a year over 3 years.

🟢 EPS has grown at 166.1% a year over 3 years.

🟢 ROE has risen from 4.5% to 13.5% over 3 years (+9.0 pts).

🟢 ROCE has risen from 8.8% to 16.1% over 3 years (+7.2 pts).

🔴 Total Debt has grown at 72.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹5,314 Cr

Total Liabilities

₹3,062 Cr

Cash & Equivalents

₹270 Cr

Operating Cash Flow

-₹842 Cr

Capex

-₹90 Cr

Shareholding (proxy)

Institutional Holding

3.7%

Insider Holding

71.1%

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

3 positive2 mixed1 general

Pace Digitek unit advances BESS capacity to 10 GWh by Q3 FY27

scanx.trade, 18 OctResults

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

Pace Digitek Unit LPPL Expands Strategic Cooperation with MEGMEET for AI Data Center Power Infrastructure in India

scanx.trade, 18 Oct

Pace Digitek soars 4% after arm bags ₹1,587 million Reliance Industries order

Alice Blue, 24 FebOrder 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.

Pace Digitek shares surge 13% as arm bags ₹488-crore BESS supply order

Business Standard, 22 SeptOrder 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.

Pace Digitek share price jumps over 13% after BESS order win worth ₹488 crore from NGSL

Upstox, 21 SeptOrder win

🟢Potentially positiveOrder wins add to future revenue, though the effect depends on the contract's size against annual sales and on when it is executed.

Pace Digitek Q2 FY27: Date and Expectations

Univest, 10 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

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

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability · Valuation

WeakRisk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 3 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 ↑