Palco Metals Limited

Basic Materials — Aluminum · BSE

₹204.05−₹9.65 (−4.52%)

DalalBaazaar Score

68 / 100

🟢 Good

Verdict

REASONABLE

Risk

High

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

In simple words: Strong business and financial position, with both sales and profits growing well. 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 Palco Metals Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Palco Metals Limited, through its subsidiary, Palco Recycle Industries Limited, engages in the manufacture and sale of aluminum wire and deoxident in India. It offers aluminum ingots, notch bars, shots, and alloys, as well as wire rods and cables.

IndustryAluminum

SectorBasic Materials

Annual revenue₹293 Cr

How does it make money?

Turns over ₹293 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹5 left at the operating level before interest, tax and depreciation.

Who are its competitors?

The closest listed comparisons in its industry are HINDALCO INDUSTRIES LTD, VEDANTA LIMITED, TATA STEEL LIMITED, JSW STEEL LIMITED. 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 36.0% 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 ROE18.7%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +84% while net margin moved +149% 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+84%

Margin effect+149%

DalalBaazaar Score

68/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.43 — 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

Quality vs. Valuation

Company Quality

70/ 100

Good

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

Valuation

75/ 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

10.7x

3Y Median

20.3x

40 monthly readings · mean 19.3x · range 5.9x–38.1x

Sector Median

12.2x

median of 4 sector peers

🟢Current valuation is approximately 47% below its 3y median of 20.3x. 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 is priced broadly in line with the peer median of 12.2x.

vs. its own history

Cheap

20.3x median over 40 months · -47%

vs. sector peers

Fair

12.2x median of 4 peers · -12%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

8.3x

PEG

0.16

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 2.5% to 4.5% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from 9.0% to 35.4%.
Return on capital is rising
ROCE has improved from 11.8% to 36.0%.
High return on capital employed
ROCE of 36.0% 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 Attention0

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

Red Flags

3 items require attention · 3 high

🔴High leverageFinancial
Debt/Equity of 1.52x — earnings must service borrowings before shareholders see anything.
🔴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 201% against revenue up 84% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 36.0% 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 2.5% to 4.5%. 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 47% 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 1.52x. Interest is payable whether or not the business has a good year.
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 17% a year✓ 22.5% CAGR
Latest reported year was 23.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 3%✓ 4.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Interest cover stays above 3x✓ 3.8x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹7 Cr
Profit that never becomes cash eventually stops being profit.

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

₹82 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

10.7x

Cheap

Cheap against the generic band

P/B Ratio

4.51x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹19.13

Profitable

Profitable on a per-share basis

ROE

35.4%

Strong

Strong capital efficiency

ROCE

36.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.52x

High

High leverage

Revenue Growth (YoY)

23.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

475.8%

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

₹7 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

3.3%

Weak

Thin margins leave little room for error

Net Margin

2.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.20

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.43

Defensive

Steadier than the market

52W Range Position

66%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

190.0 / 166.6

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

68.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹160 Cr	₹194 Cr	₹246 Cr	₹293 Cr	+22.5%
EBITDA	₹4 Cr	₹8 Cr	₹13 Cr	₹13 Cr	+49.2%
EBITDA Margin	2.5%	3.9%	5.3%	4.5%	—
PAT (Net Profit)	₹1 Cr	₹5 Cr	₹6 Cr	₹6 Cr	+65.9%
EPS	₹3.49	₹6.24	₹15.78	₹15.96	+65.9%
ROE	9.0%	26.7%	54.3%	35.4%	—
ROCE	11.8%	15.7%	38.0%	36.0%	—
Total Debt	₹26 Cr	₹36 Cr	₹37 Cr	₹29 Cr	+4.3%
Free Cash Flow	-₹6 Cr	-₹1 Cr	₹28 Cr	₹7 Cr	—

🟢 Revenue has grown at 22.5% a year over 3 years.

🟢 EBITDA has grown at 49.2% a year over 3 years.

🟢 EBITDA Margin has risen from 2.5% to 4.5% over 3 years (+2.0 pts).

🟢 PAT (Net Profit) has grown at 65.9% a year over 3 years.

🟢 EPS has grown at 65.9% a year over 3 years.

🟢 ROE has risen from 9.0% to 35.4% over 3 years (+26.5 pts).

🟢 ROCE has risen from 11.8% to 36.0% over 3 years (+24.2 pts).

🔴 Total Debt has grown at 4.3% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹6 Cr to ₹7 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹98 Cr

Total Liabilities

₹80 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹8 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

42.1%

Peer Comparison

Company	P/E	ROE
HINDALCO INDUSTRIES LTD	12.3x	12.0%
VEDANTA LIMITED	10.4x	18.7%
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%

Recent News

1 positive5 general

Palco Metals Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Palco Metals unsecured creditors approve amalgamation with Palco Recycle

scanx.trade, 27 Jul

Palco Metals consolidated net profit rises 484.62% in the June 2026 quarter

Business Standard, 11 AugResults

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

Palco Metals Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 30 Aug

Palco Metals adopts FY26 financials, re-appoints Naman Naredi at 65th AGM

scanx.trade, 28 Sept

Palco Metals (BSE:539121) - Stock Analysis

Simply Wall Street, 04 Jan

Watch Items

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

DalalBaazaar Thesis

StrongGrowth · Profitability · Valuation

MiddlingBusiness Quality · Financial Health

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 — Debt / EBITDA stays below 2x · see Key things to watch ↑