Panchmahal Steel Limited

Basic Materials — Steel · NSE

₹291.80+₹6.80 (+2.39%)

DalalBaazaar Score

38 / 100

🔴 Weak

Verdict

CAUTION

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 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 Panchmahal Steel Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Panchmahal Steel Limited manufactures and sells stainless steel long products in the form of wire rods, bars, and wires in India and internationally. It offers stainless steel wire rods; cold finished bars for precise engineering; and bars for free machining.

IndustrySteel

SectorBasic Materials

Employees498

Annual revenue₹383 Cr

How does it make money?

Turns over ₹383 Cr a year. Of every ₹100 of sales, about ₹-1 reaches shareholders as profit, with ₹3 left at the operating level before interest, tax and depreciation. Each of its 498 employees supports ₹77.0 lakh of revenue a year, the signature of a people-led business.

EBITDA margin3.5%

Net margin-0.6%

Revenue / employee₹77.0 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, JINDAL STEEL LIMITED, STEEL AUTHORITY OF INDIA. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA STEEL LIMITEDP/E 19.8x · ROE 10.8%

JSW STEEL LIMITEDP/E 12.0x · ROE 24.7%

JINDAL STEEL LIMITEDP/E 39.1x · ROE 5.3%

STEEL AUTHORITY OF INDIAP/E 16.5x · ROE 7.1%

What is its competitive advantage?Little sign of one

Returns on capital of 3.3% 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.

ROCE3.3%

ROE-1.5%

Peer median ROE10.8%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -21% while net margin moved -309% 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-21%

Margin effect-309%

DalalBaazaar Score

38/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 7.7% a year
✗ Profit fell 168.1% in the latest year

Quality vs. Valuation

Company Quality

37/ 100

Weak

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

Valuation

28/ 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

139.6x

Sector Median

18.2x

median of 4 sector peers

⚠️Against its sector it trades 668% above the peer median of 18.2x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

18.2x median of 4 peers · +668%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

139.6x

P/B

3.70x

EV/EBITDA

44.7x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 54% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Very low debt
Debt/Equity of 0.23x leaves the balance sheet with plenty of headroom.

🔴 What Needs Attention0

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

Red Flags

3 items require attention · 2 high · 1 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.2x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹2 Cr in the latest reported year.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 2.0x to 1.2x.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 54% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹25 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

A premium to the sector to defend
It trades 668% 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
2 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

1EBITDA margin holds above 1%✓ 3.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 2.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Interest cover stays above 3x✗ 1.2x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹25 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ 3.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 10 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

Price history

Quick Metrics

3 good · 4 neutral · 4 weak

Market Cap

₹557 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

139.6x

Expensive

Expensive — verify against sector peers

P/B Ratio

3.70x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹2.09

Profitable

Profitable on a per-share basis

ROE

-1.5%

Weak

Weak capital efficiency

ROCE

3.3%

Weak

Low return on total capital employed

Debt/Equity

0.23x

Low

Conservative leverage

Revenue Growth (YoY)

7.3%

Modest

Modest growth

Profit Growth (YoY)

-168.1%

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

₹25 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹291.8

Operating Margin

6.6%

Average

Average margins

Net Margin

1.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.56

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.38

Defensive

Steadier than the market

52W Range Position

45%

Mid-range

Technical Snapshot

RSI (14)

50.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹487 Cr	₹427 Cr	₹382 Cr	₹383 Cr	-7.7%
EBITDA	₹16 Cr	₹19 Cr	₹17 Cr	₹13 Cr	-5.4%
EBITDA Margin	3.2%	4.4%	4.5%	3.5%	—
PAT (Net Profit)	₹1 Cr	₹3 Cr	₹3 Cr	-₹2 Cr	—
EPS	₹0.72	₹1.56	₹1.74	₹-1.19	—
ROE	0.9%	1.9%	2.1%	-1.5%	—
ROCE	4.7%	6.6%	5.4%	3.3%	—
Total Debt	₹76 Cr	₹40 Cr	₹50 Cr	₹35 Cr	-22.8%
Free Cash Flow	-₹37 Cr	₹38 Cr	-₹5 Cr	₹25 Cr	—

🔴 Revenue has shrunk at 7.7% a year over 3 years.

🔴 EBITDA has shrunk at 5.4% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 3.5% over 3 years.

🔴 PAT (Net Profit) has turned negative, from ₹1 Cr to -₹2 Cr.

🔴 EPS has turned negative, from ₹0.72 to ₹-1.19.

🔴 ROE has fallen from 0.9% to -1.5% over 3 years (-2.4 pts).

🔴 ROCE has fallen from 4.7% to 3.3% over 3 years (-1.4 pts).

🟢 Total Debt has shrunk at 22.8% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹37 Cr to ₹25 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹224 Cr

Total Liabilities

₹74 Cr

Total Debt

₹35 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹29 Cr

Capex

-₹3 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

93.1%

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
JINDAL STEEL LIMITED	39.1x	5.3%
STEEL AUTHORITY OF INDIA	16.5x	7.1%

Recent News

1 mixed5 general

Compare with PANCHMAHAL STEEL

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PANCHMAHQ Stock Price and Chart — NSE:PANCHMAHQ

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Panchmahal Steel ਨੂੰ BHEL ਤੋਂ ਮਿਲਿਆ ਵੱਡਾ ਆਰਡਰ, **₹25.25 ਕਰੋੜ** ਦੀ ਡੀਲ ਨਾਲ ਵਧੀ ਕੰਪਨੀ ਦੀ ਰੌਣਕ

Whalesbook, 16 Oct

Panchmahal Steel AGM sees 99% support for all five resolutions

scanx.trade, 25 Sept

Panchmahal Steel Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

Panchmahal Steel Q1 results FY27: PAT Rs 4 Cr, Revenue Rs 93 Cr

Univest, 04 AugResults

🟡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

🔴Business QualityWeak7.5/20

🟢Financial HealthStrong14.7/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak3.2/15

🔴ValuationDemanding5.7/15

🔴RiskHigh4.4/10

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. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 1%3.5%
✗Debt / EBITDA stays below 2x2.7x
✗Interest cover stays above 3x1.2x
✓Free cash flow remains positive₹25 Cr
✗ROCE stays above 8%3.3%