RACL Geartech Limited

Consumer Cyclical — Auto Parts · NSE

₹1,532.00+₹54.50 (+3.69%)

DalalBaazaar Score

61 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, with modest growth. Nothing on this snapshot stands out as an immediate concern — the usual checks on business quality and management still apply.

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 RACL Geartech Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

RACL Geartech Limited manufactures and sells automotive components.

IndustryAuto Parts

SectorConsumer Cyclical

Employees771

Annual revenue₹457 Cr

How does it make money?

Turns over ₹457 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹30 left at the operating level before interest, tax and depreciation. Each of its 771 employees supports ₹59.3 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹59.3 lakh

Who are its competitors?

The closest listed comparisons in its industry are BOSCH LIMITED, MARUTI SUZUKI INDIA LTD., TVS MOTOR COMPANY LTD, EICHER MOTORS 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?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 23.0%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 13.9% against a peer median of 23.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE23.0%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +35% while net margin moved -3% 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+35%

Margin effect-3%

DalalBaazaar Score

61/ 100

Good

Weighted across six categories. Every point is explained below.

• P/E of 35.8x already prices in growth
• P/E is close to its own historical median of 40.8x
✗ P/B of 5.06x is a steep premium to book

Quality vs. Valuation

Company Quality

66/ 100

Good

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

Valuation

53/ 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

35.8x

2Y Median

40.8x

24 monthly readings · mean 40.7x · range 19.9x–63.6x

Sector Median

45.7x

median of 4 sector peers

🟢Current valuation is approximately 12% below its 2y median of 40.8x. 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% below the peer median of 45.7x.

vs. its own history

Fair

40.8x median over 24 months · -12%

vs. sector peers

Cheap

45.7x median of 4 peers · -22%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

14.9x

PEG

3.82

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 25.3% to 30.0% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
High return on capital employed
ROCE of 23.0% 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 Attention1

Return on equity is falling
ROE has dropped from 22.3% to 13.9% — each rupee of shareholder capital earns less than it did.

Red Flags

1 item require attention · 1 watch

🟡Receivables growing faster than salesFinancial
Receivables up 73% against revenue up 35% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 23.0% 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 25.3% to 30.0%. 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 22% 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?

Sales are being booked faster than collected
Receivables are up 73% against revenue up 35%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 22.3% to 13.9%. 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

1Revenue growth stays above 8% a year✓ 10.5% CAGR
Latest reported year was 31.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 28%✓ 30.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Interest cover stays above 3x✗ 2.8x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹39 Cr
Profit that never becomes cash eventually stops being profit.
5Debt / EBITDA stays below 2x✓ 1.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.

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

4 good · 6 neutral · 1 weak

Market Cap

₹1,809 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

35.8x

Fair

Fairly valued against the generic band

P/B Ratio

5.06x

Rich

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

EPS (TTM)

₹42.81

Profitable

Profitable on a per-share basis

ROE

13.9%

Moderate

Moderate capital efficiency

ROCE

23.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.67x

Moderate

Moderate leverage

Revenue Growth (YoY)

31.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

7.7%

Modest

Slow profit growth

Dividend Yield

0.20%

Modest

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

Free Cash Flow

₹39 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

17.2%

Good

Healthy core-business profitability

Net Margin

9.5%

Average

Average bottom-line conversion

Current Ratio

1.38

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.34

Defensive

Steadier than the market

52W Range Position

61%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1592.1 / 1555.6

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

33.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹338 Cr	₹410 Cr	₹382 Cr	₹457 Cr	+10.5%
EBITDA	₹86 Cr	₹99 Cr	₹100 Cr	₹137 Cr	+17.0%
EBITDA Margin	25.3%	24.2%	26.3%	30.0%	—
PAT (Net Profit)	₹37 Cr	₹39 Cr	₹24 Cr	₹49 Cr	+9.4%
EPS	₹34.72	₹36.54	₹22.05	₹42.04	+6.6%
ROE	22.3%	19.2%	10.5%	13.9%	—
ROCE	24.3%	22.2%	20.2%	23.0%	—
Total Debt	₹203 Cr	₹289 Cr	₹317 Cr	₹236 Cr	+5.0%
Free Cash Flow	-₹18 Cr	-₹61 Cr	₹8 Cr	₹39 Cr	—

🟢 Revenue has grown at 10.5% a year over 3 years.

🟢 EBITDA has grown at 17.0% a year over 3 years.

🟢 EBITDA Margin has risen from 25.3% to 30.0% over 3 years (+4.7 pts).

🟢 PAT (Net Profit) has grown at 9.4% a year over 3 years.

🟢 EPS has grown at 6.6% a year over 3 years.

🔴 ROE has fallen from 22.3% to 13.9% over 3 years (-8.5 pts).

🔴 ROCE has fallen from 24.3% to 23.0% over 3 years (-1.3 pts).

🔴 Total Debt has grown at 5.0% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹18 Cr to ₹39 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹701 Cr

Total Liabilities

₹349 Cr

Cash & Equivalents

₹6 Cr

Operating Cash Flow

₹92 Cr

Capex

-₹53 Cr

Shareholding (proxy)

Institutional Holding

8.5%

Insider Holding

55.5%

Corporate Actions

Dividend Rate

₹3

Ex-Dividend Date

20 Feb 2026

Peer Comparison

Company	P/E	ROE
BOSCH LIMITED	56.9x	15.9%
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TVS MOTOR COMPANY LTD	56.8x	35.8%
EICHER MOTORS LTD	34.7x	23.0%

Recent News

2 mixed4 general

Stocks to buy: Nagaraj Shetti recommends LIC, RACL Geartech shares to buy in the short-term

Livemint, 16 Jul

RACL Geartech soars 14%, hits 52-wk high; what's driving auto parts stock?

Business Standard, 16 Feb

RACL Geartech closes trading window from October 1 for Q2FY27 results

scanx.trade, 30 SeptResults

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

RACL Geartech Share Price Forecast: 3 Year Outlook to 2030

Univest, 23 Jul

CEO Gursharan Singh, RACL Geartech Limited's (NSE:RACLGEAR) largest shareholder sees value of holdings go down 10% after recent drop

Simply Wall Street, 08 Nov

RACL Geartech Stock Falls After Q4 Results; What Investors Are Tracking

Kalkine India, 27 MayResults

🟡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

MiddlingProfitability · Risk

WeakValuation

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.

1 of 5 tripwires tripped — Interest cover stays above 3x · see Key things to watch ↑