R M Drip and Sprinklers Systems Limited

Industrials — Farm & Heavy Construction Machinery · NSE

₹21.14+₹1.00 (+4.97%)

DalalBaazaar Score

73 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

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

In simple words: Strong business and financial position, 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, 6:58 pm

Understanding the Business

Company site ↗

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

What does this company do?

R M Drip and Sprinklers Systems Limited designs, manufactures, and sells micro irrigation equipment and components in India.

IndustryFarm & Heavy Construction Machinery

SectorIndustrials

Employees127

Annual revenue₹197 Cr

How does it make money?

Turns over ₹197 Cr a year. Of every ₹100 of sales, about ₹18 reaches shareholders as profit, with ₹29 left at the operating level before interest, tax and depreciation. Each of its 127 employees supports ₹1.55 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.55 Cr

Who are its competitors?

The closest listed comparisons in its industry are MAHINDRA & MAHINDRA LTD, ASHOK LEYLAND LTD, TATA MOTORS LIMITED, LARSEN & TOUBRO 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 33.6% 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 ROE24.4%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +1702% while net margin moved +6609% 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+1702%

Margin effect+6609%

DalalBaazaar Score

73/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.73 — historically steadier than the index
✗ 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

78/ 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

10.0x

3Y Median

159.3x

40 monthly readings · mean 901.4x · range 25.3x–4223.1x

Sector Median

27.6x

median of 4 sector peers

🟢Current valuation is approximately 94% below its 3y median of 159.3x. 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 trades 64% below the peer median of 27.6x.

vs. its own history

Cheap

159.3x median over 40 months · -94%

vs. sector peers

Cheap

27.6x median of 4 peers · -64%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

16.8x

PEG

0.01

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 16.3% to 28.8% over 3 years.
Return on equity is rising
ROE has improved from 0.2% to 31.5%.
Return on capital is rising
ROCE has improved from 5.2% to 33.6%.
High return on capital employed
ROCE of 33.6% 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 · 2 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 609% over 3 years, from ₹8 Cr to ₹54 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 273% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 33.6% 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 16.3% to 28.8%. 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 94% 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.
Cheaper than its peers
It trades 64% 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
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

1Revenue growth stays above 122% a year✓ 162.2% CAGR
Latest reported year was 32.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 27%✓ 28.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹21 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.9x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 31%✓ 33.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

6 good · 3 neutral · 2 weak

Market Cap

₹905 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

10.0x

Cheap

Cheap against the generic band

P/B Ratio

8.17x

Rich

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

EPS (TTM)

₹2.11

Profitable

Profitable on a per-share basis

ROE

31.5%

Strong

Strong capital efficiency

ROCE

33.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.48x

Low

Conservative leverage

Revenue Growth (YoY)

32.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

0.0%

Modest

Slow profit growth

Dividend Yield

0.14%

Modest

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

Free Cash Flow

-₹21 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

20.0%

Good

Healthy core-business profitability

Net Margin

16.9%

Good

Strong bottom-line conversion

Current Ratio

3.07

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.73

Defensive

Steadier than the market

52W Range Position

11%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

22.5 / 21.0

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

21.5

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹11 Cr	₹50 Cr	₹131 Cr	₹197 Cr	+162.2%
EBITDA	₹2 Cr	₹12 Cr	₹36 Cr	₹57 Cr	+216.8%
EBITDA Margin	16.3%	24.9%	27.6%	28.8%	—
PAT (Net Profit)	₹0 Cr	₹5 Cr	₹24 Cr	₹35 Cr	+965.3%
EPS	₹0	₹0.15	₹0.56	₹0.82	+604.8%
ROE	0.2%	14.4%	31.2%	31.5%	—
ROCE	5.2%	18.5%	34.3%	33.6%	—
Total Debt	₹8 Cr	₹6 Cr	₹26 Cr	₹54 Cr	+92.1%
Free Cash Flow	-₹2 Cr	-₹20 Cr	-₹35 Cr	-₹21 Cr	—

🟢 Revenue has grown at 162.2% a year over 3 years.

🟢 EBITDA has grown at 216.8% a year over 3 years.

🟢 EBITDA Margin has risen from 16.3% to 28.8% over 3 years (+12.5 pts).

🟢 PAT (Net Profit) has grown at 965.3% a year over 3 years.

🟢 EPS has grown at 604.8% a year over 3 years.

🟢 ROE has risen from 0.2% to 31.5% over 3 years (+31.3 pts).

🟢 ROCE has risen from 5.2% to 33.6% over 3 years (+28.4 pts).

🔴 Total Debt has grown at 92.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹210 Cr

Total Liabilities

₹97 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

-₹13 Cr

Capex

-₹8 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

71.3%

Corporate Actions

Dividend Rate

₹0.03

Ex-Dividend Date

23 Sept 2026

Peer Comparison

Company	P/E	ROE
MAHINDRA & MAHINDRA LTD	17.8x	19.7%
ASHOK LEYLAND LTD	25.2x	24.4%
TATA MOTORS LIMITED	37.1x	32.8%
LARSEN & TOUBRO LTD.	30.1x	15.2%

Recent News

2 mixed4 general

RM Drip and Sprinklers System Upper Circuit Today

Univest, 16 Oct

If EPS Growth Is Important To You, R M Drip and Sprinklers Systems (NSE:RMDRIP) Presents An Opportunity

Simply Wall Street, 13 Oct

ED raids RM Drip and R&B Denims: Investigates 6 cities including Mumbai

Bhaskar English, 16 Oct

Cheap shares, WhatsApp tips, then a crash: ED probes stock manipulation case

India Today, 16 OctPrice 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.

RM Drip Allots Bonus Shares In 5:7 Ratio; Shares Fall 3.17%

HDFC Sky, 13 AprPrice 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.

ED raids 29 premises in six cities in stock market rigging case

Tehelka, 16 Oct

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

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. 2 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 ↑