Rane (Madras) Limited

Consumer Cyclical — Auto Parts · NSE

₹1,283.00+₹5.40 (+0.42%)

DalalBaazaar Score

62 / 100

🟢 Good

Verdict

REASONABLE

Risk

High

Driven by moderate debt load, short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, with both sales and profits growing well. Short-term liquidity is 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 Rane (Madras) Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Rane (Madras) Limited engages in the manufacture and marketing of auto components for transportation industry in India and internationally.

IndustryAuto Parts

SectorConsumer Cyclical

Employees2,631

Annual revenue₹3,818 Cr

How does it make money?

Turns over ₹3,818 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹9 left at the operating level before interest, tax and depreciation. Each of its 2,631 employees supports ₹1.45 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.45 Cr

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?Some evidence

ROCE of 21.9% 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 ROE23.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +65% while net margin moved +117% 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+65%

Margin effect+117%

DalalBaazaar Score

62/ 100

Good

Weighted across six categories. Every point is explained below.

• ROE of 14.3% is moderate

Quality vs. Valuation

Company Quality

64/ 100

Average

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 reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

29.9x

3Y Median

45.5x

40 monthly readings · mean 48.3x · range 29.0x–84.9x

Sector Median

45.7x

median of 4 sector peers

🟢Current valuation is approximately 34% below its 3y median of 45.5x. 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 35% below the peer median of 45.7x.

vs. its own history

Cheap

45.5x median over 40 months · -34%

vs. sector peers

Cheap

45.7x median of 4 peers · -35%

vs. generic bands

Fair

15x–35x

EV/EBITDA

12.0x

PEG

0.56

What's Good / What's Bad

🟢 What's Going Well4

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on capital is rising
ROCE has improved from 17.5% to 21.9%.
High return on capital employed
ROCE of 21.9% 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

5 items require attention · 1 high · 4 watch

🔴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.
🟡Receivables growing faster than salesFinancial
Receivables up 90% against revenue up 65% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 95% against revenue up 65% — stock may not be moving.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 70% over 3 years — each existing share owns a smaller slice of the company.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.92 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 21.9% 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.
Priced below its own history
The stock trades 34% 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 35% 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 90% against revenue up 65%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 14% a year✓ 18.2% CAGR
Latest reported year was 18.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 7%✓ 9.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Interest cover stays above 3x✓ 3.5x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹28 Cr
Profit that never becomes cash eventually stops being profit.

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

5 good · 6 neutral · 0 weak

Market Cap

₹3,546 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

29.9x

Fair

Fairly valued against the generic band

P/B Ratio

4.72x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹42.87

Profitable

Profitable on a per-share basis

ROE

14.3%

Moderate

Moderate capital efficiency

ROCE

21.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.00x

Moderate

Moderate leverage

Revenue Growth (YoY)

18.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

62.5%

Healthy

Profits growing at a healthy clip

Dividend Yield

1.25%

Modest

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

Free Cash Flow

₹28 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

4.6%

Weak

Thin margins leave little room for error

Net Margin

3.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.92

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.46

Defensive

Steadier than the market

52W Range Position

81%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1329.3 / 1236.9

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

42.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,314 Cr	₹3,413 Cr	₹3,365 Cr	₹3,818 Cr	+18.2%
EBITDA	₹201 Cr	₹297 Cr	₹317 Cr	₹355 Cr	+20.9%
EBITDA Margin	8.7%	8.7%	9.4%	9.3%	—
PAT (Net Profit)	₹30 Cr	₹55 Cr	₹38 Cr	₹107 Cr	+53.0%
EPS	₹18.46	₹19.81	₹13.62	₹38.89	+28.2%
ROE	12.4%	8.3%	5.6%	14.3%	—
ROCE	17.5%	3.3%	15.8%	21.9%	—
Total Debt	₹668 Cr	₹851 Cr	₹813 Cr	₹752 Cr	+4.0%
Free Cash Flow	-₹21 Cr	-₹3 Cr	₹131 Cr	₹28 Cr	—

🟢 Revenue has grown at 18.2% a year over 3 years.

🟢 EBITDA has grown at 20.9% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 9.3% over 3 years.

🟢 PAT (Net Profit) has grown at 53.0% a year over 3 years.

🟢 EPS has grown at 28.2% a year over 3 years.

🟢 ROE has risen from 12.4% to 14.3% over 3 years (+1.9 pts).

🟢 ROCE has risen from 17.5% to 21.9% over 3 years (+4.4 pts).

🔴 Total Debt has grown at 4.0% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹21 Cr to ₹28 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,521 Cr

Total Liabilities

₹1,770 Cr

Cash & Equivalents

₹46 Cr

Operating Cash Flow

₹219 Cr

Capex

-₹191 Cr

Shareholding (proxy)

Institutional Holding

0.1%

Insider Holding

70.8%

Corporate Actions

Dividend Rate

₹16

Ex-Dividend Date

29 Jul 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

1 positive2 mixed3 general

Compare with RANE MADRAS

Equitymaster, 16 Oct

Rane (Madras) Share Price: Fundamentals Near Yearly High

Univest, 06 Oct

Here's What We Like About Rane (Madras)'s (NSE:RML) Upcoming Dividend

Simply Wall Street, 25 JulCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Rane (Madras) Acquires Hindustan Composites Friction Business in ₹370 Crore Strategic Deal

Sahi, 01 Jul

Rane (Madras) shares jump 6%, hit 52-week high after key business update; check details

Upstox, 30 JunPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Rane (Madras) to acquire Hindustan Composites’ friction business for ₹370 crore

CNBC TV18, 30 JunM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Watch Items

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

DalalBaazaar Thesis

StrongGrowth

MiddlingBusiness Quality · Financial Health · Valuation

WeakProfitability · Risk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Debt / EBITDA stays below 2x · see Key things to watch ↑