Sarthak Industries Limited

Industrials — Conglomerates · BSE

₹24.76−₹0.79 (−3.09%)

DalalBaazaar Score

61 / 100

🟢 Good

Verdict

CAUTION

Risk

High

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, 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. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

The 60-second version of Sarthak Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sarthak Industries Limited engages in the trading of agri and non agri-commodities in India. It operates through Cylinders and Merchant Trading segments. The Cylinders segment manufactures, sells, and repairs LPG cylinders.

IndustryConglomerates

SectorIndustrials

Employees28

Annual revenue₹282 Cr

How does it make money?

Turns over ₹282 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹1 left at the operating level before interest, tax and depreciation. Each of its 28 employees supports ₹10.08 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹10.08 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA 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?Little sign of one

Returns on capital of 11.1% 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.

Peer median ROE15.2%

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 +384% while net margin moved -5% 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+384%

Margin effect-5%

DalalBaazaar Score

61/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.25 — 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

58/ 100

Average

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

Valuation

84/ 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

7.8x

3Y Median

30.3x

40 monthly readings · mean 25.8x · range 6.6x–60.3x

Sector Median

88.8x

median of 3 sector peers

🟢Current valuation is approximately 74% below its 3y median of 30.3x. 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 91% below the peer median of 88.8x.

vs. its own history

Cheap

30.3x median over 40 months · -74%

vs. sector peers

Cheap

88.8x median of 3 peers · -91%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

12.8x

PEG

0.12

What's Good / What's Bad

🟢 What's Going Well3

Return on equity is rising
ROE has improved from 2.0% to 7.6%.
Return on capital is rising
ROCE has improved from 4.3% to 11.1%.
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

6 items require attention · 4 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 366% over 3 years, from ₹3 Cr to ₹14 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.
🔴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 598% against revenue up 384% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 12.9x to 4.5x.
🟡Margins are compressingFinancial
EBITDA margin is down 3.1 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 74% 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 91% 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?

Margins are being competed away
EBITDA margin has fallen from 4.1% to 1.0%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 5.0x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
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
4 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 52% a year✓ 69.2% CAGR
Latest reported year was 39.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above -1%✓ 1.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 5.0x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹22 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✓ 11.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 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 · 3 neutral · 3 weak

Market Cap

₹23 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

7.8x

Cheap

Cheap against the generic band

P/B Ratio

0.50x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹3.17

Profitable

Profitable on a per-share basis

ROE

7.6%

Weak

Weak capital efficiency

ROCE

11.1%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.32x

Low

Conservative leverage

Revenue Growth (YoY)

39.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-54.9%

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

-₹22 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

1.3%

Weak

Thin margins leave little room for error

Net Margin

0.9%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.51

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.25

Defensive

Steadier than the market

52W Range Position

18%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

25.3 / 25.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

55.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹58 Cr	₹30 Cr	₹204 Cr	₹282 Cr	+69.2%
EBITDA	₹2 Cr	₹2 Cr	₹4 Cr	₹3 Cr	+6.6%
EBITDA Margin	4.1%	6.1%	2.2%	1.0%	—
PAT (Net Profit)	₹1 Cr	₹1 Cr	₹3 Cr	₹3 Cr	+66.1%
EPS	₹0.82	₹0.73	₹3.04	₹3.75	+66.0%
ROE	2.0%	1.7%	6.7%	7.6%	—
ROCE	4.3%	3.4%	9.5%	11.1%	—
Total Debt	₹3 Cr	₹2 Cr	₹5 Cr	₹14 Cr	+67.0%
Free Cash Flow	-₹8 Cr	-₹2 Cr	-₹15 Cr	-₹22 Cr	—

🟢 Revenue has grown at 69.2% a year over 3 years.

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

🔴 EBITDA Margin has fallen from 4.1% to 1.0% over 3 years (-3.1 pts).

🟢 PAT (Net Profit) has grown at 66.1% a year over 3 years.

🟢 EPS has grown at 66.0% a year over 3 years.

🟢 ROE has risen from 2.0% to 7.6% over 3 years (+5.7 pts).

🟢 ROCE has risen from 4.3% to 11.1% over 3 years (+6.8 pts).

🔴 Total Debt has grown at 67.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹106 Cr

Total Liabilities

₹61 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹22 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

84.0%

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

6 general

Sarthak Industries Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 04 Sept

Sarthak Industries (SARTHAKIND) Share: LPG Cylinders Meets Commodity Trading

Kalkine India, 10 Sept

Sarthak Industries Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 03 Sept

Sarthak Industries Ltd. Peer Comparison – Compare with Others

Value Research, 31 Aug

SARTHAK INDUSTRIES Share Price

Upstox, 12 Apr

Sarthak Metals shareholders approve all AGM resolutions; clarify filing delay

scanx.trade, 19 Aug

Watch Items

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

DalalBaazaar Thesis

StrongGrowth · Valuation

MiddlingBusiness Quality · Financial Health · Profitability

WeakRisk

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

2 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive · see Key things to watch ↑