Sattrix Information Security Limited

Technology — Software - Infrastructure · BSE

₹286.00+₹3.00 (+1.06%)

DalalBaazaar Score

58 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

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

What does this company do?

Sattrix Information Security Limited provides information security solutions and related services internationally.

IndustrySoftware - Infrastructure

SectorTechnology

Employees207

Annual revenue₹61 Cr

How does it make money?

Turns over ₹61 Cr a year. Of every ₹100 of sales, about ₹13 reaches shareholders as profit, with ₹21 left at the operating level before interest, tax and depreciation. Each of its 207 employees supports ₹29.4 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹29.4 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO 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?Little sign of one

Returns on capital of 5.7% 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 ROE32.0%

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 +66% while net margin moved +21% 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+66%

Margin effect+21%

DalalBaazaar Score

58/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Beta of 1.51 — amplifies market moves in both directions
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ 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

61/ 100

Average

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

Valuation

59/ 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

25.8x

3Y Median

56.4x

30 monthly readings · mean 53.2x · range 28.7x–71.7x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 54% below its 3y median of 56.4x. 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 56% above the peer median of 16.5x.

vs. its own history

Cheap

56.4x median over 30 months · -54%

vs. sector peers

Expensive

16.5x median of 4 peers · +56%

vs. generic bands

Fair

15x–35x

EV/EBITDA

24.8x

PEG

0.98

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 16.6% to 21.4% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 33.5% to 4.0% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 48.8% to 5.7% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 3 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 216% over 3 years, from ₹2 Cr to ₹6 Cr.
🔴High leverageFinancial
Debt/Equity of 3.04x — earnings must service borrowings before shareholders see anything.
🔴Receivables growing faster than salesFinancial
Receivables up 152% against revenue up 66% — sales are being booked faster than they are collected.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹150 Cr in the latest year.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 67% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 16.6% to 21.4%. 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 54% 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.
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?

Leverage amplifies any setback
Debt/Equity of 3.04x. Interest is payable whether or not the business has a good year.
Sales are being booked faster than collected
Receivables are up 152% against revenue up 66%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 56% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 33.5% to 4.0%. 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.
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.

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

1Revenue growth stays above 14% a year✓ 18.5% CAGR
Latest reported year was 46.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 19%✓ 21.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹150 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✗ 5.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 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

3 good · 4 neutral · 4 weak

Market Cap

₹325 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

25.8x

Fair

Fairly valued against the generic band

P/B Ratio

1.60x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹11.1

Profitable

Profitable on a per-share basis

ROE

6.8%

Weak

Weak capital efficiency

ROCE

5.7%

Weak

Low return on total capital employed

Debt/Equity

3.04x

High

High leverage

Revenue Growth (YoY)

46.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

44.2%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹153 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

4.8%

Average

Average asset productivity

Operating Margin

23.4%

Good

Healthy core-business profitability

Net Margin

13.5%

Good

Strong bottom-line conversion

Current Ratio

2.40

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

1.51

High swing

Swings more than the market in both directions

52W Range Position

27%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

317.2 / 331.8

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

24.2

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹37 Cr	₹40 Cr	₹45 Cr	₹61 Cr	+18.5%
EBITDA	₹6 Cr	₹3 Cr	₹7 Cr	₹13 Cr	+29.0%
EBITDA Margin	16.6%	8.2%	16.5%	21.4%	—
PAT (Net Profit)	₹4 Cr	₹2 Cr	₹4 Cr	₹8 Cr	+26.4%
EPS	₹5.88	₹2.65	₹6.27	—	—
ROE	33.5%	13.3%	11.1%	4.0%	—
ROCE	48.8%	21.8%	16.3%	5.7%	—
Total Debt	₹2 Cr	₹0 Cr	₹2 Cr	₹6 Cr	+46.8%
Free Cash Flow	₹1 Cr	₹7 Cr	-₹15 Cr	-₹150 Cr	—

🟢 Revenue has grown at 18.5% a year over 3 years.

🟢 EBITDA has grown at 29.0% a year over 3 years.

🟢 EBITDA Margin has risen from 16.6% to 21.4% over 3 years (+4.8 pts).

🟢 PAT (Net Profit) has grown at 26.4% a year over 3 years.

🔴 ROE has fallen from 33.5% to 4.0% over 3 years (-29.5 pts).

🔴 ROCE has fallen from 48.8% to 5.7% over 3 years (-43.2 pts).

🔴 Total Debt has grown at 46.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹1 Cr to -₹150 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹231 Cr

Total Liabilities

₹28 Cr

Cash & Equivalents

₹7 Cr

Operating Cash Flow

₹2 Cr

Capex

-₹152 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

77.3%

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

1 mixed5 general

Sattrix Information Security Lower Circuit Today

Univest, 08 Oct

Compare with

Equitymaster, 17 Oct

Sattrix Signs Strategic Alliance; Shares Trade Higher

HDFC Sky, 14 JulPrice 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.

87% Returns in 1 Year: This Small-Cap Cybersecurity Stock Jumps 7% After Securing Rs 9,30,00,000 Public Sector Bank Order

Dalal Street Investment Journal, 07 Jul

Cybersecurity: How Vijay Kedia's new-age thematic play handed him 3 multibagger stocks

The Economic Times, 16 Jul

Sattrix Information Security Completes Board-Approved Share Allotment Worth Rs. 157.83 Crores

scanx.trade, 10 Feb

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

StrongGrowth

MiddlingBusiness Quality · Financial Health · Profitability · Valuation

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

2 of 5 tripwires tripped — Free cash flow remains positive; ROCE stays above 8% · see Key things to watch ↑