SEDEMAC Mechatronics Limited

Consumer Cyclical — Auto Parts · NSE

₹3,259.90+₹69.80 (+2.19%)

DalalBaazaar Score

68 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by negative free cash flow, small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:00 pm

Understanding the Business

Company site ↗

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

What does this company do?

SEDEMAC Mechatronics Limited provides electronic control units to original equipment manufacturers in the mobility and industrial markets in India, the United States, and Europe. It operates in two segments, Mobility and Industrial.

IndustryAuto Parts

SectorConsumer Cyclical

Employees500

Annual revenue₹1,055 Cr

How does it make money?

Turns over ₹1,055 Cr a year. Of every ₹100 of sales, about ₹10 reaches shareholders as profit, with ₹21 left at the operating level before interest, tax and depreciation. Each of its 500 employees supports ₹2.11 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.11 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 31.0% 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 is the outlook?

3 analysts covering the stock expect revenue to grow about 29.3% and earnings to grow about 36.6% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+29.3%

Est. earnings growth+36.6%

Analysts3

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +150% while net margin moved +383% 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+150%

Margin effect+383%

DalalBaazaar Score

68/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 120.1x is demanding — it needs sustained high growth to justify
✗ P/B of 31.80x is a steep premium to book

Quality vs. Valuation

Company Quality

83/ 100

Excellent

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

Valuation

37/ 100

Expensive

What you are being asked to pay, ignoring how good the business is.

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

120.1x

Sector Median

45.7x

median of 4 sector peers

⚠️Against its sector it trades 163% above the peer median of 45.7x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

45.7x median of 4 peers · +163%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

65.2x

PEG

0.93

What's Good / What's Bad

🟢 What's Going Well7

Margins are improving
EBITDA margin is up from 12.9% to 21.0% over 3 years.
Debt is being paid down
Total debt is down 31% over 3 years.
Return on equity is rising
ROE has improved from 7.5% to 23.1%.
Return on capital is rising
ROCE has improved from 13.8% to 31.0%.
High return on capital employed
ROCE of 31.0% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.16x leaves the balance sheet with plenty of headroom.
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

2 items require attention · 1 high · 1 watch

🔴Receivables growing faster than salesFinancial
Receivables up 777% against revenue up 150% — sales are being booked faster than they are collected.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹47 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 31.0% 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 12.9% to 21.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 31% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
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 777% against revenue up 150%. 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 163% above the peer median. That premium needs a reason that persists, or it closes.
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
Small 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 27% a year✓ 35.7% CAGR
Latest reported year was 42.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 19%✓ 21.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹47 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 28%✓ 31.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 12 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
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

6 good · 2 neutral · 3 weak

Market Cap

₹14,399 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

120.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

31.80x

Rich

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

EPS (TTM)

₹27.14

Profitable

Profitable on a per-share basis

ROE

23.1%

Strong

Strong capital efficiency

ROCE

31.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.16x

Low

Conservative leverage

Revenue Growth (YoY)

42.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

90.6%

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

-₹47 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

57.3x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

13.8%

Average

Average margins

Net Margin

10.4%

Good

Strong bottom-line conversion

Current Ratio

1.38

Comfortable

Healthy short-term liquidity

52W Range Position

83%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

3285.7 / 3128.2

Bullish alignment (short > long)

RSI (14)

36.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹422 Cr	₹529 Cr	₹657 Cr	₹1,055 Cr	+35.7%
EBITDA	₹54 Cr	₹84 Cr	₹130 Cr	₹222 Cr	+59.9%
EBITDA Margin	12.9%	16.0%	19.8%	21.0%	—
PAT (Net Profit)	₹9 Cr	₹6 Cr	₹47 Cr	₹104 Cr	+129.5%
EPS	₹1.94	₹1.33	₹10.65	₹23.52	+129.7%
ROE	7.5%	4.7%	15.5%	23.1%	—
ROCE	13.8%	25.2%	23.3%	31.0%	—
Total Debt	₹104 Cr	₹115 Cr	₹64 Cr	₹72 Cr	-11.5%
Free Cash Flow	₹22 Cr	-₹6 Cr	₹5 Cr	-₹47 Cr	—

🟢 Revenue has grown at 35.7% a year over 3 years.

🟢 EBITDA has grown at 59.9% a year over 3 years.

🟢 EBITDA Margin has risen from 12.9% to 21.0% over 3 years (+8.2 pts).

🟢 PAT (Net Profit) has grown at 129.5% a year over 3 years.

🟢 EPS has grown at 129.7% a year over 3 years.

🟢 ROE has risen from 7.5% to 23.1% over 3 years (+15.6 pts).

🟢 ROCE has risen from 13.8% to 31.0% over 3 years (+17.1 pts).

🟢 Total Debt has shrunk at 11.5% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹22 Cr to -₹47 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹814 Cr

Total Liabilities

₹365 Cr

Cash & Equivalents

₹7 Cr

Operating Cash Flow

₹128 Cr

Capex

-₹175 Cr

Shareholding (proxy)

Institutional Holding

40.1%

Insider Holding

40.4%

Analyst Consensus

Recommendations

3 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹3,558.33

+9.2% vs CMP

Target Range

₹3,075 – ₹4,000

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

Half Yearly Results, Half yearly Earnings for SEDEMAC Mechatronics

The Economic Times, 16 OctResults

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

Sedemac Mechatronics shares can rally to Rs 3,700? Here’s why HSBC initiated coverage on the stock

The Economic Times, 31 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.

NRJN Trust, Others Sell Sedemac Stake for ₹1,469 Cr

HDFC Sky, 25 Sept

Stocks to watch, Sept 25: PB Fintech, SAIL, Sedemac Mechatronics, Dr Lal Pathlabs, Genesys International, Wheels India

Upstox, 24 Sept

Sedemac Mechatronics stock analysis - Tech Edge Meets Rich Pricing

Alice Blue, 08 Oct

Sedemac Mechatronics hits new high; up 117% from IPO issue price in 3 mths

Business Standard, 12 Jun

Watch Items

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

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Growth · Profitability

WeakValuation · Risk

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑