Sungarner Energies Limited

Sector n/a · NSE

₹360.10−₹10.55 (−2.85%)

DalalBaazaar Score

57 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Very High

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

In simple words: Strong business and financial position, 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, 6:08 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

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

How does it make money?

Turns over ₹74 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹11 left at the operating level before interest, tax and depreciation.

EBITDA margin10.8%

Net margin5.2%

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 24.6%. Returns that high normally get competed away; when they persist, something is protecting them. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE24.6%

ROE25.4%

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 +329% while net margin moved +20% 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+329%

Margin effect+20%

DalalBaazaar Score

57/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ 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

63/ 100

Average

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

Valuation

60/ 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.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

No P/E available

P/E (Trailing)

—

P/B

—

EV/EBITDA

13.7x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 9.0% to 10.8% over 3 years.
High return on capital employed
ROCE of 24.6% 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 Attention3

Debt is rising
Total debt is up 543% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on capital is falling
ROCE has declined from 38.1% to 24.6% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 3 high

🔴Debt has risen sharplyFinancial
Total debt is up 543% over 3 years, from ₹4 Cr to ₹27 Cr.
🔴High leverageFinancial
Debt/Equity of 1.81x — earnings must service borrowings before shareholders see anything.
🔴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.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 24.6% 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 9.0% to 10.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
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?

The debt load needs earnings to hold up
Debt is 3.4x 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
3 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 47% a year✓ 62.4% CAGR
Latest reported year was 121.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 9%✓ 10.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 3.4x
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✗ -₹5 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✓ 3.9x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

6 / 9 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
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 5 neutral · 2 weak

Market Cap

₹83 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not available

No data

Source didn't return this field

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

Not available

No data

Source didn't return this field

ROE

25.4%

Strong

Strong capital efficiency

ROCE

24.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.81x

High

High leverage

Revenue Growth (YoY)

121.6%

Healthy

Healthy top-line growth

Profit Growth (YoY)

131.1%

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

-₹5 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹360.1

Gross Margin

23.5%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

5.2%

Average

Average bottom-line conversion

Current Ratio

1.35

Comfortable

Healthy short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

329.0 / 315.9

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

31.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹17 Cr	₹18 Cr	₹33 Cr	₹74 Cr	+62.4%
EBITDA	₹2 Cr	₹2 Cr	₹4 Cr	₹8 Cr	+72.9%
EBITDA Margin	9.0%	11.8%	10.7%	10.8%	—
PAT (Net Profit)	₹1 Cr	₹1 Cr	₹2 Cr	₹4 Cr	+72.7%
EPS	₹3.2	₹5.22	—	—	—
ROE	23.2%	11.2%	14.7%	25.4%	—
ROCE	38.1%	19.1%	20.0%	24.6%	—
Total Debt	₹4 Cr	₹6 Cr	₹14 Cr	₹27 Cr	+85.9%
Free Cash Flow	-₹3 Cr	-₹11 Cr	-₹7 Cr	-₹5 Cr	—

🟢 Revenue has grown at 62.4% a year over 3 years.

🟢 EBITDA has grown at 72.9% a year over 3 years.

🟢 EBITDA Margin has risen from 9.0% to 10.8% over 3 years (+1.8 pts).

🟢 PAT (Net Profit) has grown at 72.7% a year over 3 years.

🟢 ROE has risen from 23.2% to 25.4% over 3 years (+2.2 pts).

🔴 ROCE has fallen from 38.1% to 24.6% over 3 years (-13.5 pts).

🔴 Total Debt has grown at 85.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹71 Cr

Total Liabilities

₹56 Cr

Total Debt

₹27 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹3 Cr

Capex

-₹9 Cr

Recent News

1 positive5 general

Here's Why We Think Sungarner Energies (NSE:SEL) Might Deserve Your Attention Today

Simply Wall Street, 23 Jul

Sungarner Energies IPO: Check GMP, subscription status on day 3, other details to know

Livemint, 23 Aug

Sungarner Energies (NSEI:SEL) - Stock Analysis

Simply Wall Street, 31 Aug

After debut at 200% premium, Sungarner Energies sees selling pressure

Moneycontrol.com, 31 Aug

Green energy stock jumps after it receives order for 13.5 MW solar power plants in Rajasthan

Alice Blue, 07 JanOrder win

🟢Potentially positiveAn order or contract win, which adds to future revenue. How much depends on its size against annual sales and on when it is executed.

Sungarner Energies Ltd Peer Comparison – Compare with Others

Value Research, 30 Aug

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Sector/industry classification unavailable — verify manually for peer comparison.
3 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

🟡Business QualityAdequate9.6/20

🔴Financial HealthStretched7.7/20

🟢GrowthStrong18.5/20

🟢ProfitabilityStrong11.5/15

🟡ValuationFair7.5/15

🔴RiskHigh2.5/10

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.

This thesis breaks if

✓Revenue growth stays above 47% a year62.4% CAGR
✓EBITDA margin holds above 9%10.8%
✗Debt / EBITDA falls below 3x3.4x
✗Free cash flow remains positive-₹5 Cr
✓Interest cover stays above 3x3.9x