SEPC Limited

Industrials — Engineering & Construction · NSE

₹5.31−₹0.10 (−1.85%)

DalalBaazaar Score

54 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by 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. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:45 pm

Understanding the Business

Company site ↗

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

What does this company do?

SEPC Limited provides integrated design, engineering, procurement, construction, and project management services in India.

IndustryEngineering & Construction

SectorIndustrials

Employees212

Annual revenue₹1,054 Cr

How does it make money?

Turns over ₹1,054 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 212 employees supports ₹4.97 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹4.97 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., ADANI PORT & SEZ LTD, SIEMENS 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 4.7% 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 ROE14.1%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +178% while net margin moved -492% 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+178%

Margin effect-492%

DalalBaazaar Score

54/ 100

Moderate

Weighted across six categories. Every point is explained below.

• Beta of 0.94 — moves roughly with the market
✗ 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

54/ 100

Average

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

Valuation

55/ 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

40.8x

2Y Median

74.5x

28 monthly readings · mean 79.2x · range 16.7x–185.8x

Sector Median

30.1x

median of 3 sector peers

🟢Current valuation is approximately 45% below its 2y median of 74.5x. 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 36% above the peer median of 30.1x.

vs. its own history

Cheap

74.5x median over 28 months · -45%

vs. sector peers

Expensive

30.1x median of 3 peers · +36%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

12.3x

PEG

—

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from -11.3% to 10.4% over 3 years.
Debt is being paid down
Total debt is down 14% over 3 years.
Return on equity is rising
ROE has improved from -0.5% to 2.8%.
Very low debt
Debt/Equity of 0.18x leaves the balance sheet with plenty of headroom.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Free cash flow negative for 3 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.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 32% 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 -11.3% to 10.4%. 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 45% 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.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 3.2x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
A premium to the sector to defend
It trades 36% 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
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
2 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 31% a year✓ 40.7% CAGR
Latest reported year was 35.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 8%✓ 10.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 3.2x
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✗ -₹264 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 2.5x
How much operating profit can fall before interest stops being comfortably covered.

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 · 2 neutral · 4 weak

Market Cap

₹1,032 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

40.8x

Expensive

Expensive — verify against sector peers

P/B Ratio

0.54x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.13

Profitable

Profitable on a per-share basis

ROE

2.8%

Weak

Weak capital efficiency

ROCE

4.7%

Weak

Low return on total capital employed

Debt/Equity

0.18x

Low

Conservative leverage

Revenue Growth (YoY)

35.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

115.5%

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

-₹264 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

5.8%

Average

Average margins

Net Margin

2.3%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.54

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.94

Market-like

Moves roughly in line with the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

5.2 / 5.5

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

54.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹379 Cr	₹561 Cr	₹598 Cr	₹1,054 Cr	+40.7%
EBITDA	-₹43 Cr	₹175 Cr	₹99 Cr	₹110 Cr	—
EBITDA Margin	-11.3%	31.1%	16.6%	10.4%	—
PAT (Net Profit)	-₹5 Cr	₹23 Cr	₹25 Cr	₹54 Cr	—
EPS	₹-0.04	₹0.15	₹0.15	₹0.3	—
ROE	-0.5%	1.9%	1.6%	2.8%	—
ROCE	6.0%	4.2%	4.4%	4.7%	—
Total Debt	₹409 Cr	₹455 Cr	₹359 Cr	₹353 Cr	-4.8%
Free Cash Flow	₹21 Cr	-₹121 Cr	-₹133 Cr	-₹264 Cr	—

🟢 Revenue has grown at 40.7% a year over 3 years.

🟢 EBITDA has turned positive, from -₹43 Cr to ₹110 Cr.

🟢 EBITDA Margin has risen from -11.3% to 10.4% over 3 years (+21.8 pts).

🟢 PAT (Net Profit) has turned positive, from -₹5 Cr to ₹54 Cr.

🟢 EPS has turned positive, from ₹-0.04 to ₹0.3.

🟢 ROE has risen from -0.5% to 2.8% over 3 years (+3.2 pts).

🔴 ROCE has fallen from 6.0% to 4.7% over 3 years (-1.3 pts).

🟢 Total Debt has shrunk at 4.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹21 Cr to -₹264 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,093 Cr

Total Liabilities

₹1,172 Cr

Cash & Equivalents

₹26 Cr

Operating Cash Flow

-₹263 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

12.5%

Insider Holding

13.0%

Corporate Actions

Ex-Dividend Date

11 Sept 2012

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
ADANI PORT & SEZ LTD	29.9x	14.1%
SIEMENS LTD	88.8x	10.5%

Recent News

1 positive2 mixed3 general

SEPC Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

SEPC Ltd. Share Price Live: Second Straight Session of Gains

Univest, 12 OctPrice 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.

SEPC shares jump 9% on bagging an order worth ₹855 crore from SAIL; here’s what investors need to know

Upstox, 05 AugPrice 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.

SEPC Limited Faces ₹521.46 Crore EPC Subcontract Termination; Enters Arbitration with Shalimar Corp

Sahi, 13 Jul

SEPC Shares Slip After Board Clears Rs 1,530 Crore Share-Swap Deal

Equitypandit, 08 Jul

Rs 1,024-crore market cap, Rs 10,000-crore order book: This penny stock jumps 11% after SAIL deal

The Economic Times, 09 OctOrder win

🟢Potentially positiveOrder wins add to future revenue, though the effect depends on the contract's size against annual sales and on when it is executed.

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health · Growth

MiddlingProfitability · Valuation

WeakBusiness Quality · 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. 2 high-severity red flags sit above this conclusion and should be read first.

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