Shah Alloys Limited

Basic Materials — Steel · NSE

₹76.02−₹1.10 (−1.43%)

DalalBaazaar Score

64 / 100

🟢 Good

Verdict

REASONABLE

Risk

High

Driven by short-term liabilities exceed short-term assets, negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, but sales are shrinking. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 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

Company site ↗

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

What does this company do?

Shah Alloys Limited engages in the manufacture and sale of stainless steel, alloy and special steel, carbon/mild steel, and armor steel products in India and internationally.

IndustrySteel

SectorBasic Materials

Employees16

Annual revenue₹37 Cr

How does it make money?

Turns over ₹37 Cr a year. Of every ₹100 of sales, about ₹289 reaches shareholders as profit, with ₹19 left at the operating level before interest, tax and depreciation. Each of its 16 employees supports ₹2.33 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin19.2%

Net margin289.1%

Revenue / employee₹2.33 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, JINDAL STEEL LIMITED, STEEL AUTHORITY OF INDIA. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA STEEL LIMITEDP/E 19.8x · ROE 10.8%

JSW STEEL LIMITEDP/E 12.0x · ROE 24.7%

JINDAL STEEL LIMITEDP/E 39.1x · ROE 5.3%

STEEL AUTHORITY OF INDIAP/E 16.5x · ROE 7.1%

What is its competitive advantage?Some evidence

ROCE of 115.6% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE115.6%

ROE96.1%

Peer median ROE10.8%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -94% while net margin moved -56476% 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-94%

Margin effect-56476%

DalalBaazaar Score

64/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 61.0% a year
✗ Latest-year revenue growth of -86.0% is below the longer-term trend — momentum is fading

Quality vs. Valuation

Company Quality

62/ 100

Average

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

Valuation

69/ 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

3.6x

Sector Median

18.2x

median of 4 sector peers

🟢Against its sector it trades 80% below the peer median of 18.2x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

18.2x median of 4 peers · -80%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

3.6x

P/B

1.34x

EV/EBITDA

29.7x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 1.1% to 19.2% over 3 years.
Debt is being paid down
Total debt is down 15% over 3 years.
Return on equity is rising
ROE has improved from -10.5% to 96.1%.
Return on capital is rising
ROCE has improved from -3.8% to 115.6%.
High return on capital employed
ROCE of 115.6% is the mark of a business that converts capital into profit efficiently.

🔴 What Needs Attention2

Free cash flow is negative
The business is not currently covering its capital spending from operations.
Short-term liquidity is tight
Current ratio of 0.50 — near-term obligations exceed near-term assets.

Red Flags

3 items require attention · 1 high · 2 watch

🔴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.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹90 Cr in the latest year.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.50 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 115.6% 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 1.1% to 19.2%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 80% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 8.8x 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.

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

1EBITDA margin holds above 17%✓ 19.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 8.8x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹90 Cr
Profit that never becomes cash eventually stops being profit.
4ROCE stays above 113%✓ 115.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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

7 good · 2 neutral · 2 weak

Market Cap

₹151 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

3.6x

Cheap

Cheap against the generic band

P/B Ratio

1.34x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹21.05

Profitable

Profitable on a per-share basis

ROE

96.1%

Strong

Strong capital efficiency

ROCE

115.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.56x

Low

Conservative leverage

Revenue Growth (YoY)

-86.0%

Shrinking

Sales are contracting

Profit Growth (YoY)

645.9%

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

-₹90 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹76.02

Operating Margin

9.1%

Average

Average margins

Net Margin

796.0%

Good

Strong bottom-line conversion

Current Ratio

0.50

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.19

Defensive

Steadier than the market

52W Range Position

36%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

84.4 / 86.1

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

9.2

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹626 Cr	₹592 Cr	₹267 Cr	₹37 Cr	-61.0%
EBITDA	₹7 Cr	₹4 Cr	-₹12 Cr	₹7 Cr	+0.8%
EBITDA Margin	1.1%	0.6%	-4.5%	19.2%	—
PAT (Net Profit)	-₹3 Cr	-₹19 Cr	-₹20 Cr	₹108 Cr	—
EPS	₹-1.62	₹-9.42	₹-9.97	₹54.42	—
ROE	-10.5%	-165.8%	—	96.1%	—
ROCE	-3.8%	-80.7%	—	115.6%	—
Total Debt	₹74 Cr	₹80 Cr	₹79 Cr	₹63 Cr	-5.1%
Free Cash Flow	₹43 Cr	-₹12 Cr	₹7 Cr	-₹90 Cr	—

🔴 Revenue has shrunk at 61.0% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (0.8% a year).

🟢 EBITDA Margin has risen from 1.1% to 19.2% over 3 years (+18.0 pts).

🟢 PAT (Net Profit) has turned positive, from -₹3 Cr to ₹108 Cr.

🟢 EPS has turned positive, from ₹-1.62 to ₹54.42.

🟢 ROE has risen from -10.5% to 96.1% over 3 years (+106.6 pts).

🟢 ROCE has risen from -3.8% to 115.6% over 3 years (+119.4 pts).

🟢 Total Debt has shrunk at 5.1% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹43 Cr to -₹90 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹208 Cr

Total Liabilities

₹95 Cr

Total Debt

₹63 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

-₹71 Cr

Capex

-₹19 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

64.1%

Corporate Actions

Ex-Dividend Date

06 Sept 2007

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
JINDAL STEEL LIMITED	39.1x	5.3%
STEEL AUTHORITY OF INDIA	16.5x	7.1%

Recent News

2 mixed4 general

Shah Alloys Limited (SHAHALLOYS.NS) Eases to ₹85.42 as Traders Watch ₹81.15 Support Zone - Hull Moving Average

https://www.siam.in/, 02 Oct

Shah Alloys seeks nod for steel plant restructuring, new business objects

scanx.trade, 24 Aug

Shah Alloys Ltd. Share Price Up 8.77%: Price, Valuation

Univest, 18 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.

Shah Alloys Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Shah Alloys Stock Gains Despite June Quarter Loss

Kalkine India, 28 AugResults

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

Shah Alloys Share Price News: Price Action and Valuation

Univest, 28 Aug

Watch Items

Revenue growth is negative (-86.0%) on the latest reported period — check if this is one-off or a trend.
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

🟢Business QualityStrong16.6/20

🟡Financial HealthAdequate11.5/20

🔴GrowthWeak5/20

🟢ProfitabilityStrong13.5/15

🟢ValuationAttractive13/15

🔴RiskHigh4/10

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. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 17%19.2%
✗Debt / EBITDA falls below 3x8.8x
✗Free cash flow remains positive-₹90 Cr
✓ROCE stays above 113%115.6%