Smiths & Founders (India) Limited

Consumer Cyclical — Auto Parts · BSE

₹9.00₹0.00 (0.00%)

DalalBaazaar Score

62 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:27 pm

Understanding the Business

Company site ↗

The 60-second version of Smiths & Founders (India) Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Smiths & Founders (India) Limited manufactures and sells forgings and machined components in India.

IndustryAuto Parts

SectorConsumer Cyclical

Employees57

Annual revenue₹13 Cr

How does it make money?

Turns over ₹13 Cr a year. Of every ₹100 of sales, about ₹10 reaches shareholders as profit, with ₹9 left at the operating level before interest, tax and depreciation. Each of its 57 employees supports ₹23.4 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹23.4 lakh

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?Little sign of one

Returns on capital of 8.2% 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 ROE23.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +35% while net margin moved +317% 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+35%

Margin effect+317%

DalalBaazaar Score

62/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.46 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast

Quality vs. Valuation

Company Quality

66/ 100

Good

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

Valuation

52/ 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

64.3x

3Y Median

104.0x

40 monthly readings · mean 133.6x · range 40.3x–324.0x

Sector Median

45.7x

median of 4 sector peers

🟢Current valuation is approximately 38% below its 3y median of 104.0x. 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 41% above the peer median of 45.7x.

vs. its own history

Cheap

104.0x median over 40 months · -38%

vs. sector peers

Expensive

45.7x median of 4 peers · +41%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

72.5x

PEG

0.83

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 7.6% to 9.4% over 3 years.
Cash generation is improving
Free cash flow is up 953% over 3 years.
Return on equity is rising
ROE has improved from 1.3% to 6.4%.
Return on capital is rising
ROCE has improved from 2.4% to 8.2%.
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

1 item require attention · 1 watch

🟡Receivables growing faster than salesFinancial
Receivables up 55% against revenue up 35% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 7.6% to 9.4%. 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 38% 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?

Sales are being booked faster than collected
Receivables are up 55% against revenue up 35%. 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 41% 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.

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

1Revenue growth stays above 8% a year✓ 10.4% CAGR
Latest reported year was -0.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 7%✓ 9.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹2 Cr
Profit that never becomes cash eventually stops being profit.
4ROCE stays above 8%✓ 8.2%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Valuation vs its own median of 104.0x✓ 64.3x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

3 / 10 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ 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

2 good · 6 neutral · 3 weak

Market Cap

₹92 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

64.3x

Expensive

Expensive — verify against sector peers

P/B Ratio

4.31x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹0.14

Profitable

Profitable on a per-share basis

ROE

6.4%

Weak

Weak capital efficiency

ROCE

8.2%

Moderate

Moderate return on the capital in the business

Debt/Equity

Not available

No data

Source didn't return this field

Revenue Growth (YoY)

-0.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

0.0%

Modest

Slow profit growth

Dividend Yield

None

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

Free Cash Flow

₹2 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

9.0%

Average

Average margins

Net Margin

9.7%

Average

Average bottom-line conversion

Current Ratio

5.20

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.46

Defensive

Steadier than the market

52W Range Position

42%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

8.9 / 11.0

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

59.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹10 Cr	₹11 Cr	₹13 Cr	₹13 Cr	+10.4%
EBITDA	₹1 Cr	₹1 Cr	₹2 Cr	₹1 Cr	+18.1%
EBITDA Margin	7.6%	9.8%	14.3%	9.4%	—
PAT (Net Profit)	₹0 Cr	₹1 Cr	₹1 Cr	₹1 Cr	+77.7%
EPS	₹0.02	₹0.06	₹0.1	₹0.14	+90.8%
ROE	1.3%	3.3%	5.3%	6.4%	—
ROCE	2.4%	4.1%	7.2%	8.2%	—
Total Debt	₹3 Cr	₹2 Cr	₹0 Cr	—	—
Free Cash Flow	₹0 Cr	₹1 Cr	₹2 Cr	₹2 Cr	+119.2%

🟢 Revenue has grown at 10.4% a year over 3 years.

🟢 EBITDA has grown at 18.1% a year over 3 years.

🟢 EBITDA Margin has risen from 7.6% to 9.4% over 3 years (+1.7 pts).

🟢 PAT (Net Profit) has grown at 77.7% a year over 3 years.

🟢 EPS has grown at 90.8% a year over 3 years.

🟢 ROE has risen from 1.3% to 6.4% over 3 years (+5.1 pts).

🟢 ROCE has risen from 2.4% to 8.2% over 3 years (+5.8 pts).

🟢 Free Cash Flow has grown at 119.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹23 Cr

Total Liabilities

₹2 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹2 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

86.7%

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

3 mixed3 general

Smiths & Founders approves merger with SKF Elixer India

scanx.trade, 10 JunM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Smiths & Founders (India) Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Smiths & Founders seeks CMD re-appointment and merger approval at AGM

scanx.trade, 02 JulM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

METALIC TECHNOFORGE LTD Share Price: Price Rise Analysis

Univest, 20 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.

Smiths & Founders (India) Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

ADROIT INDUSTRIES (INDIA) LTD Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 30 Sept

Watch Items

Revenue growth is negative (-0.2%) 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.
1 metric couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

StrongFinancial Health · Growth

MiddlingBusiness Quality · Profitability · Valuation

WeakRisk

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself.

All 5 tripwires holding · see Key things to watch ↑