SML Mahindra Limited

Consumer Cyclical — Auto Manufacturers · NSE

₹6,123.00+₹91.50 (+1.52%)

DalalBaazaar Score

68 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by small-cap size, which brings sharper price swings, a very high earnings multiple, which leaves little margin for disappointment, falling profits.

In simple words: Strong business and financial position, though profits are falling even as sales grow. Valuation 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 SML Mahindra Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

SML Mahindra Limited manufactures and sells commercial vehicles and related parts in India and internationally. Its products include trucks, buses, and special application vehicles.

IndustryAuto Manufacturers

SectorConsumer Cyclical

Employees1,063

Annual revenue₹2,819 Cr

How does it make money?

Turns over ₹2,819 Cr a year. Of every ₹100 of sales, about ₹6 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 1,063 employees supports ₹2.65 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.65 Cr

Who are its competitors?

The closest listed comparisons in its industry are MARUTI SUZUKI INDIA LTD., TATA MOTORS LIMITED, TATA MOTORS PASS VEH LTD, MAHINDRA & MAHINDRA 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?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 38.6%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 30.8% against a peer median of 19.7% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE19.7%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +56% while net margin moved +417% 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+56%

Margin effect+417%

DalalBaazaar Score

68/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 56.7x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 48.7x
✗ P/B of 17.06x is a steep premium to book

Quality vs. Valuation

Company Quality

77/ 100

Good

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

Valuation

42/ 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

56.7x

3Y Median

48.7x

40 monthly readings · mean 66.4x · range 14.2x–165.7x

Sector Median

25.2x

median of 3 sector peers

⚠️Current valuation is approximately 16% above its 3y median of 48.7x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 125% above the peer median of 25.2x.

vs. its own history

Fair

48.7x median over 40 months · +16%

vs. sector peers

Expensive

25.2x median of 3 peers · +125%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

31.9x

PEG

0.56

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 4.5% to 10.2% over 3 years.
Cash generation is improving
Free cash flow is up 76% over 3 years.
Return on equity is rising
ROE has improved from 11.1% to 30.8%.
Return on capital is rising
ROCE has improved from 15.3% to 38.6%.
High return on capital employed
ROCE of 38.6% 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 Attention0

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

Red Flags

2 items require attention · 2 high

🔴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.
🔴Receivables growing faster than salesFinancial
Receivables up 257% against revenue up 56% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 38.6% 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 4.5% to 10.2%. 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?

Sales are being booked faster than collected
Receivables are up 257% against revenue up 56%. 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 125% 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.
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 12% a year✓ 15.9% CAGR
Latest reported year was 13.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 8%✓ 10.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹86 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 36%✓ 38.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 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

6 good · 2 neutral · 3 weak

Market Cap

₹8,861 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

56.7x

Expensive

Expensive — verify against sector peers

P/B Ratio

17.06x

Rich

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

EPS (TTM)

₹108.08

Profitable

Profitable on a per-share basis

ROE

30.8%

Strong

Strong capital efficiency

ROCE

38.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.56x

Low

Conservative leverage

Revenue Growth (YoY)

13.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-5.0%

Falling

Profits are shrinking

Dividend Yield

0.38%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹86 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

9.1%

Average

Average margins

Net Margin

5.3%

Average

Average bottom-line conversion

Current Ratio

1.25

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.01

Defensive

Steadier than the market

52W Range Position

81%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

6308.4 / 5881.3

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

32.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,809 Cr	₹2,183 Cr	₹2,383 Cr	₹2,819 Cr	+15.9%
EBITDA	₹81 Cr	₹183 Cr	₹241 Cr	₹287 Cr	+52.3%
EBITDA Margin	4.5%	8.4%	10.1%	10.2%	—
PAT (Net Profit)	₹20 Cr	₹108 Cr	₹122 Cr	₹160 Cr	+100.4%
EPS	₹13.71	₹74.54	₹84.08	—	—
ROE	11.1%	37.8%	31.8%	30.8%	—
ROCE	15.3%	34.5%	36.3%	38.6%	—
Total Debt	₹265 Cr	₹421 Cr	₹327 Cr	₹289 Cr	+3.0%
Free Cash Flow	₹49 Cr	-₹92 Cr	₹115 Cr	₹86 Cr	+20.8%

🟢 Revenue has grown at 15.9% a year over 3 years.

🟢 EBITDA has grown at 52.3% a year over 3 years.

🟢 EBITDA Margin has risen from 4.5% to 10.2% over 3 years (+5.7 pts).

🟢 PAT (Net Profit) has grown at 100.4% a year over 3 years.

🟢 ROE has risen from 11.1% to 30.8% over 3 years (+19.6 pts).

🟢 ROCE has risen from 15.3% to 38.6% over 3 years (+23.3 pts).

🔴 Total Debt has grown at 3.0% a year over 3 years.

🟢 Free Cash Flow has grown at 20.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,397 Cr

Total Liabilities

₹877 Cr

Cash & Equivalents

₹5 Cr

Operating Cash Flow

₹156 Cr

Capex

-₹70 Cr

Shareholding (proxy)

Institutional Holding

2.1%

Insider Holding

72.8%

Corporate Actions

Dividend Rate

₹23.5

Ex-Dividend Date

03 Jul 2026

Peer Comparison

Company	P/E	ROE
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TATA MOTORS LIMITED	37.1x	32.8%
TATA MOTORS PASS VEH LTD	—	-3.0%
MAHINDRA & MAHINDRA LTD	17.8x	19.7%

Recent News

2 positive3 mixed1 general

SML Mahindra declares ₹2.35 dividend at 42nd AGM

scanx.trade, 18 OctCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

If EPS Growth Is Important To You, SML Mahindra (NSE:SMLMAH) Presents An Opportunity

Simply Wall Street, 12 Oct

SML Mahindra Share Price Target 2027 to 2030: Analyst Outlook

Univest, 18 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

SML Mahindra Stock Falls 4% Even As September Sales Jump 18%

NDTV Profit, 01 OctResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

SML Mahindra Share Price Jumps 15% on Thursday; Here's Why

Dalal Street Investment Journal, 30 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.

SML Mahindra shares rise 7.5% as company targets 10-12% CV market share by FY31

Moneycontrol.com, 03 SeptPrice 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.

Watch Items

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

DalalBaazaar Thesis

StrongFinancial Health · Growth · Profitability

MiddlingBusiness Quality · Risk

WeakValuation

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

All 5 tripwires holding · see Key things to watch ↑