Sarthak Metals Limited

Industrials — Metal Fabrication · NSE

₹74.32+₹0.66 (+0.90%)

DalalBaazaar Score

36 / 100

🔴 Weak

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, 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. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

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

What does this company do?

Sarthak Metals Limited manufactures, sells, and exports cored wires and aluminum flipping coils in India and internationally.

IndustryMetal Fabrication

SectorIndustrials

Employees149

Annual revenue₹191 Cr

How does it make money?

Turns over ₹191 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 149 employees supports ₹1.28 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin5.7%

Net margin2.4%

Revenue / employee₹1.28 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, HINDALCO INDUSTRIES LTD, VEDANTA LIMITED. 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%

HINDALCO INDUSTRIES LTDP/E 12.3x · ROE 12.0%

VEDANTA LIMITEDP/E 10.4x · ROE 18.7%

What is its competitive advantage?Little sign of one

Returns on capital of 5.4% 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.

ROCE5.4%

ROE4.0%

Peer median ROE18.7%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved -53% while net margin moved -67% 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-53%

Margin effect-67%

DalalBaazaar Score

36/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 22.2% a year
✗ Profit has declined at 46.3% a year

Quality vs. Valuation

Company Quality

32/ 100

Weak

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

Valuation

49/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

20.8x

3Y Median

16.2x

40 monthly readings · mean 17.9x · range 8.7x–35.4x

Sector Median

12.2x

median of 4 sector peers

⚠️Current valuation is approximately 28% above its 3y median of 16.2x. 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 71% above the peer median of 12.2x.

vs. its own history

Expensive

16.2x median over 40 months · +28%

vs. sector peers

Expensive

12.2x median of 4 peers · +71%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

20.8x

P/B

0.81x

EV/EBITDA

10.0x

PEG

0.80

Dividend Yield

0.67%

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention6

Margins are compressing
EBITDA margin has slipped from 10.7% to 5.7% over 3 years.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 28.3% to 3.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 38.9% to 5.4% — often a sign of competition or overexpansion.
Inventory building faster than sales
Inventory is up 170% against revenue growth of -53% — stock may not be moving.
Valuation above its historical average
At 20.8x the stock trades 28% above its own median of 16.2x.

Red Flags

6 items require attention · 3 high · 3 watch

🔴High leverageFinancial
Debt/Equity of 4.17x — earnings must service borrowings before shareholders see anything.
🔴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.
🔴Inventory building faster than salesFinancial
Inventory up 170% against revenue up -53% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹33 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 85% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 5.0 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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?

Margins are being competed away
EBITDA margin has fallen from 10.7% to 5.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 4.17x. Interest is payable whether or not the business has a good year.
The price already assumes success
The stock trades 28% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 28.3% to 3.7%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
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 4%✓ 5.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹33 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 8%✗ 5.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Valuation vs its own median of 16.2x✗ 20.8x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

6 / 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

4 good · 3 neutral · 4 weak

Market Cap

₹102 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

20.8x

Fair

Fairly valued against the generic band

P/B Ratio

0.81x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹3.58

Profitable

Profitable on a per-share basis

ROE

4.0%

Weak

Weak capital efficiency

ROCE

5.4%

Weak

Low return on total capital employed

Debt/Equity

4.17x

High

High leverage

Revenue Growth (YoY)

19.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

26.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.67%

Modest

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

Free Cash Flow

-₹33 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹74.32

ROA

9.6%

Good

Assets are working hard

Operating Margin

1.7%

Weak

Thin margins leave little room for error

Net Margin

2.4%

Weak

Very little revenue reaches the bottom line

Current Ratio

11.54

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.65

Defensive

Steadier than the market

52W Range Position

28%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

68.6 / 67.4

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

73.3

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹406 Cr	₹304 Cr	₹177 Cr	₹191 Cr	-22.2%
EBITDA	₹43 Cr	₹21 Cr	₹9 Cr	₹11 Cr	-37.0%
EBITDA Margin	10.7%	7.0%	5.3%	5.7%	—
PAT (Net Profit)	₹30 Cr	₹14 Cr	₹4 Cr	₹5 Cr	-46.3%
EPS	₹21.74	₹10.1	₹3.01	₹3.37	-46.3%
ROE	28.3%	11.9%	3.4%	3.7%	—
ROCE	38.9%	16.6%	5.5%	5.4%	—
Free Cash Flow	₹32 Cr	₹22 Cr	-₹7 Cr	-₹33 Cr	—

🔴 Revenue has shrunk at 22.2% a year over 3 years.

🔴 EBITDA has shrunk at 37.0% a year over 3 years.

🔴 EBITDA Margin has fallen from 10.7% to 5.7% over 3 years (-5.0 pts).

🔴 PAT (Net Profit) has shrunk at 46.3% a year over 3 years.

🔴 EPS has shrunk at 46.3% a year over 3 years.

🔴 ROE has fallen from 28.3% to 3.7% over 3 years (-24.6 pts).

🔴 ROCE has fallen from 38.9% to 5.4% over 3 years (-33.5 pts).

🔴 Free Cash Flow has turned negative, from ₹32 Cr to -₹33 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹137 Cr

Total Liabilities

₹13 Cr

Total Debt

₹7 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹33 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

72.1%

Corporate Actions

Dividend Rate

₹0.5

Ex-Dividend Date

11 Jul 2025

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
HINDALCO INDUSTRIES LTD	12.3x	12.0%
VEDANTA LIMITED	10.4x	18.7%

Recent News

1 positive1 mixed4 general

Sarthak Metals NSE:SMLT Clarifies Share Price Movement

Kalkine India, 07 Oct

Sarthak Metals FY26 revenue rises 8% to ₹192.25 Crore

scanx.trade, 18 JulResults

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

Sarthak Metals Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 14 Sept

Momentum Stocks: Sarthak Metals, Sterling Tools, Pix Transmissions rise up to 16% on sheer momentum

Moneycontrol.com, 01 Oct

Sarthak Metals Share Price Target 2026: Bull Case Rs 100

Univest, 29 JunAnalyst view

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

Sarthak Metals fixes record date for 31st AGM

scanx.trade, 20 Jul

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟡Financial HealthAdequate10.6/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak4.6/15

🟡ValuationFair8.7/15

🔴RiskHigh4/10

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 4%5.7%
✗Free cash flow remains positive-₹33 Cr
✓Debt / EBITDA stays below 2x0.6x
✗ROCE stays above 8%5.4%
✗Valuation vs its own median of 16.2x20.8x today