SoftTech Engineers Limited

Technology — Software - Application · NSE

₹455.00+₹14.60 (+3.32%)

DalalBaazaar Score

50 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, 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, 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, 6:09 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 SoftTech Engineers Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

SoftTech Engineers Limited provide software, platforms, and digital solutions for architecture, engineering, and construction projects in India.

IndustrySoftware - Application

SectorTechnology

Employees487

Annual revenue₹133 Cr

How does it make money?

Turns over ₹133 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹27 left at the operating level before interest, tax and depreciation. Each of its 487 employees supports ₹27.3 lakh of revenue a year, the signature of a people-led business.

EBITDA margin27.1%

Net margin3.7%

Revenue / employee₹27.3 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?Little sign of one

Returns on capital of 6.9% 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.

ROCE6.9%

ROE2.9%

Peer median ROE32.0%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +103% while net margin moved -39% 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+103%

Margin effect-39%

DalalBaazaar Score

50/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 2.9% is weak

Quality vs. Valuation

Company Quality

52/ 100

Average

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

Valuation

37/ 100

Expensive

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

125.3x

3Y Median

118.6x

40 monthly readings · mean 178.2x · range 39.1x–459.3x

Sector Median

16.5x

median of 4 sector peers

🟡Currently trading close to its 3y median of 118.6x — the market is paying about what it usually pays for this company.

⚠️Against its sector it trades 657% above the peer median of 16.5x.

vs. its own history

Fair

118.6x median over 40 months · +6%

vs. sector peers

Expensive

16.5x median of 4 peers · +657%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

125.3x

P/B

3.67x

EV/EBITDA

18.2x

PEG

17.13

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 19% over 3 years.
Very low debt
Debt/Equity of 0.23x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Margins are compressing
EBITDA margin has slipped from 35.3% to 27.1% over 3 years.
Free cash flow is negative
The business is not currently covering its capital spending from operations.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 8.1 points, from 35.3% to 27.1%.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 36% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 19% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
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 35.3% to 27.1%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
A premium to the sector to defend
It trades 657% 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 20% a year✓ 26.7% CAGR
Latest reported year was 23.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 25%✓ 27.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹1 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✓ 3.2x
How much operating profit can fall before interest stops being comfortably covered.
5Debt / EBITDA stays below 2x✓ 1.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.

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

₹630 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

125.3x

Expensive

Expensive — verify against sector peers

P/B Ratio

3.67x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹3.63

Profitable

Profitable on a per-share basis

ROE

2.9%

Weak

Weak capital efficiency

ROCE

6.9%

Weak

Low return on total capital employed

Debt/Equity

0.23x

Low

Conservative leverage

Revenue Growth (YoY)

23.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

10.3%

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

-₹1 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹455

Operating Margin

6.7%

Average

Average margins

Net Margin

3.6%

Average

Average bottom-line conversion

Current Ratio

1.96

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.56

Defensive

Steadier than the market

52W Range Position

73%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

473.8 / 447.3

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

39.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹65 Cr	₹79 Cr	₹95 Cr	₹133 Cr	+26.7%
EBITDA	₹23 Cr	₹23 Cr	₹24 Cr	₹36 Cr	+16.0%
EBITDA Margin	35.3%	29.1%	24.9%	27.1%	—
PAT (Net Profit)	₹4 Cr	₹4 Cr	₹1 Cr	₹5 Cr	+7.3%
EPS	₹3.78	₹3.17	₹1	₹3.56	-2.0%
ROE	3.9%	2.8%	0.8%	2.9%	—
ROCE	8.4%	7.4%	4.3%	6.9%	—
Total Debt	₹48 Cr	₹39 Cr	₹42 Cr	₹39 Cr	-6.9%
Free Cash Flow	-₹9 Cr	-₹3 Cr	-₹7 Cr	-₹1 Cr	—

🟢 Revenue has grown at 26.7% a year over 3 years.

🟢 EBITDA has grown at 16.0% a year over 3 years.

🔴 EBITDA Margin has fallen from 35.3% to 27.1% over 3 years (-8.1 pts).

🟢 PAT (Net Profit) has grown at 7.3% a year over 3 years.

🟡 EPS has been broadly flat over 3 years (-2.0% a year).

🟡 ROE has held roughly flat at 2.9% over 3 years.

🔴 ROCE has fallen from 8.4% to 6.9% over 3 years (-1.5 pts).

🟢 Total Debt has shrunk at 6.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹254 Cr

Total Liabilities

₹83 Cr

Total Debt

₹39 Cr

Cash & Equivalents

₹13 Cr

Operating Cash Flow

₹31 Cr

Capex

-₹33 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

85.5%

Corporate Actions

Ex-Dividend Date

20 Sept 2019

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

1 mixed5 general

Compare with

Equitymaster, 16 Oct

Multibagger stock: Softtech Engineers' share price on cusp of breakout. Do you own?

Livemint, 27 May

Compare with

Equitymaster, 15 Oct

SoftTech Wins ₹92.95 Crore JNPA Project; Shares Rise 4.9%

HDFC Sky, 17 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.

SoftTech Engineers Q3FY26: Revenue ₹31.25Cr, PAT ₹2.27Cr, Orders ₹128Cr

scanx.trade, 21 Apr

Stocks to Watch Today: Alkem Labs, Ola Electric, PNC Infratech, Equitas Small Finance Bank, NHPC, Anant...

Moneycontrol.com, 02 Jun

Watch Items

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

DalalBaazaar Thesis

🟡Business QualityAdequate10.3/20

🟢Financial HealthStrong13.8/20

🟡GrowthModest10.9/20

🔴ProfitabilityWeak4.5/15

🟡ValuationFair6.9/15

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

This thesis breaks if

✓Revenue growth stays above 20% a year26.7% CAGR
✓EBITDA margin holds above 25%27.1%
✗Free cash flow remains positive-₹1 Cr
✓Interest cover stays above 3x3.2x
✓Debt / EBITDA stays below 2x1.1x