SRM Contractors Limited

Industrials — Engineering & Construction · NSE

₹390.70−₹7.90 (−1.98%)

DalalBaazaar Score

70 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, 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, 6:08 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 SRM Contractors Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

SRM Contractors Limited engages in the provision of engineering and construction services in India. The company is involved in the development of roads, bridges, tunnels, slope stabilization, and miscellaneous civil infrastructure projects.

IndustryEngineering & Construction

SectorIndustrials

Employees230

Annual revenue₹1,026 Cr

How does it make money?

Turns over ₹1,026 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹18 left at the operating level before interest, tax and depreciation. Each of its 230 employees supports ₹4.46 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin18.1%

Net margin10.8%

Revenue / employee₹4.46 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., ADANI PORT & SEZ LTD, SIEMENS LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

LARSEN & TOUBRO LTD.P/E 30.1x · ROE 15.2%

ADANI PORT & SEZ LTDP/E 29.9x · ROE 14.1%

SIEMENS LTDP/E 88.8x · ROE 10.5%

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 33.3%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 29.9% against a peer median of 14.1% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE33.3%

ROE29.9%

Peer median ROE14.1%

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 +242% while net margin moved +73% 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+242%

Margin effect+73%

DalalBaazaar Score

70/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.58 — 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
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

72/ 100

Good

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

Valuation

86/ 100

Cheap

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

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

7.6x

3Y Median

22.8x

32 monthly readings · mean 51.5x · range 8.1x–326.7x

Sector Median

30.1x

median of 3 sector peers

🟢Current valuation is approximately 67% below its 3y median of 22.8x. 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 75% below the peer median of 30.1x.

vs. its own history

Cheap

22.8x median over 32 months · -67%

vs. sector peers

Cheap

30.1x median of 3 peers · -75%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

7.6x

P/B

2.42x

EV/EBITDA

5.2x

PEG

0.09

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 12.8% to 18.1% over 3 years.
High return on capital employed
ROCE of 33.3% is the mark of a business that converts capital into profit efficiently.
Valuation below its historical average
At 7.6x the stock trades 67% below its own median of 22.8x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention4

Debt is rising
Total debt is up 187% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Receivables growing faster than sales
Receivables are up 498% against revenue growth of 242% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 425% against revenue growth of 242% — stock may not be moving.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 187% over 3 years, from ₹47 Cr to ₹135 Cr.
🔴Receivables growing faster than salesFinancial
Receivables up 498% against revenue up 242% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 425% against revenue up 242% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹95 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 33.3% 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 12.8% to 18.1%. 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 67% 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.
Cheaper than its peers
It trades 75% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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 498% against revenue up 242%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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
3 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 38% a year✓ 50.6% CAGR
Latest reported year was 37.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 16%✓ 18.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹95 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 30%✓ 33.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 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 · 3 neutral · 1 weak

Market Cap

₹897 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

7.6x

Cheap

Cheap against the generic band

P/B Ratio

2.42x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹51.42

Profitable

Profitable on a per-share basis

ROE

29.9%

Strong

Strong capital efficiency

ROCE

33.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.33x

Low

Conservative leverage

Revenue Growth (YoY)

37.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

54.5%

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

-₹95 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹390.7

Operating Margin

14.2%

Average

Average margins

Net Margin

10.9%

Good

Strong bottom-line conversion

Current Ratio

1.40

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.58

Defensive

Steadier than the market

52W Range Position

10%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

409.1 / 445.4

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

36.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹300 Cr	₹342 Cr	₹528 Cr	₹1,026 Cr	+50.6%
EBITDA	₹39 Cr	₹49 Cr	₹95 Cr	₹185 Cr	+68.8%
EBITDA Margin	12.8%	14.4%	18.0%	18.1%	—
PAT (Net Profit)	₹19 Cr	₹27 Cr	₹55 Cr	₹111 Cr	+80.9%
EPS	₹0.82	₹11.75	₹23.97	₹48.39	+289.8%
ROE	29.6%	20.8%	20.0%	29.9%	—
ROCE	34.6%	25.9%	28.2%	33.3%	—
Total Debt	₹47 Cr	₹48 Cr	₹41 Cr	₹135 Cr	+42.1%
Free Cash Flow	₹3 Cr	₹5 Cr	-₹93 Cr	-₹95 Cr	—

🟢 Revenue has grown at 50.6% a year over 3 years.

🟢 EBITDA has grown at 68.8% a year over 3 years.

🟢 EBITDA Margin has risen from 12.8% to 18.1% over 3 years (+5.2 pts).

🟢 PAT (Net Profit) has grown at 80.9% a year over 3 years.

🟢 EPS has grown at 289.8% a year over 3 years.

🟡 ROE has held roughly flat at 29.9% over 3 years.

🔴 ROCE has fallen from 34.6% to 33.3% over 3 years (-1.3 pts).

🔴 Total Debt has grown at 42.1% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹3 Cr to -₹95 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹995 Cr

Total Liabilities

₹582 Cr

Total Debt

₹135 Cr

Cash & Equivalents

₹69 Cr

Operating Cash Flow

₹92 Cr

Capex

-₹187 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

72.6%

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
ADANI PORT & SEZ LTD	29.9x	14.1%
SIEMENS LTD	88.8x	10.5%

Recent News

2 mixed4 general

SRM Contractors discloses promoter subscription intent for preferential issue

scanx.trade, 15 Oct

SRM Contractors Share Price Target 2027 to 2030: Analyst Outlook

Univest, 14 AugAnalyst view

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

Phillip Capital starts with 'Buy' on SRM Contractors; sees up to 61% upside

Business Standard, 28 Jan

Could The Market Be Wrong About SRM Contractors Limited (NSE:SRM) Given Its Attractive Financial Prospects?

Simply Wall Street, 07 Feb

SRM Contractors Share Price Target 2026: Bull Case Rs 655, Bear C

Univest, 01 JulAnalyst view

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

Is SRM Contractors (NSE:SRM) A Risky Investment?

Simply Wall Street, 07 Dec

Watch Items

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

DalalBaazaar Thesis

🟢Business QualityStrong14.1/20

🟡Financial HealthAdequate12/20

🟢GrowthStrong14.9/20

🟢ProfitabilityStrong13.1/15

🟢ValuationAttractive11.8/15

🔴RiskHigh4/10

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 38% a year50.6% CAGR
✓EBITDA margin holds above 16%18.1%
✗Free cash flow remains positive-₹95 Cr
✓Debt / EBITDA stays below 2x0.7x
✓ROCE stays above 30%33.3%