Sterling Powergensys Limited

Technology — Solar · BSE

₹22.50−₹0.89 (−3.81%)

DalalBaazaar Score

60 / 100

🟢 Good

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: Strong business and financial position, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:57 pm

Understanding the Business

Company site ↗

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

What does this company do?

Sterling Powergensys Limited engages in manufacturing of industrial boilers, thermal power plants in India. It offers commodities, electrolyser system and accessories, bearings; as well as solar solutions in solar products and EPC projects.

IndustrySolar

SectorTechnology

Employees8

Annual revenue₹24 Cr

How does it make money?

Turns over ₹24 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹4 left at the operating level before interest, tax and depreciation. Each of its 8 employees supports ₹2.98 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.98 Cr

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.

Compared side by side in Peers ↓

What is its competitive advantage?Some evidence

ROCE of 38.0% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

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 +7112% while net margin moved -102% 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+7112%

Margin effect-102%

DalalBaazaar Score

60/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.24 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ 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

61/ 100

Average

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

Valuation

77/ 100

Cheap

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

9.9x

2Y Median

14.6x

28 monthly readings · mean 42.1x · range 6.5x–104.2x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 32% below its 2y median of 14.6x. 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 40% below the peer median of 16.5x.

vs. its own history

Cheap

14.6x median over 28 months · -32%

vs. sector peers

Cheap

16.5x median of 4 peers · -40%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

13.3x

PEG

—

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from -83.4% to 4.5% over 3 years.
Debt is being paid down
Total debt is down 57% over 3 years.
Return on capital is rising
ROCE has improved from -17.4% to 38.0%.
High return on capital employed
ROCE of 38.0% is the mark of a business that converts capital into profit efficiently.

🔴 What Needs Attention0

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

Red Flags

2 items require attention · 2 high

🔴High leverageFinancial
Debt/Equity of 1.72x — earnings must service borrowings before shareholders see anything.
🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 38.0% 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 -83.4% to 4.5%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 57% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 32% 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 40% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 1.72x. Interest is payable whether or not the business has a good year.
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 237% a year✓ 316.3% 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 2%✓ 4.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Free cash flow remains positive✗ -₹0 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 35%✓ 38.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

5 good · 2 neutral · 4 weak

Market Cap

₹12 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

9.9x

Cheap

Cheap against the generic band

P/B Ratio

9.44x

Rich

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

EPS (TTM)

₹2.27

Profitable

Profitable on a per-share basis

ROE

143.6%

Strong

Strong capital efficiency

ROCE

38.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.72x

High

High leverage

Revenue Growth (YoY)

-13.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

421.6%

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

ROA

5.6%

Average

Average asset productivity

Operating Margin

-10.2%

Weak

Thin margins leave little room for error

Net Margin

4.6%

Average

Average bottom-line conversion

Current Ratio

1.35

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.24

Defensive

Steadier than the market

52W Range Position

21%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

23.7 / 28.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

35.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹0 Cr	₹7 Cr	₹13 Cr	₹24 Cr	+316.3%
EBITDA	-₹0 Cr	-₹0 Cr	-₹1 Cr	₹1 Cr	—
EBITDA Margin	-83.4%	-5.8%	-7.3%	4.5%	—
PAT (Net Profit)	-₹1 Cr	₹3 Cr	₹0 Cr	₹1 Cr	—
EPS	₹-1.39	₹5.56	₹0.36	₹1.87	—
ROE	—	1996.0%	58.0%	71.2%	—
ROCE	-17.4%	102.7%	9.9%	38.0%	—
Total Debt	₹5 Cr	₹2 Cr	₹3 Cr	₹2 Cr	-24.8%
Free Cash Flow	₹0 Cr	-₹1 Cr	-₹1 Cr	-₹0 Cr	—

🟢 Revenue has grown at 316.3% a year over 3 years.

🟢 EBITDA has turned positive, from -₹0 Cr to ₹1 Cr.

🟢 EBITDA Margin has risen from -83.4% to 4.5% over 3 years (+87.9 pts).

🟢 PAT (Net Profit) has turned positive, from -₹1 Cr to ₹1 Cr.

🟢 EPS has turned positive, from ₹-1.39 to ₹1.87.

🔴 ROE has fallen from 1996.0% to 71.2% over 3 years (-1924.8 pts).

🟢 ROCE has risen from -17.4% to 38.0% over 3 years (+55.4 pts).

🟢 Total Debt has shrunk at 24.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹0 Cr to -₹0 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹17 Cr

Total Liabilities

₹15 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹0 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

43.1%

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

6 general

Compare with

Equitymaster, 17 Oct

Sterling Powergensys Reports Q3FY26 Net Loss of ₹13.66 Lakhs on Revenue of ₹512.65 Lakhs

scanx.trade, 06 Apr

Compare GOODVALUE IR with

Equitymaster, 30 Sept

Sterling Powergensys shareholders pass all AGM resolutions unanimously

scanx.trade, 12 Sept

STERLING POWERGENSYS LTD Share Price - Live STERPOW Stock Price & Chart

Upstox, 20 Mar

Compare Honeywell Automation with

Equitymaster, 30 Sept

Watch Items

Revenue growth is negative (-13.2%) 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.

DalalBaazaar Thesis

StrongGrowth · Profitability · Valuation

MiddlingBusiness Quality · Financial Health

WeakRisk

Points for each in the Score ↑

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.

2 of 5 tripwires tripped — Debt / EBITDA stays below 2x; Free cash flow remains positive · see Key things to watch ↑