Swan Defence and Heavy Industries Limited

Industrials — Aerospace & Defense · NSE

₹2,915.00−₹29.80 (−1.01%)

DalalBaazaar Score

54 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by small-cap size, which brings sharper price swings, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, 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, 6:51 pm

Understanding the Business

Company site ↗

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

What does this company do?

Swan Defence and Heavy Industries Limited engages in the construction of vessels, repairs, and refits of ships and rigs and heavy engineering in India and internationally.

IndustryAerospace & Defense

SectorIndustrials

Employees260

Annual revenue₹282 Cr

How does it make money?

Turns over ₹282 Cr a year. Of every ₹100 of sales, about ₹-80 reaches shareholders as profit, with ₹-98 left at the operating level before interest, tax and depreciation. Each of its 260 employees supports ₹1.09 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.09 Cr

Who are its competitors?

The closest listed comparisons in its industry are LARSEN & TOUBRO LTD., SIEMENS LTD, ABB INDIA LIMITED. 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?Little sign of one

Returns on capital of -7.6% 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.

Peer median ROE15.2%

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 +8826% while net margin moved -100% 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+8826%

Margin effect-100%

DalalBaazaar Score

54/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 43.9x is demanding — it needs sustained high growth to justify
✗ P/E is 464423% above its own historical median of 0.0x — expensive by its own standards
✗ P/B of 6.79x is a steep premium to book

Quality vs. Valuation

Company Quality

61/ 100

Average

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

Valuation

46/ 100

Fair

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

43.9x

3Y Median

0.0x

40 monthly readings · mean 0.0x · range 0.0x–0.0x

Sector Median

88.8x

median of 3 sector peers

⚠️Current valuation is approximately 464423% above its 3y median of 0.0x. 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 51% below the peer median of 88.8x.

vs. its own history

Expensive

0.0x median over 40 months · +464423%

vs. sector peers

Cheap

88.8x median of 3 peers · -51%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

—

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Margins are improving
EBITDA margin is up from -1046.1% to -98.0% over 3 years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 3277.7% to -324.4% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 782.6% to -7.6% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 2 high · 3 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only -20.6x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹226 Cr in the latest reported year.
🟡Debt is increasingFinancial
Total debt is up 30% over 3 years.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from -7.7x to -20.6x.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 1864% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -1046.1% to -98.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 51% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

The price already assumes success
The stock trades 464423% 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 3277.7% to -324.4%. 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
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 260% a year✓ 346.9% CAGR
Latest reported year was 74.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above -100%✓ -98.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Interest cover stays above 3x✗ -20.6x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹104 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ -7.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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

₹15,357 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

43.9x

Expensive

Expensive — verify against sector peers

P/B Ratio

6.79x

Rich

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

EPS (TTM)

₹66.35

Profitable

Profitable on a per-share basis

ROE

25.1%

Strong

Strong capital efficiency

ROCE

-7.6%

Weak

Low return on total capital employed

Debt/Equity

0.52x

Low

Conservative leverage

Revenue Growth (YoY)

74.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-24.8%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹333 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

ROA

-4.2%

Weak

Assets generate little profit

Operating Margin

33.8%

Good

Healthy core-business profitability

Net Margin

91.9%

Good

Strong bottom-line conversion

Current Ratio

3.57

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.84

Market-like

Moves roughly in line with the market

52W Range Position

95%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

2787.2 / 2613.7

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

76.6

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹3 Cr	—	₹7 Cr	₹282 Cr	+346.9%
EBITDA	-₹33 Cr	-₹27 Cr	-₹100 Cr	-₹277 Cr	—
EBITDA Margin	-1046.1%	—	-1427.0%	-98.0%	—
PAT (Net Profit)	₹17,937 Cr	-₹121 Cr	-₹181 Cr	-₹226 Cr	—
EPS	₹66,875.98	₹-449.62	₹-51.51	₹-42.88	—
ROE	3277.7%	-25.3%	-61.2%	-324.4%	—
ROCE	782.6%	-4.4%	-6.2%	-7.6%	—
Total Debt	₹2,148 Cr	₹2,219 Cr	₹2,505 Cr	₹2,788 Cr	+9.1%
Free Cash Flow	₹1,428 Cr	-₹80 Cr	-₹259 Cr	₹104 Cr	-58.2%

🟢 Revenue has grown at 346.9% a year over 3 years.

🟢 EBITDA Margin has risen from -1046.1% to -98.0% over 3 years (+948.1 pts).

🔴 PAT (Net Profit) has turned negative, from ₹17,937 Cr to -₹226 Cr.

🔴 EPS has turned negative, from ₹66,875.98 to ₹-42.88.

🔴 ROE has fallen from 3277.7% to -324.4% over 3 years (-3602.1 pts).

🔴 ROCE has fallen from 782.6% to -7.6% over 3 years (-790.3 pts).

🔴 Total Debt has grown at 9.1% a year over 3 years.

🔴 Free Cash Flow has shrunk at 58.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,167 Cr

Total Liabilities

₹3,098 Cr

Cash & Equivalents

₹184 Cr

Operating Cash Flow

₹182 Cr

Capex

-₹78 Cr

Shareholding (proxy)

Institutional Holding

1.7%

Insider Holding

90.9%

Peer Comparison

Company	P/E	ROE
LARSEN & TOUBRO LTD.	30.1x	15.2%
SIEMENS LTD	88.8x	10.5%
ABB INDIA LIMITED	92.6x	19.1%

Recent News

2 positive2 mixed2 general

Swan Defence shares rise 4% to hit 52-week high on Rs 1,897 crore tanker order prospect

The Economic Times, 12 OctPrice 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.

Swan Defence Set to Bag Rs 1,897 Cr Oil Tanker Order

Equitypandit, 12 OctOrder win

🟢Potentially positiveAn order or contract win, which adds to future revenue. How much depends on its size against annual sales and on when it is executed.

Swan Defence Q2FY27 Results: PAT ₹566 Cr, order book hits ₹6,500 Cr

scanx.trade, 12 OctOrder win

🟢Potentially positiveOrder wins add to future revenue, though the effect depends on the contract's size against annual sales and on when it is executed.

Swan Defence and Heavy Industries Limited (SWANDEF.BO) Stock Price, News, Quote & History

Yahoo! Finance Canada, 01 Oct

Swan Defence swings to ₹566 crore net profit in Q2 on provision write-back

CNBC TV18, 12 OctResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Swan Defence Names Venu Avadhanula As New Chief Operating Officer

https://defence.newsd.in/, 01 Oct

Watch Items

Trading very close to its 52-week high — momentum-driven entries here carry more mean-reversion risk.
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

StrongFinancial Health · Growth · Profitability

MiddlingRisk

WeakBusiness Quality · Valuation

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 — Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑