Tarmat Limited

Industrials — Engineering & Construction · NSE

₹54.46−₹0.84 (−1.52%)

DalalBaazaar Score

42 / 100

🟡 Moderate

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, 6:59 pm

Understanding the Business

Company site ↗

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

What does this company do?

Tarmat Limited engages in the construction of airfield, and national and state highways in India.

IndustryEngineering & Construction

SectorIndustrials

Employees112

Annual revenue₹117 Cr

How does it make money?

Turns over ₹117 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹7 left at the operating level before interest, tax and depreciation. Each of its 112 employees supports ₹1.05 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.05 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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 3.5% 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 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 -18% while net margin moved +3% 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-18%

Margin effect+3%

DalalBaazaar Score

42/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 6.5% a year
✗ Profit has declined at 5.6% a year

Quality vs. Valuation

Company Quality

35/ 100

Weak

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

Valuation

73/ 100

Cheap

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

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

19.0x

3Y Median

36.0x

40 monthly readings · mean 47.2x · range 21.3x–112.9x

Sector Median

30.1x

median of 3 sector peers

🟢Current valuation is approximately 47% below its 3y median of 36.0x. 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 37% below the peer median of 30.1x.

vs. its own history

Cheap

36.0x median over 40 months · -47%

vs. sector peers

Cheap

30.1x median of 3 peers · -37%

vs. generic bands

Fair

15x–35x

EV/EBITDA

16.0x

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Margins are improving
EBITDA margin is up from 4.4% to 6.9% over 3 years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 5.9% to 3.5% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 3 high

🔴Debt has risen sharplyFinancial
Total debt is up 152% over 3 years, from ₹6 Cr to ₹15 Cr.
🔴High leverageFinancial
Debt/Equity of 8.05x — 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?

Margin expansion has further to run
EBITDA margin has risen from 4.4% to 6.9%. 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 47% 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 37% 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 8.05x. 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
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

1EBITDA margin holds above 5%✓ 6.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹0 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 1.9x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 8%✗ 3.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Interest cover stays above 4x✓ 6.1x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

5 / 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

₹136 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

19.0x

Fair

Fairly valued against the generic band

P/B Ratio

0.73x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹2.87

Profitable

Profitable on a per-share basis

ROE

3.3%

Weak

Weak capital efficiency

ROCE

3.5%

Weak

Low return on total capital employed

Debt/Equity

8.05x

High

High leverage

Revenue Growth (YoY)

43.6%

Healthy

Healthy top-line growth

Profit Growth (YoY)

106.7%

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

-₹0 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

6.0%

Average

Average margins

Net Margin

5.5%

Average

Average bottom-line conversion

Current Ratio

3.44

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.60

Defensive

Steadier than the market

52W Range Position

30%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

56.0 / 56.9

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

45.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹144 Cr	₹89 Cr	₹101 Cr	₹117 Cr	-6.5%
EBITDA	₹6 Cr	₹3 Cr	₹4 Cr	₹8 Cr	+8.6%
EBITDA Margin	4.4%	3.3%	3.8%	6.9%	—
PAT (Net Profit)	₹7 Cr	-₹1 Cr	₹2 Cr	₹6 Cr	-5.6%
EPS	₹2.37	₹-0.51	₹0.63	₹2.51	+1.9%
ROE	5.7%	-0.9%	1.1%	3.3%	—
ROCE	5.9%	-0.4%	1.4%	3.5%	—
Total Debt	₹6 Cr	₹10 Cr	₹10 Cr	₹15 Cr	+36.2%
Free Cash Flow	₹9 Cr	-₹3 Cr	-₹15 Cr	-₹0 Cr	—

🔴 Revenue has shrunk at 6.5% a year over 3 years.

🟢 EBITDA has grown at 8.6% a year over 3 years.

🟢 EBITDA Margin has risen from 4.4% to 6.9% over 3 years (+2.5 pts).

🔴 PAT (Net Profit) has shrunk at 5.6% a year over 3 years.

🟡 EPS has been broadly flat over 3 years (1.9% a year).

🔴 ROE has fallen from 5.7% to 3.3% over 3 years (-2.3 pts).

🔴 ROCE has fallen from 5.9% to 3.5% over 3 years (-2.4 pts).

🔴 Total Debt has grown at 36.2% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹9 Cr to -₹0 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹261 Cr

Total Liabilities

₹74 Cr

Cash & Equivalents

₹21 Cr

Operating Cash Flow

₹8 Cr

Capex

-₹8 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

80.1%

Corporate Actions

Ex-Dividend Date

20 Sept 2010

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

1 positive2 mixed3 general

Tarmat Ltd. Share Price rise with market cap at Rs 128.43 Cr

Univest, 26 AugPrice 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.

Tarmat Limited (TARMAT) Share Price NSE

TechGraph, 07 Oct

Getting In Cheap On Tarmat Limited (NSE:TARMAT) Is Unlikely

Simply Wall Street, 14 Jan

Tarmat consolidated net profit rises 121.74% in the June 2026 quarter

Business Standard, 14 AugResults

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

Tarmat Stock Falls 6%: Key Levels and Results

Kalkine India, 27 AugResults

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

Tarmat Ltd. Share Price News: Price Action, Fundamentals

Univest, 13 Aug

Watch Items

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

DalalBaazaar Thesis

StrongValuation

MiddlingFinancial Health

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 3 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Free cash flow remains positive; ROCE stays above 8% · see Key things to watch ↑