True Colors Limited

Industrials — Industrial Distribution · BSE

₹144.00−₹2.05 (−1.40%)

DalalBaazaar Score

65 / 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, 6:09 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 True Colors Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

True Colors Limited distributes digital textile inkjet printers in India. The company operates through three segments: Digital Textile Printing Services; Sublimation Paper Manufacturing; and Machinery and Ink Supply.

IndustryIndustrial Distribution

SectorIndustrials

Employees963

Annual revenue₹302 Cr

How does it make money?

Turns over ₹302 Cr a year. Of every ₹100 of sales, about ₹10 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation. Each of its 963 employees supports ₹31.3 lakh of revenue a year, the signature of a people-led business.

EBITDA margin15.6%

Net margin10.3%

Revenue / employee₹31.3 lakh

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.

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

SIEMENS LTDP/E 88.8x · ROE 10.5%

ABB INDIA LIMITEDP/E 92.6x · ROE 19.1%

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

ROCE has stayed above 15% in every year available and stands at 21.3%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 25.7% against a peer median of 15.2% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE21.3%

ROE25.7%

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 +274% while net margin moved +113% 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+274%

Margin effect+113%

DalalBaazaar Score

65/ 100

Good

Weighted across six categories. Every point is explained below.

✗ 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

68/ 100

Good

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

Valuation

81/ 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

10.1x

1.3Y Median

12.7x

15 monthly readings · mean 13.2x · range 10.1x–20.1x

Sector Median

88.8x

median of 3 sector peers

🟢Current valuation is approximately 20% below its 1.3y median of 12.7x. 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 89% below the peer median of 88.8x.

vs. its own history

Cheap

12.7x median over 15 months · -20%

vs. sector peers

Cheap

88.8x median of 3 peers · -89%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

10.1x

P/B

1.90x

EV/EBITDA

8.5x

PEG

0.10

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 7.0% to 15.6% over 3 years.
High return on capital employed
ROCE of 21.3% is the mark of a business that converts capital into profit efficiently.
Valuation below its historical average
At 10.1x the stock trades 20% below its own median of 12.7x.
Very low debt
Debt/Equity of 0.25x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention6

Debt is rising
Total debt is up 129% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 61.5% to 16.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 33.8% to 21.3% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 733% against revenue growth of 274% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 311% against revenue growth of 274% — stock may not be moving.

Red Flags

5 items require attention · 4 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 129% over 3 years, from ₹20 Cr to ₹46 Cr.
🔴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.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Receivables growing faster than salesFinancial
Receivables up 733% against revenue up 274% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 311% against revenue up 274% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 21.3% 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 7.0% to 15.6%. 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 20% 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 89% 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 733% against revenue up 274%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 61.5% to 16.6%. 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.
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
4 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 41% a year✓ 55.2% CAGR
Latest reported year was 10.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 14%✓ 15.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹73 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 18%✓ 21.3%
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

₹355 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

10.1x

Cheap

Cheap against the generic band

P/B Ratio

1.90x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹14.28

Profitable

Profitable on a per-share basis

ROE

25.7%

Strong

Strong capital efficiency

ROCE

21.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.25x

Low

Conservative leverage

Revenue Growth (YoY)

10.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

39.6%

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

-₹86 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹144

ROA

11.9%

Good

Assets are working hard

Operating Margin

14.2%

Average

Average margins

Net Margin

10.3%

Good

Strong bottom-line conversion

Current Ratio

2.02

Comfortable

Healthy short-term liquidity

52W Range Position

13%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

148.0 / 150.0

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

45.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹81 Cr	₹160 Cr	₹233 Cr	₹302 Cr	+55.2%
EBITDA	₹6 Cr	₹15 Cr	₹41 Cr	₹47 Cr	+102.4%
EBITDA Margin	7.0%	9.1%	17.5%	15.6%	—
PAT (Net Profit)	₹4 Cr	₹8 Cr	₹24 Cr	₹31 Cr	+99.6%
EPS	₹1.59	₹3.34	₹12.78	₹14.28	+107.9%
ROE	61.5%	56.4%	43.7%	16.6%	—
ROCE	33.8%	34.1%	45.9%	21.3%	—
Total Debt	₹20 Cr	₹57 Cr	₹48 Cr	₹46 Cr	+31.9%
Free Cash Flow	-₹22 Cr	-₹30 Cr	-₹3 Cr	-₹73 Cr	—

🟢 Revenue has grown at 55.2% a year over 3 years.

🟢 EBITDA has grown at 102.4% a year over 3 years.

🟢 EBITDA Margin has risen from 7.0% to 15.6% over 3 years (+8.6 pts).

🟢 PAT (Net Profit) has grown at 99.6% a year over 3 years.

🟢 EPS has grown at 107.9% a year over 3 years.

🔴 ROE has fallen from 61.5% to 16.6% over 3 years (-44.9 pts).

🔴 ROCE has fallen from 33.8% to 21.3% over 3 years (-12.5 pts).

🔴 Total Debt has grown at 31.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹287 Cr

Total Liabilities

₹100 Cr

Total Debt

₹46 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

-₹35 Cr

Capex

-₹38 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

77.5%

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

1 mixed5 general

Mukul Agarwal buys 1.6% stake in True Colors; shares trade 10% below IPO

The Economic Times, 08 Apr

True Colors Ltd Key Financial Ratios – Valuation, Profitability & More

Value Research, 29 Aug

TRUE COLORS LIMITED Share Price

Upstox, 05 May

True Colors approves JV for paper products, appoints auditors

scanx.trade, 17 AugPartnership

🟡Mixed / dependsA partnership, whose value depends entirely on terms that a headline will not carry. Worth reading the filing before assuming either way.

Ace Investor Mukul Agrawal Makes Fresh Buying, Adds 1.62% Stake in SME Company

Dalal Street Investment Journal, 09 Apr

Compare with

Equitymaster, 14 Oct

Watch Items

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

DalalBaazaar Thesis

🟡Business QualityAdequate12.6/20

🟢Financial HealthStrong13/20

🟢GrowthStrong14.9/20

🟢ProfitabilityStrong10.4/15

🟢ValuationAttractive11.8/15

🔴RiskHigh2.5/10

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

This thesis breaks if

✓Revenue growth stays above 41% a year55.2% CAGR
✓EBITDA margin holds above 14%15.6%
✗Free cash flow remains positive-₹73 Cr
✓Debt / EBITDA stays below 2x1.0x
✓ROCE stays above 18%21.3%