Vedavaag Systems Limited

Technology — Information Technology Services · NSE

₹23.00+₹0.52 (+2.31%)

DalalBaazaar Score

56 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by moderate debt load, micro-cap size, which brings thin liquidity, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. The direction of profits is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

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

What does this company do?

Vedavaag Systems Limited, together with its subsidiaries, provides information technology (IT) sales and services in India. It acts as a business correspondent for implementation of KIOSK business.

IndustryInformation Technology Services

SectorTechnology

Employees213

Annual revenue₹129 Cr

How does it make money?

Turns over ₹129 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 213 employees supports ₹60.3 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹60.3 lakh

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?Little sign of one

Returns on capital of 5.4% 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 ROE32.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +51% while net margin moved -55% 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+51%

Margin effect-55%

DalalBaazaar Score

56/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 3.4% is weak

Quality vs. Valuation

Company Quality

48/ 100

Average

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

Valuation

87/ 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

13.0x

Sector Median

16.5x

median of 4 sector peers

🟢Against its sector it trades 21% below the peer median of 16.5x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

16.5x median of 4 peers · -21%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

4.3x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 52% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 7.6% to 5.4% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 9.7 points, from 19.4% to 9.7%.
🔴Receivables growing faster than salesFinancial
Receivables up 110% against revenue up 51% — sales are being booked faster than they are collected.
🟡Profit is decliningFinancial
Net profit is down 31% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 52% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 21% 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?

Margins are being competed away
EBITDA margin has fallen from 19.4% to 9.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Sales are being booked faster than collected
Receivables are up 110% against revenue up 51%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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 11% a year✓ 14.8% CAGR
Latest reported year was -28.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 8%✓ 9.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹3 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✗ 5.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 10 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

Price history

Quick Metrics

4 good · 3 neutral · 4 weak

Market Cap

₹54 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

13.0x

Cheap

Cheap against the generic band

P/B Ratio

0.34x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹1.77

Profitable

Profitable on a per-share basis

ROE

3.4%

Weak

Weak capital efficiency

ROCE

5.4%

Weak

Low return on total capital employed

Debt/Equity

0.90x

Moderate

Moderate leverage

Revenue Growth (YoY)

-28.9%

Shrinking

Sales are contracting

Profit Growth (YoY)

-48.9%

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

₹3 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

7.4%

Average

Average margins

Net Margin

3.5%

Average

Average bottom-line conversion

Current Ratio

3.77

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.31

Defensive

Steadier than the market

52W Range Position

69%

Mid-range

Technical Snapshot

RSI (14)

45.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹85 Cr	₹87 Cr	₹106 Cr	₹129 Cr	+14.8%
EBITDA	₹16 Cr	₹17 Cr	₹16 Cr	₹12 Cr	-8.9%
EBITDA Margin	19.4%	19.4%	14.9%	9.7%	—
PAT (Net Profit)	₹8 Cr	₹8 Cr	₹8 Cr	₹5 Cr	-11.8%
EPS	₹3.31	₹3.44	₹3.62	₹2.22	-12.5%
ROE	6.0%	5.9%	5.7%	3.4%	—
ROCE	7.6%	7.0%	7.6%	5.4%	—
Total Debt	₹4 Cr	₹2 Cr	₹5 Cr	₹2 Cr	-21.7%
Free Cash Flow	₹3 Cr	₹5 Cr	-₹6 Cr	₹3 Cr	+1.0%

🟢 Revenue has grown at 14.8% a year over 3 years.

🔴 EBITDA has shrunk at 8.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 19.4% to 9.7% over 3 years (-9.7 pts).

🔴 PAT (Net Profit) has shrunk at 11.8% a year over 3 years.

🔴 EPS has shrunk at 12.5% a year over 3 years.

🔴 ROE has fallen from 6.0% to 3.4% over 3 years (-2.6 pts).

🔴 ROCE has fallen from 7.6% to 5.4% over 3 years (-2.2 pts).

🟢 Total Debt has shrunk at 21.7% a year over 3 years.

🟡 Free Cash Flow has been broadly flat over 3 years (1.0% a year).

Balance Sheet & Cash Flow — FY2026

Total Assets

₹200 Cr

Total Liabilities

₹47 Cr

Cash & Equivalents

₹3 Cr

Operating Cash Flow

₹3 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

39.1%

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

VEDAVAAG Stock Price and Chart — NSE:VEDAVAAG

TradingView, 18 Aug

Vedavaag Systems subsidiary gets in-principle IRDAI broker approval

scanx.trade, 07 Oct

Vedavaag Systems Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 05 Sept

Vedavaag Systems stock jumps following ITI order for supply and installation of CCTV

Alice Blue, 24 Dec

Vedavaag Systems board approves investment in insurance broking subsidiary

scanx.trade, 24 Sept

Vedavaag Systems passes both resolutions at 28th AGM

scanx.trade, 01 Oct

Watch Items

Revenue growth is negative (-28.9%) 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

StrongFinancial Health · Valuation

MiddlingRisk

WeakBusiness Quality · Growth · Profitability

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.

1 of 5 tripwires tripped — ROCE stays above 8% · see Key things to watch ↑