Virinchi Limited

Technology — Software - Application · NSE

₹13.61−₹0.32 (−2.30%)

DalalBaazaar Score

40 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by the company is currently loss-making, micro-cap size, which brings thin liquidity.

In simple words: The company is currently losing money, but sales are shrinking. Whether sales start growing again is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

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

What does this company do?

Virinchi Limited provides information technology (IT) products and services worldwide. The company operates through Development of Computer Software and Services, IT Enabled Services, and Healthcare Services segments.

IndustrySoftware - Application

SectorTechnology

Employees1,019

Annual revenue₹234 Cr

How does it make money?

Turns over ₹234 Cr a year. Of every ₹100 of sales, about ₹-11 reaches shareholders as profit, with ₹32 left at the operating level before interest, tax and depreciation. Each of its 1,019 employees supports ₹22.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹22.9 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 1.4% 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?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -8% while net margin moved -321% 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-8%

Margin effect-321%

DalalBaazaar Score

40/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Return on equity is negative
✗ ROE has fallen by 8.7 points over the period

Quality vs. Valuation

Company Quality

38/ 100

Weak

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

Valuation

54/ 100

Fair

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

Weak on business quality and not cheap enough to compensate.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

N/A

No P/E — the company is lossmaking

EV/EBITDA

5.6x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 14% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 3.2% to -5.5% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 8.0% to 1.4% — often a sign of competition or overexpansion.

Red Flags

6 items require attention · 3 high · 3 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 0.3x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹26 Cr in the latest reported year.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 11.2 points, from 43.2% to 31.9%.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 1.1x to 0.3x.
🟡Receivables growing faster than salesFinancial
Receivables up 31% against revenue up -8% — sales are being booked faster than they are collected.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 30% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

No clear supporting case emerges from the available numbers.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 43.2% to 31.9%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 3.7x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 31% against revenue up -8%. 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 3.2% to -5.5%. 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.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 30%✓ 31.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.7x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Interest cover stays above 3x✗ 0.3x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹2 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ 1.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

3 good · 3 neutral · 5 weak

Market Cap

₹153 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not meaningful

Loss-making

Earnings are negative, so a P/E multiple can't be read here

P/B Ratio

0.29x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹-2.52

Loss-making

Negative earnings per share — the business is losing money

ROE

-5.5%

Weak

Weak capital efficiency

ROCE

1.4%

Weak

Low return on total capital employed

Debt/Equity

0.57x

Low

Conservative leverage

Revenue Growth (YoY)

-12.0%

Shrinking

Sales are contracting

Profit Growth (YoY)

0.0%

Modest

Slow profit growth

Dividend Yield

None

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

Free Cash Flow

₹2 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

2.0%

Weak

Thin margins leave little room for error

Net Margin

-9.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.69

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.78

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

13.4 / 14.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

46.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹254 Cr	₹239 Cr	₹238 Cr	₹234 Cr	-2.8%
EBITDA	₹110 Cr	₹114 Cr	₹96 Cr	₹75 Cr	-12.1%
EBITDA Margin	43.2%	47.5%	40.3%	31.9%	—
PAT (Net Profit)	₹13 Cr	₹14 Cr	₹1 Cr	-₹26 Cr	—
EPS	₹1.56	₹1.44	₹0.07	₹-2.52	—
ROE	3.2%	3.0%	0.2%	-5.5%	—
ROCE	8.0%	8.4%	5.6%	1.4%	—
Total Debt	₹317 Cr	₹330 Cr	₹292 Cr	₹273 Cr	-4.8%
Free Cash Flow	-₹9 Cr	₹3 Cr	₹5 Cr	₹2 Cr	—

🔴 Revenue has shrunk at 2.8% a year over 3 years.

🔴 EBITDA has shrunk at 12.1% a year over 3 years.

🔴 EBITDA Margin has fallen from 43.2% to 31.9% over 3 years (-11.2 pts).

🔴 PAT (Net Profit) has turned negative, from ₹13 Cr to -₹26 Cr.

🔴 EPS has turned negative, from ₹1.56 to ₹-2.52.

🔴 ROE has fallen from 3.2% to -5.5% over 3 years (-8.7 pts).

🔴 ROCE has fallen from 8.0% to 1.4% over 3 years (-6.6 pts).

🟢 Total Debt has shrunk at 4.8% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹9 Cr to ₹2 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹850 Cr

Total Liabilities

₹368 Cr

Cash & Equivalents

₹9 Cr

Operating Cash Flow

₹21 Cr

Capex

-₹19 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

43.5%

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 VIRINCHI CONSULTANTS

Equitymaster, 16 Oct

Virinchi Limited Allots 8.5 Lakh Equity Shares on Warrant Conversion Worth Rs.1.79 Crore

scanx.trade, 10 Apr

Virinchi Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

Virinchi Share: Bull Case vs Bear Case for 2026

Univest, 29 Sept

Electrosteel Castings (ELECTCAST.NS) Edges Up 1.69% to ₹74.11, Nearing Resistance Zone - New Highs New Lows

siam.in, 23 Sept

Virinchi seeks approval for RPTs worth ₹90 crore

scanx.trade, 12 Jun

Watch Items

Revenue growth is negative (-12.0%) on the latest reported period — check if this is one-off or a trend.
Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health

MiddlingValuation

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 3 high-severity red flags sit above this conclusion and should be read first.

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑