Xchanging Solutions Limited

Technology — Information Technology Services · NSE

₹60.99+₹1.09 (+1.82%)

DalalBaazaar Score

72 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, with modest growth. Nothing obvious stands out as stretched — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 pm

Constructive picture on fundamentals. Profitability, leverage and growth metrics are broadly healthy on this snapshot. That said, valuation should still be checked against direct sector peers (not just the generic P/E bands used here) before treating this as a buy signal.

Understanding the Business

Company site ↗

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

What does this company do?

Xchanging Solutions Limited provides information technology services in India, Europe, the United States, Singapore, and internationally.

IndustryInformation Technology Services

SectorTechnology

Employees86

Annual revenue₹203 Cr

How does it make money?

Turns over ₹203 Cr a year. Of every ₹100 of sales, about ₹29 reaches shareholders as profit, with ₹40 left at the operating level before interest, tax and depreciation. Each of its 86 employees supports ₹2.36 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin40.5%

Net margin29.3%

Revenue / employee₹2.36 Cr

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.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?Some evidence

ROCE of 18.1% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE18.1%

ROE15.0%

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 +16% while net margin moved +14% 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+16%

Margin effect+14%

DalalBaazaar Score

72/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.79 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast

Quality vs. Valuation

Company Quality

74/ 100

Good

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

Valuation

82/ 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

11.4x

3Y Median

26.7x

40 monthly readings · mean 39.5x · range 10.7x–102.3x

Sector Median

16.5x

median of 4 sector peers

🟢Current valuation is approximately 58% below its 3y median of 26.7x. 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 31% below the peer median of 16.5x.

vs. its own history

Cheap

26.7x median over 40 months · -58%

vs. sector peers

Cheap

16.5x median of 4 peers · -31%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

11.4x

P/B

1.71x

EV/EBITDA

5.4x

PEG

1.16

Dividend Yield

3.28%

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 34.6% to 40.5% over 3 years.
Return on equity is rising
ROE has improved from 6.6% to 15.0%.
Return on capital is rising
ROCE has improved from 8.7% to 18.1%.
Valuation below its historical average
At 11.4x the stock trades 58% below its own median of 26.7x.
Very low debt
Debt/Equity of 0.18x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Debt is rising
Total debt is up 5207% over 3 years — worth checking what it funded.
Receivables growing faster than sales
Receivables are up 120% against revenue growth of 16% — customers are taking longer to pay.

Red Flags

3 items require attention · 3 high

🔴Debt has risen sharplyFinancial
Total debt is up 5207% over 3 years, from ₹1 Cr to ₹71 Cr.
🔴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 120% against revenue up 16% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 18.1% 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 34.6% to 40.5%. 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 58% 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 31% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹41 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 120% against revenue up 16%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Growth barely outpaces inflation
Revenue compounding at 5.2% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
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 38%✓ 40.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✓ 5.2% CAGR
Latest reported year was 7.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹41 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.9x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 15%✓ 18.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 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 · 4 neutral · 0 weak

Market Cap

₹679 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

11.4x

Cheap

Cheap against the generic band

P/B Ratio

1.71x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹5.37

Profitable

Profitable on a per-share basis

ROE

15.0%

Strong

Strong capital efficiency

ROCE

18.1%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.18x

Low

Conservative leverage

Revenue Growth (YoY)

7.3%

Modest

Modest growth

Profit Growth (YoY)

9.7%

Modest

Slow profit growth

Dividend Yield

3.28%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹41 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹60.99

Operating Margin

33.5%

Good

Healthy core-business profitability

Net Margin

29.4%

Good

Strong bottom-line conversion

Current Ratio

4.97

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.79

Defensive

Steadier than the market

52W Range Position

24%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

60.6 / 62.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

48.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹174 Cr	₹174 Cr	₹185 Cr	₹203 Cr	+5.2%
EBITDA	₹60 Cr	₹68 Cr	₹70 Cr	₹82 Cr	+10.9%
EBITDA Margin	34.6%	39.2%	37.9%	40.5%	—
PAT (Net Profit)	₹45 Cr	₹14 Cr	₹50 Cr	₹59 Cr	+9.8%
EPS	₹4.03	₹1.23	₹4.45	₹5.34	+9.8%
ROE	6.6%	3.9%	13.8%	15.0%	—
ROCE	8.7%	14.6%	16.1%	18.1%	—
Total Debt	₹1 Cr	₹105 Cr	₹85 Cr	₹71 Cr	+275.8%
Free Cash Flow	₹42 Cr	-₹12 Cr	₹49 Cr	₹41 Cr	-0.7%

🟢 Revenue has grown at 5.2% a year over 3 years.

🟢 EBITDA has grown at 10.9% a year over 3 years.

🟢 EBITDA Margin has risen from 34.6% to 40.5% over 3 years (+5.9 pts).

🟢 PAT (Net Profit) has grown at 9.8% a year over 3 years.

🟢 EPS has grown at 9.8% a year over 3 years.

🟢 ROE has risen from 6.6% to 15.0% over 3 years (+8.4 pts).

🟢 ROCE has risen from 8.7% to 18.1% over 3 years (+9.4 pts).

🔴 Total Debt has grown at 275.8% a year over 3 years.

🟡 Free Cash Flow has been broadly flat over 3 years (-0.7% a year).

Balance Sheet & Cash Flow — FY2026

Total Assets

₹523 Cr

Total Liabilities

₹127 Cr

Total Debt

₹71 Cr

Cash & Equivalents

₹311 Cr

Operating Cash Flow

₹41 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

75.0%

Corporate Actions

Dividend Rate

₹2

Ex-Dividend Date

14 Aug 2026

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

3 positive1 mixed2 general

Three Days Left To Buy Xchanging Solutions Limited (NSE:XCHANGING) Before The Ex-Dividend Date

Simply Wall Street, 10 AugCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Xchanging Solutions Share Price Target 2027, 2028 and 2030: Long Term Analyst Forecast

Univest, 11 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Xchanging Solutions Q4 Net Profit Jumps 10.5% to ₹16.2 Crore YoY

Sahi, 21 MayResults

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

Xchanging Solutions Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

Xchanging FY26 Net Profit Rises to INR 5,945 Lakh

scanx.trade, 21 MayResults

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

Compare with CAMBRIDGE SOLUTIONS

Equitymaster, 10 Oct

Watch Items

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

DalalBaazaar Thesis

🟢Business QualityStrong17.1/20

🟢Financial HealthStrong15.6/20

🟡GrowthModest10.4/20

🟢ProfitabilityStrong12.6/15

🟢ValuationAttractive11.8/15

🔴RiskHigh4.4/10

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

This thesis breaks if

✓EBITDA margin holds above 38%40.5%
✓Revenue growth stays above 4% a year5.2% CAGR
✓Free cash flow remains positive₹41 Cr
✓Debt / EBITDA stays below 2x0.9x
✓ROCE stays above 15%18.1%