Zeal Global Services Limited

Sector n/a · NSE

₹189.50−₹5.00 (−2.57%)

DalalBaazaar Score

50 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, falling profits.

In simple words: Strong business and financial position, but sales are shrinking. 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

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

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

How does it make money?

Turns over ₹286 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation.

EBITDA margin8.0%

Net margin3.9%

What is its competitive advantage?Some evidence

ROCE of 18.4% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE18.4%

ROE12.1%

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 +154% while net margin moved -56% 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+154%

Margin effect-56%

DalalBaazaar Score

50/ 100

Moderate

Weighted across six categories. Every point is explained below.

• ROE of 12.1% is moderate
✗ ROE has fallen by 31.8 points over the period

Quality vs. Valuation

Company Quality

51/ 100

Average

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

Valuation

60/ 100

Fair

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.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

No P/E available

P/E (Trailing)

—

P/B

—

EV/EBITDA

11.8x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.22x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention4

Margins are compressing
EBITDA margin has slipped from 13.5% to 8.0% over 3 years.
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 43.9% to 12.1% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 62.5% to 18.4% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.5 points, from 13.5% to 8.0%.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹15 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 18.4% 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.
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 13.5% to 8.0%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Returns on shareholder capital are falling
ROE has dropped from 43.9% to 12.1%. 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.
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.

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

1Revenue growth stays above 27% a year✓ 36.5% CAGR
Latest reported year was -22.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 6%✓ 8.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹15 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%✓ 18.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

4 / 9 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
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

2 good · 6 neutral · 3 weak

Market Cap

₹252 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not available

No data

Source didn't return this field

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

Not available

No data

Source didn't return this field

ROE

12.1%

Moderate

Moderate capital efficiency

ROCE

18.4%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.22x

Low

Conservative leverage

Revenue Growth (YoY)

-22.4%

Shrinking

Sales are contracting

Profit Growth (YoY)

-23.5%

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

-₹15 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹189.5

Gross Margin

9.7%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

3.9%

Average

Average bottom-line conversion

Current Ratio

1.41

Comfortable

Healthy short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

73.2 / 70.4

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

18.6

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹112 Cr	₹193 Cr	₹368 Cr	₹286 Cr	+36.5%
EBITDA	₹15 Cr	₹21 Cr	₹25 Cr	₹23 Cr	+14.6%
EBITDA Margin	13.5%	10.7%	6.9%	8.0%	—
PAT (Net Profit)	₹10 Cr	₹12 Cr	₹15 Cr	₹11 Cr	+4.2%
EPS	₹7.4	₹9.97	₹10.96	—	—
ROE	43.9%	18.1%	18.0%	12.1%	—
ROCE	62.5%	26.2%	24.7%	18.4%	—
Total Debt	₹17 Cr	₹10 Cr	₹14 Cr	₹20 Cr	+5.0%
Free Cash Flow	-₹19 Cr	₹3 Cr	₹10 Cr	-₹15 Cr	—

🟢 Revenue has grown at 36.5% a year over 3 years.

🟢 EBITDA has grown at 14.6% a year over 3 years.

🔴 EBITDA Margin has fallen from 13.5% to 8.0% over 3 years (-5.5 pts).

🟢 PAT (Net Profit) has grown at 4.2% a year over 3 years.

🔴 ROE has fallen from 43.9% to 12.1% over 3 years (-31.8 pts).

🔴 ROCE has fallen from 62.5% to 18.4% over 3 years (-44.1 pts).

🔴 Total Debt has grown at 5.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹143 Cr

Total Liabilities

₹51 Cr

Total Debt

₹20 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

-₹12 Cr

Capex

-₹2 Cr

Recent News

6 general

Zeal Global Services (NSEI:ZEAL) - Stock Analysis

Simply Wall Street, 11 Oct

Zeal Global Services Ltd Key Financial Ratios – Valuation, Profitability & More

Value Research, 06 Oct

TRIVENI POWER TRANSMISSION LTD. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 12 Oct

Zeal Global acquires 5.06% stake in Gayatri Projects

scanx.trade, 10 Jul

Zeal Global Services Ltd Peer Comparison – Compare with Others

Value Research, 31 Aug

German Green Steel raises over Rs 91 crore from anchor investors ahead of September 25 IPO

Moneycontrol.com, 24 Sept

Watch Items

Revenue growth is negative (-22.4%) 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.
Sector/industry classification unavailable — verify manually for peer comparison.
3 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

🔴Business QualityWeak8.8/20

🟢Financial HealthStrong13.2/20

🟡GrowthModest10/20

🔴ProfitabilityWeak6/15

🟡ValuationFair7.5/15

🔴RiskHigh4.3/10

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. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 27% a year36.5% CAGR
✓EBITDA margin holds above 6%8.0%
✗Free cash flow remains positive-₹15 Cr
✓Debt / EBITDA stays below 2x0.9x
✓ROCE stays above 15%18.4%