ZF Steering Gear (India) Limited

Consumer Cyclical — Auto Parts · NSE

₹686.00+₹1.50 (+0.22%)

DalalBaazaar Score

46 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

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

In simple words: The business is earning a fairly low return on the money invested in it, with modest growth. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:28 pm

Understanding the Business

Company site ↗

The 60-second version of ZF Steering Gear (India) Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

ZF Steering Gear (India) Limited engages in the production and assembly of steering systems for vehicles, buses, and tractors in India and internationally. It operates in two segments, Auto Component and Renewable Energy.

IndustryAuto Parts

SectorConsumer Cyclical

Annual revenue₹568 Cr

How does it make money?

Turns over ₹568 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹15 left at the operating level before interest, tax and depreciation.

Who are its competitors?

The closest listed comparisons in its industry are BOSCH LIMITED, MARUTI SUZUKI INDIA LTD., TVS MOTOR COMPANY LTD, EICHER MOTORS 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 7.0% 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 ROE23.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +27% while net margin moved -51% 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+27%

Margin effect-51%

DalalBaazaar Score

46/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 3.2% is weak

Quality vs. Valuation

Company Quality

43/ 100

Weak

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

Valuation

73/ 100

Cheap

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

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

31.5x

Sector Median

45.7x

median of 4 sector peers

🟢Against its sector it trades 31% below the peer median of 45.7x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

45.7x median of 4 peers · -31%

vs. generic bands

Fair

15x–35x

EV/EBITDA

8.4x

PEG

—

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 Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 146% over 3 years, from ₹43 Cr to ₹106 Cr.
🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🟡Profit is decliningFinancial
Net profit is down 37% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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.
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?

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

1EBITDA margin holds above 13%✓ 15.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹12 Cr
Profit that never becomes cash eventually stops being profit.
3Revenue growth stays above 6% a year✓ 8.3% CAGR
Latest reported year was 7.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Debt / EBITDA stays below 2x✓ 1.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✗ 7.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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

4 good · 4 neutral · 3 weak

Market Cap

₹622 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

31.5x

Fair

Fairly valued against the generic band

P/B Ratio

1.29x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹21.8

Profitable

Profitable on a per-share basis

ROE

3.2%

Weak

Weak capital efficiency

ROCE

7.0%

Weak

Low return on total capital employed

Debt/Equity

0.22x

Low

Conservative leverage

Revenue Growth (YoY)

7.6%

Modest

Modest growth

Profit Growth (YoY)

73.0%

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

-₹12 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

2.1%

Weak

Thin margins leave little room for error

Net Margin

3.4%

Average

Average bottom-line conversion

Current Ratio

1.25

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.51

Defensive

Steadier than the market

52W Range Position

24%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

701.7 / 688.7

Bullish alignment (short > long)

RSI (14)

20.7

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹448 Cr	₹476 Cr	₹492 Cr	₹568 Cr	+8.3%
EBITDA	₹65 Cr	₹63 Cr	₹61 Cr	₹87 Cr	+10.1%
EBITDA Margin	14.5%	13.3%	12.4%	15.2%	—
PAT (Net Profit)	₹25 Cr	₹44 Cr	₹15 Cr	₹15 Cr	-14.4%
EPS	₹27.05	₹48.15	₹16.44	₹16.96	-14.4%
ROE	5.9%	9.5%	3.2%	3.2%	—
ROCE	8.6%	10.6%	6.0%	7.0%	—
Total Debt	₹43 Cr	₹77 Cr	₹100 Cr	₹106 Cr	+34.9%
Free Cash Flow	₹9 Cr	-₹59 Cr	-₹19 Cr	-₹12 Cr	—

🟢 Revenue has grown at 8.3% a year over 3 years.

🟢 EBITDA has grown at 10.1% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 15.2% over 3 years.

🔴 PAT (Net Profit) has shrunk at 14.4% a year over 3 years.

🔴 EPS has shrunk at 14.4% a year over 3 years.

🔴 ROE has fallen from 5.9% to 3.2% over 3 years (-2.7 pts).

🔴 ROCE has fallen from 8.6% to 7.0% over 3 years (-1.6 pts).

🔴 Total Debt has grown at 34.9% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹9 Cr to -₹12 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹673 Cr

Total Liabilities

₹192 Cr

Cash & Equivalents

₹5 Cr

Operating Cash Flow

₹98 Cr

Capex

-₹110 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

74.9%

Peer Comparison

Company	P/E	ROE
BOSCH LIMITED	56.9x	15.9%
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TVS MOTOR COMPANY LTD	56.8x	35.8%
EICHER MOTORS LTD	34.7x	23.0%

Recent News

1 positive5 general

ZF Steering Gear (India) Share Price - Live NSE: ZFCVINDIA Stock Price & Chart

Upstox, 16 Oct

GRP vs Mercury EV-Tech vs ZF Steering Gear (India)

Univest, 16 Oct

ZF Steering Gear share skyrockets 15% on bagging this deal; details here

Business Standard, 31 Dec

ZF Steering Gear (India) Limited Opens Special Window for Physical Share Transfer Requests

scanx.trade, 13 Apr

ZF Steering Gea Consolidated March 2026 Net Sales at Rs 174.34 crore, up 27.24% Y-o-Y

Moneycontrol.com, 12 May

ZF Steering Shares Skyrocketed 15% as Arm Secures Rs 151 Crore Order

Equitypandit, 31 DecOrder win

🟢Potentially positiveAn order or contract win, which adds to future revenue. How much depends on its size against annual sales and on when it is executed.

Watch Items

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

MiddlingBusiness Quality · Financial Health · Valuation

WeakGrowth · Profitability · Risk

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 2 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Free cash flow remains positive; ROCE stays above 8% · see Key things to watch ↑