🟢 At a Glance
SRM Contractors Ltd is an infrastructure company that specializes in roads, bridges, tunnels, and slope stabilization—especially in India’s most treacherous terrains like J&K, Ladakh, and Arunachal. With a 5-year profit CAGR of 69% and ROCE of 31%, this stock has quietly become a multibagger since IPO. But is it still worth climbing?
🪜 1. Introduction with Hook
From mountain passes to investor dashboards, SRM is climbing fast.
While most infra companies are stuck waiting for payments or approval files to move, SRM Contractors is sprinting across India’s most unstable terrain—literally. Be it tunnels in the Himalayas or roads across riverbeds, these guys are building infrastructure where Google Maps doesn’t dare to go.
And it’s paying off. The stock is up 171% in the past year, and with FY25 PAT jumping 126% YoY, the Street is finally noticing this ₹1,100 Cr microcap.
🏗️ 2. WTF Do They Even Do? (Business Model)
SRM Contractors is an EPC and HAM contractor that specializes in:
- Roads & Bridges (including complex hilly terrains)
- Tunnels (a big deal in J&K and Northeast India)
- Slope Stabilization (think landslide prevention, not HR conflict resolution)
- Flood Control & Irrigation Projects
- Housing & Drainage Works for government agencies
🧠 Fun fact: Most of their projects come from tough states where very few infra players are willing to operate. That means less competition and better pricing power.
💰 3. Financials Overview – Profit, Margins, ROE, Growth
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 161 | 264 | 300 | 342 | 527 |
| EBITDA (₹ Cr) | 18 | 30 | 38 | 42 | 81 |
| Net Profit (₹ Cr) | 8 | 18 | 19 | 22 | 50 |
| ROCE | – | 37% | 33% | 25% | 31% |
| ROE | – | 29% | 27% | 26% | 25.6% |
| OPM | 11% | 11% | 13% | 12% | 15% |
📈 5-Year CAGR:
- Revenue: 30%+
- PAT: 69%
- EPS (TTM): ₹21.86
This isn’t just high growth—it’s high growth with discipline.
💸 4. Valuation – Is It Cheap, Meh, or Crack?
- CMP: ₹494
- Market Cap: ₹1,132 Cr
- P/E (TTM): 22.6
- Book Value: ₹116
- P/B: 4.26
🧮 EduFair Value Range™: ₹460 – ₹580
Based on 20–25x earnings multiple on FY25 PAT of ₹50 Cr and future growth optionality, SRM’s fair value is capped more by liquidity and visibility than earnings.
It’s not “cheap” anymore, but it’s not crack-level frothy either. For a company with 30%+ ROCE and strong execution, 22x P/E is still reasonable—IF order inflows and margins sustain.
🍳 5. What’s Cooking – News, Triggers, Drama
- 💼 Analyst Meets Galore: Vyom Wealth, Poddar Diamonds, and others are being courted.
- 📰 Strong Q4FY25: Revenue up 51% QoQ, PAT up 64% QoQ.
- 📣 Press Releases & Presentations showing consistent communication—unusual for smallcaps.
No flashy infra contracts announced recently, but past execution is doing all the talking. Also, SRM’s Q4 margins held at 15%, even with higher revenue—rare combo.
🧾 6. Balance Sheet – How Much Debt, How Many Dreams?
| Year | Total Assets (₹ Cr) | Net Worth (₹ Cr) | Total Debt (₹ Cr) |
|---|---|---|---|
| FY23 | 136 | 64 | 47 |
| FY24 | 231 | 125 | 48 |
| FY25 | 395 | 266 | 41 |
📊 Debt-to-Equity: Dropped to 0.15x
🏗️ Fixed Asset Base: ₹72 Cr → Shows steady infra capex but not bloated
Clean and conservative. No signs of leverage-induced optimism.
💸 7. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | FCF? | CFI (₹ Cr) | CFF (₹ Cr) |
|---|---|---|---|---|
| FY24 | ₹0 | Low | ₹0 | ₹0 |
| FY25 | ₹1 Cr | Minimal | ₹(46) Cr | ₹79 Cr |
🧠 Operating cash flow has been flat due to working capital creep—typical of EPC players. The company raised equity (IPO) and infused capital, hence the financing bump.
📊 8. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROE | 25.6% |
| ROCE | 31.0% |
| OPM | 15% |
| Inventory Days | 82 |
| Debtor Days | 27 |
| Cash Conversion Cycle | 44 days |
🧠 Working capital days have expanded, but still manageable. 44-day CCC is not alarming yet.
🧾 9. P&L Breakdown – Show Me the Money
In FY25:
- Revenue: ₹527 Cr
- EBITDA: ₹81 Cr
- Net Profit: ₹50 Cr
- EPS: ₹21.86
- No dividend (Why pay when you can compound?)
This is a story of operational leverage done right. EBITDA nearly doubled with revenue up just 54%.
🧬 10. Miscellaneous – Shareholding, Promoters
| Category | Mar 2025 | Change (1 Year) |
|---|---|---|
| Promoters | 72.92% | No Change |
| FIIs | 0.04% | Down |
| DIIs | 3.45% | Down |
| Public | 23.59% | Up from 19.78% |
📉 Institutional stake is still tiny. Retail seems to be picking it up. Float is limited = volatility ahead?
✅ EduInvesting Verdict™
SRM = Sasta Road Magician.
- 🚧 Niche infra player in tough terrains
- 💪 High ROCE, high PAT growth, clean balance sheet
- 🤏 Low institutional holding = room for discovery
- 📉 Slight WC and liquidity risks, but no red flags yet
For investors okay with low float, infra cyclicality, and microcap volatility—SRM Contractors is still worth watching.
FV Range: ₹460 – ₹580
Status: “Earned its margin of safety… now needs growth to kick further.”
✍️ Written by Prashant | 📅 June 27, 2025
Tags: SRM Contractors, Infrastructure, EPC, Microcap Stocks, EduInvesting, Roads & Bridges, Slope Stabilization, Tunnel Projects, ROCE, Fair Value
