1. At a Glance
CFF Fluid Control Ltd is no ordinary metal-bending workshop — it’s a niche submarine and warship systems supplier to the Indian Navy. From test rigs to sonar components, the company has evolved from a parts manufacturer to a defense sector sweetheart with order inflows that scream “classified but cash-rich.”
2. Introduction with Hook
Imagine you’re the plumber for India’s billion-dollar submarines. Now, add engineering wizardry, government contracts, and 433-day working capital cycles, and you get CFF Fluid Control Ltd — the Navy’s go-to handyman for stealth hardware.
- Revenue in FY25: ₹146 Cr, up from ₹32 Cr in FY20
- Net profit CAGR (5 years): 77%
- Current Market Cap: ₹1,227 Cr
The company may not be on every investor’s radar, but it’s definitely on every naval sonar.
3. Business Model (WTF Do They Even Do?)
CFF started off building basic components. Today, they provide:
- Engineering, manufacturing, and overhaul services for submarine and surface ship machinery.
- Test rigs for hydraulic, pneumatic, electrical systems.
- Specialized equipment for Nuclear and Clean Energy sectors.
Client list? Think Mazagon Dock, Indian Navy, Naval Dockyard. They don’t do B2C. They do B2B… with DRDO and Ministry of Defense.
Revenue is mostly project-based and driven by order book wins. They recently won multiple contracts worth ₹10–₹267 Cr in FY25 alone — a staggering pipeline for a sub-₹150 Cr revenue firm.
4. Financials Overview
| Year | Revenue (₹ Cr) | EBITDA (₹ Cr) | Net Profit (₹ Cr) | OPM % | NPM % |
|---|---|---|---|---|---|
| FY20 | 32 | 5 | 1 | 16% | 3% |
| FY21 | 15 | 3 | 0 | 19% | 0% |
| FY22 | 47 | 13 | 8 | 27% | 17% |
| FY23 | 71 | 18 | 10 | 26% | 14% |
| FY24 | 107 | 31 | 17 | 29% | 16% |
| FY25 | 146 | 41 | 24 | 28% | 16% |
Key Trends:
- Operating margins are consistently above 25%
- EPS has grown from ₹7.1 in FY23 to ₹12.25 in FY25
- Revenue CAGR (FY20–25): 36%
5. Valuation
Current Price: ₹631
Book Value: ₹75.9 → P/B = 8.31x
P/E (TTM): 51.4x
Let’s run a fair value range using 3 methods:
- DCF (conservative growth 18%, 22% ROCE): ₹500–₹580
- Peer Average P/E (45x FY25 EPS ₹12.25): ₹551
- EV/EBITDA multiple (20x FY25 EBITDA of ₹41 Cr): ₹820
Fair Value Range: ₹550–₹820
The stock is expensive. But defense stocks tend to remain that way when the government is your BFF.
6. What’s Cooking – News, Triggers, Drama
- ₹11.72 Cr order (June 2025) for P75 submarine spares.
- ₹267.60 Cr + ₹266.94 Cr Letters of Intent received (Jul 2024).
- CRISIL upgraded credit rating to BBB+/Positive in Dec 2024.
- Expansion with a new Pune facility for sonar system production.
Also:
- Filed draft for Further Public Offer (Jan 2025) — this may dilute equity but add cash firepower.
The company is riding the Modi 3.0 defense capex wave like an Akshay Kumar-stunt double on a submarine.
7. Balance Sheet
| Item | FY25 |
|---|---|
| Equity Capital | ₹19 Cr |
| Reserves | ₹128 Cr |
| Borrowings | ₹21 Cr |
| Total Liabilities | ₹199 Cr |
| Fixed Assets | ₹36 Cr |
| CWIP | ₹2 Cr |
| Other Assets | ₹161 Cr |
Key Highlights:
- Equity base expanded during IPO/FPO (from ₹0.71 Cr in FY22 to ₹19 Cr)
- Asset-light model, decent reserve build-up
- Minimal debt, healthy book value growth
8. Cash Flow – Sab Number Game Hai
| Year | CFO (₹ Cr) | CFI (₹ Cr) | CFF (₹ Cr) | Net Change |
|---|---|---|---|---|
| FY20 | +20 | 0 | -19 | +1 |
| FY21 | -7 | 0 | +7 | -1 |
| FY22 | +15 | -6 | -7 | +2 |
| FY23 | -9 | -19 | +26 | -2 |
| FY24 | -27 | -17 | +59 | +16 |
| FY25 | -3 | -5 | -7 | -15 |
Issues:
- Negative CFO in 3 of last 4 years
- High WC requirements from slow defense payments
- Reliance on financing for capex expansion
9. Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 22.1% |
| ROE | 17.4% |
| Debtor Days | 150 |
| Inventory Days | 376 |
| CCC | 433 days |
| D/E | 0.16 |
Analysis:
- ROE and ROCE healthy despite working capital hell
- Cash Conversion Cycle at 433 days is a big red flag
- Execution is solid, but collections are slow
10. P&L Breakdown – Show Me the Money
| Year | Sales | Expenses | EBITDA | PAT | EPS |
|---|---|---|---|---|---|
| FY25 | ₹146 Cr | ₹105 Cr | ₹41 Cr | ₹24 Cr | ₹12.25 |
CFF converts ~16% of sales into net profit — solid for a manufacturing company in defense. They don’t overpromise. They just quietly invoice the government for ₹267 Cr.
11. Peer Comparison
| Company | P/E | ROE | Market Cap (₹ Cr) | OPM % |
|---|---|---|---|---|
| HAL | 38.9 | 26% | ₹3.25 Lakh Cr | 31% |
| Bharat Electron | 56.2 | 29.3% | ₹2.99 Lakh Cr | 28.75% |
| Zen Tech | 59.8 | 26% | ₹16,778 Cr | 38.4% |
| Data Patterns | 71.9 | 15.7% | ₹15,950 Cr | 38.8% |
| CFF Fluid | 51.4 | 17.4% | ₹1,227 Cr | 28% |
Takeaway: CFF is still a microcap, but its margin profile and order book scream “potential Data Patterns junior.”
12. Miscellaneous – Shareholding, Promoters
| Category | Stake (%) |
|---|---|
| Promoters | 73.3% |
| Public | 26.5% |
| FIIs | 0% |
| DIIs | 0.14% |
- Low public float = potential for volatility
- Promoter skin in the game: 73.3%
- No institutional investors yet — could change post FPO
13. EduInvesting Verdict™
CFF Fluid Control Ltd is the kind of stock that shows up late to the defense party but ends up getting more orders than the caterer. It’s still small, still niche, but packs the operational and order-book punch of a future defense multibagger.
But — and this is a sonar-sized “but” — its cash flows and working capital are a maze of delayed payments and tight liquidity. Investors should monitor how it manages scale and collections post-FPO.
Verdict: A naval niche player building deep moats — but needs to fix its financial plumbing before becoming a HAL or BEL.
Metadata
– Written by EduInvesting Team | July 13, 2025
– Tags: Defense, Submarine Systems, Navy Suppliers, CFF Fluid Control, Order Book Stocks, Microcap Defense Plays
