📆 CMP ₹60.5 | Market Cap ₹208 Cr | P/E 32.5 | Promoter Holding: 15.4%
✍️ Written by Prashant | 📅 July 5, 2025
1. At a Glance (Excerpt)
Kavveri Defence & Wireless Technologies Ltd – once a telecom infra struggler, now a “defence tech” hopeful – has pulled off a miraculous ₹17 Cr topline revival in FY25 after a decade of decline. With only 15.4% promoter holding, massive contingent liabilities (₹218 Cr), and a dramatic 688% TTM profit growth, this ₹208 Cr small-cap looks less like a stealth bomber and more like a flying Jugaad.
2. 🎣 Introduction – From Fibre to Firepower
Once upon a time, Kavveri was a telecom infra player installing signal repeaters in malls. Now? They claim to be in RF systems for defence, counter-drone tech, and aerospace.
Plot twist? They’re also under SEBI radar for related party transactions, have -7000% OPM in FY23, and have somehow pulled off a ₹6.41 Cr PAT in FY25 despite 167 debtor days.
Is this a legit turnaround… or just another signal booster rerun? Let’s decode 👇
3. 🛰️ WTF Do They Even Do? – Business Model
Kavveri’s business is a buffet of buzzwords:
- 📡 Defence-grade Antennas & RF Systems
- 🚫 Counter-Drone Jammers (buzzword alert 🚨)
- 🏢 Indoor coverage solutions for enterprise buildings
- 📶 Repeaters for GSM/CDMA carriers (still?)
- 🛰️ Aerospace & Public Safety Communications
They operate in the “Make in India for Defence” category. But unlike BEL or Data Patterns, there’s zero clarity on order book, clients, or tender wins.
Think of it as a low-flying Tejas Networks without DRDO backing.
4. 📊 Financials – Rags to Reboot?
| FY | Sales (₹ Cr) | Net Profit (₹ Cr) | OPM % | ROE % | EPS ₹ |
|---|---|---|---|---|---|
| FY21 | 4.14 | -16.4 | -41% | -8.2% | -8.16 |
| FY22 | 5.61 | -18.1 | -20% | -9.0% | -8.99 |
| FY23 | 2.82 | ₹31.5* | -7300% | 15.7% | ₹15.65 |
| FY24 | 1.59 | -1.34 | -81% | -0.67% | -0.67 |
| FY25 | 17.1 | ₹6.41 | 12% | 9.6% | ₹3.19 |
🧂 *FY23 profit was 100% due to ₹238 Cr Other Income – pure accounting magic.
✅ FY25 is first year of organic PAT turnaround
🚨 But Sales of ₹17 Cr on ₹208 Cr market cap? Valuation = 🚀 + 😬
5. 🔍 Valuation – Meh, or Madcap?
- P/E: 32.5 – way higher than defence peers with order visibility
- P/S: 12.1x on FY25 sales – insane
- Book Value: ₹43.2 → P/B ~1.4x
- ROE: Just 9.6% – not bad, but nothing DRDO would brag about
- Fair Value Range (EduInvesting Calc™):
→ Using 2 methods:
A. Normalised PAT (₹4 Cr) × 20x PE = ₹80 Cr FV = ₹23/share
B. DCF on 20% profit CAGR (5Y) → ₹28–₹35/share max
📉 EduVerdict FV Range: ₹23–₹35
⚠️ Stock is ~70% above this range at CMP ₹60.5
6. 🍿 What’s Cooking – Drama + Defence + SEBI
- ✅ Big spike in Q4 & Q1 sales – ₹7–8 Cr quarterly
- 📉 SEBI slap on wrist: Admin warning for Related Party Transactions
- 😵 Resignation of Company Secretary in June 2025
- 🔁 Multiple NSE penalty notices
- 🛑 Public shareholding zoomed to 76.9% – FII/DII EXITED
- 🎣 Retail punters running the show
7. 🧾 Balance Sheet – Once a Wreck, Still Fragile
| Year | Borrowings (₹ Cr) | Reserves (₹ Cr) | Total Liabilities (₹ Cr) |
|---|---|---|---|
| FY21 | 206.8 | ₹8.6 | ₹284.9 |
| FY23 | 0.03 | ₹32.1 | ₹79.0 |
| FY25 | 18.9 | ₹66.7 | ₹123.5 |
✅ Debt light now
🚩 Contingent Liabilities ₹218 Cr – more than market cap
🎯 Equity base is stable (₹20.1 Cr)
🚨 Still has legacy ghosts on books
8. 💵 Cash Flow – Sab Number Game Hai
| Year | CFO ₹ Cr | FCF ₹ Cr |
|---|---|---|
| FY21 | -10.77 | Negative |
| FY22 | +24.29 | ✅ |
| FY23 | -18.65 | 🚨 |
| FY24 | -11.34 | 🫠 |
| FY25 | +0.65 | 🤷♂️ |
No consistency. One good year ≠ sustainable trend.
9. 📐 Ratios – Stressy but Recovering
- ROCE: 8.4% (FY25) vs 24.9% in FY23 (Other income boost)
- Debtor Days: 167 → 👏 improved from 4000+ historical
- Inventory Days: 133 – still on the higher side
- CCC: 35.6 days – okayish now
- Working Capital Days: 320 – back to positive territory
🧹 They’ve cleaned up a lot, but baggage remains.
10. 📈 P&L Breakdown – Real vs Reel
FY25 vs FY24
- 🔼 Sales: ₹17.1 Cr vs ₹1.6 Cr
- 🔼 OPM: 12.1% vs -81%
- 🔼 PAT: ₹6.41 Cr vs ₹-1.34 Cr
- 🚨 Other Income in FY25: ₹4.69 Cr – still 70% of profits
- 🧾 Core Operating Profit: ~₹2 Cr only
😬 It’s not a defence turnaround… more like a finance one.
11. 🆚 Peer Comparison – Underdog or Outlier?
| Company | CMP ₹ | Market Cap ₹ Cr | ROCE % | P/E | Sales ₹ Cr |
|---|---|---|---|---|---|
| Kavveri | 60.5 | 208 | 8.4 | 32.5 | 17.1 |
| Tejas Networks | 705 | 12,466 | 15.4 | 27.9 | 8,923 |
| Sterlite Tech | 115 | 5,627 | 2.9 | – | 3,996 |
| Optiemus | 621 | 5,427 | 14.4 | 85.7 | 1,890 |
| ADC India | 1,252 | 576 | 46.5 | 23.5 | 187 |
| Birla Cable | 182 | 538 | 5.1 | 107 | 661 |
📌 Kavveri has lowest sales, but high P/E
📌 Pure valuation froth – not backed by fundamentals
📌 Only ADC India and Tejas look relatively balanced
12. 👥 Shareholding – Promoter Ghost Town
- 🏦 Promoters: Just 15.4%
- 🌍 FIIs: Down from 14% → 7.6%
- 🏢 DIIs: Basically 0%
- 🧑🤝🧑 Public: 77% – full-on punter party
- 📉 Institutions exiting = 🚨
13. 🧑⚖️ EduInvesting Verdict™
Kavveri Defence is the classic case of a penny stock that reinvented itself just enough to trend.
Yes, FY25 was a turnaround – but driven by Other Income, not orders.
Yes, debt is gone – but contingent liabilities still loom.
Yes, sales grew 10x – but from a base of ₹1 Cr.
This isn’t a defence play. It’s a narrative trade.
If they announce a DRDO order or bag a Ministry of Defence contract – maybe.
Till then, it’s Defence Tech in brochure, Telecom in DNA.
🎯 EduInvesting FV Range: ₹23–₹35
💥 CMP ₹60.5 is overbought by 70%
🔔 Watchlist, not wishlist.
Tags: Kavveri Defence, Defence Stocks, Penny Stock Turnaround, RF Technology, Antenna Manufacturing, Small Cap India, Telecom Infrastructure, EduInvesting Analysis
