1. At a Glance
A digital engineering player with operations in 13+ countries and a market cap under ₹900 Cr? Yes, you read that right. Onward Technologies Ltd (OTL) delivers Engineering R&D, Embedded Systems, and Digital Data Engineering services to global clients. Its PAT grew 79% YoY in Q1 FY26, but promoter holding’s been on a slippery slope.
2. Introduction with Hook
Imagine you’re building a spaceship. You’ve got the blueprint, but no one to code the navigation or simulate the airflow. That’s where companies like Onward Technologies come in—India’s underdog in outsourced Engineering R&D, crafting the digital spine of the global industrial complex from inside a Bandra BKC office.
- Revenue (Q1 FY26): ₹135.6 Cr (Up 4.3% QoQ)
- PAT (Q1 FY26): ₹12.7 Cr (Up 79.3% YoY)
This isn’t your Infosys—it’s scrappy, small-cap, and in the race for high-margin niches.
3. Business Model (WTF Do They Even Do?)
Onward Technologies provides:
- ER&D (Engineering Research & Development): CAD/CAE, simulation, mechanical design.
- Digital Engineering: Cloud, AI, Data Analytics.
- Embedded & Electronics: IoT, sensor systems, real-time OS.
Clients are largely from:
- Automotive
- Heavy Engineering
- Aerospace
- BFSI (increasingly)
It’s a classic service-based revenue model with contracts (multi-year or project-based). Think TCS/Infosys—but for nuts, bolts, chips, and simulation software.
4. Financials Overview
P&L FY25
| Particulars | ₹ Cr |
|---|---|
| Revenue | 491 |
| EBITDA | 45 |
| EBITDA Margin | 9% |
| PAT | 27 |
| EPS | ₹11.94 |
- TTM Revenue: ₹507 Cr
- OPM recovering to double digits (13% in Q1 FY26)
- Dividend payout: 42%
- 3-year PAT CAGR: only 5% (thanks, Covid years)
5. Valuation
- Current Price: ₹380
- P/E (TTM): 26.8x
- Market Cap: ₹876 Cr
- Book Value: ₹98.9
Fair Value Range (Edu DCF & Peer P/E Blend):
- Base: ₹310
- Bull: ₹440
- Bear: ₹280
Verdict? Slightly ahead of itself, but not a tech bubble. You’re paying for visibility and the ER&D tag.
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26 PAT up 79% YoY
- EBITDA margins up to 12.9% (vs 9% FY25 average)
- AGM Drama: Promoter holding dropped from 45.6% in 2022 to 38.6% now.
- New client wins in auto-electronics vertical
- High-potential USA & Europe delivery ramps ongoing
Add to that: rumors of private equity sniffing around mid-cap ER&D players.
7. Balance Sheet
| Particulars (₹ Cr) | Mar 2025 |
|---|---|
| Equity | 23 |
| Reserves | 202 |
| Borrowings | 32 |
| Fixed Assets | 65 |
| Other Assets (current) | 244 |
| Total Assets | 311 |
Key Points:
- Light debt (Debt/Equity < 0.15x)
- Asset-light: More engineers than machines
- No major capex—growth is headcount-linked
8. Cash Flow – Sab Number Game Hai
| ₹ Cr | FY25 |
|---|---|
| CFO (Ops) | 32 |
| CFI (Investing) | -17 |
| CFF (Financing) | -21 |
| Net Change in Cash | -7 |
Insights:
- FY24 CFO was ₹62 Cr, so slight slowdown
- Working capital ballooned: 110 days (from 60 in FY23)
- Not alarming, but watch receivables
9. Ratios – Sexy or Stressy?
| Metric | FY25 |
|---|---|
| ROCE | 16% |
| ROE | 13% |
| OPM | 9% |
| Debtor Days | 81 |
| Dividend Yield | 1.32% |
Narrative:
- ROCE back in comfort zone
- OPM trending up post-Covid
- Cash Conversion Cycle: 78–81 days — tight, but not brutal
10. P&L Breakdown – Show Me the Money
| Particulars (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Sales | 441 | 472 | 491 |
| EBITDA | 29 | 52 | 45 |
| PAT | 11 | 34 | 27 |
| EPS (₹) | 5.15 | 15.06 | 11.94 |
Takeaway:
FY24 was a breakout year. FY25 saw a dip, but Q1 FY26 already bounced back.
11. Peer Comparison
| Company | M.Cap (Cr) | P/E | ROCE | OPM | PAT Growth |
|---|---|---|---|---|---|
| L&T Technology | 46,098 | 36.4 | 28% | 17% | Flat |
| Tata Technologies | 29,798 | 43.5 | 25.8% | 17% | Low double digit |
| Cyient | 14,479 | 23.6 | 16.6% | 15% | -9.94% |
| Onward Technologies | 876 | 26.8 | 15.6% | 9% | 79% (Q1 FY26) |
Key Insight:
OTL is the penny stock version of L&T Tech—but growth is catching up.
12. Miscellaneous – Shareholding, Promoters
| Stakeholder | Mar ’23 | Mar ’24 | Jun ’25 |
|---|---|---|---|
| Promoters | 45.2% | 38.1% | 38.6% |
| FIIs | 0.0% | 2.5% | 9.3% |
| DIIs | 0.5% | 7.6% | 3.8% |
| Public | 54.3% | 51.7% | 48.2% |
- Promoter selling raises eyebrows
- FIIs gobbling up—9.3% stake from nearly zero a year ago
- 22,700 shareholders—retail love is growing
13. EduInvesting Verdict™
Onward Technologies Ltd is not the next TCS—but it doesn’t want to be. It’s the scaled-down ER&D ninja that knows how to punch above its market-cap weight. Lean margins, offshore hustle, and a niche focus make it worth watching.
But the promoter stake slide is your mandatory “Don’t Ignore This” warning label. Unless that stabilizes, investors will remain… cautious optimists.
Metadata
– Written by EduInvesting Analyst Team | 16 July 2025
– Tags: Onward Technologies, ER&D Services, Small Cap IT, Engineering Design, Digital Engineering, Q1 FY26, Tech Outsourcing India, CAD Tech, Midcap Analysis
