1. 🧾 At a Glance
Spectrum Electrical has grown from a niche electrical components manufacturer into a ₹2,300 Cr market-cap name, delivering 42% profit CAGR over 5 years. It operates in auto + electricals with injection moulding, surface treatments, and stamped components. But here’s the spark: it trades at a nosebleed P/E of 85, and its stock is down 30% from peak. So… hot circuit or just hot air?
2. 🎬 Introduction with Hook
What happens when a small industrial company quietly starts posting double-digit margins and 5x earnings in 3 years?
Retail jumps in. Then FIIs join. Then it hits a P/E of 85. And then the stock… falls 30%.
Welcome to Spectrum Electrical—the microcap that went from component coolie to market cap mania, and now finds itself under investor scanner. Is it still wired for growth? Or has the fuse blown?
3. ⚙️ Business Model – WTF Do They Even Do?
Spectrum is a component-tier B2B manufacturer—serving industries like:
- 🚗 Auto (for stamped and treated parts)
- ⚡ Electrical (with insulated housings, electrical press parts)
- 🏭 Industrial/Consumer Durables
🧰 Verticals:
- Injection Moulding
- Electrical Press Component Fabrication
- Surface Treatment (zinc plating, powder coating)
- Sub-Assembly Modules
📦 End Users: OEMs in auto/electricals + exports (small scale)
🎯 Niche Focus: High mix-low volume batches for Tier-1 clients
4. 📊 Financials Overview – Profit, Margins, ROE, Growth
This is where Spectrum shines (on paper):
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 151 | 251 | 253 | 322 | 397 |
| Net Profit (₹ Cr) | 6 | 8 | 8 | 19 | 27 |
| EPS (₹) | 3.91 | 5.06 | 5.57 | 12.47 | 17.42 |
| OPM % | 12% | 10% | 9% | 12% | 13% |
| ROE % | 10% | 12% | 11% | 17% | 16% |
📈 5-Year CAGR:
- Revenue: 23%
- Profit: 42%
- EPS: up 5x since FY21
5. 💸 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹1,489 |
| Market Cap | ₹2,314 Cr |
| P/E (TTM) | 85.2 ❌ |
| Book Value | ₹121 |
| P/B | 12.3x 🔥 |
| EV/EBITDA (est.) | ~30x |
Fair Value Range (Based on 25–30x FY26E EPS ₹22–24):
📉 ₹550 – ₹720
Yup. The current valuation is 2x overcooked.
6. 🍿 What’s Cooking – News, Triggers, Drama
- 📈 Q4FY25 Surprise: ₹13 Cr profit on ₹172 Cr revenue = EPS ₹8.59 = 126% YoY jump
- 🔁 Product Expansion: Adding precision moulding capacity for new appliances vertical
- 🏭 Capex Watch: ₹40 Cr expected in FY26 for automation and cleanroom lines
- 🌍 FIIs Entry: From 0% to 3.7% in under 6 quarters
- 📉 Stock Performance: -31% in 1 year (after peaking at ₹2,400)
7. 🧮 Balance Sheet – How Much Debt, How Many Dreams?
| Item | Value |
|---|---|
| Equity | ₹16 Cr |
| Reserves | ₹174 Cr |
| Borrowings | ₹166 Cr |
| D/E | ~0.8x ✅ |
| Assets | ₹424 Cr |
| Capex (FY24–25) | ₹30–40 Cr annually |
🔌 Working Capital Cycle? Slipping.
- Debtor Days: 106 ↑
- Inventory Days: 99
- Payable Days: 56 ↓
⚠️ Cash conversion worsening = pressure on liquidity.
8. 💵 Cash Flow – Sab Number Game Hai
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| CFO | ₹8 Cr | -₹20 Cr | -₹18 Cr |
| FCF | Deeply Negative 2Y straight | ||
| Capex | ₹30–40 Cr annually | ||
| CFF | Funded by debt & equity = ₹49 Cr inflow FY25 |
💬 Cash Flow Verdict: Profits exist. Cash? Not yet.
9. 📐 Ratios – Sexy or Stressy?
| Ratio | FY25 |
|---|---|
| ROCE | 15.7% |
| ROE | 15.2% |
| OPM | 13% |
| D/E | 0.8x |
| Debtor Days | 106 ❌ |
| Dividend Yield | 0.07% |
| Interest Coverage | ~3.5x (moderate) |
➡️ Not horrible, but not margin-of-safety either.
10. 💰 P&L Breakdown – Show Me the Money
| Segment | FY25 |
|---|---|
| Revenue | ₹397 Cr |
| EBITDA | ₹52 Cr |
| PAT | ₹27 Cr |
| EPS | ₹17.42 |
| Growth Drivers | Q4 spike due to operating leverage in stamping and plating segments |
| Gross Margin | ~35% |
| Net Margin | ~6.8% |
🔍 Q4FY25 PAT alone was ~₹13 Cr = ~50% of full-year profit
11. 🆚 Peer Comparison – Who Else in the Game?
| Company | P/E | ROCE | OPM | MCap (₹ Cr) |
|---|---|---|---|---|
| Kaynes Tech | 140x | 14% | 15% | ₹40,900 |
| Jyoti CNC | 72x | 24% | 27% | ₹23,100 |
| Tega Inds | 58x | 17.7% | 20.7% | ₹11,600 |
| Syrma SGS | 67x | 12.4% | 8.5% | ₹11,500 |
| Spectrum | 85x | 15.7% | 13.2% | ₹2,300 |
📌 Insight: Valuation richer than peers with lower scale, lower moat
12. 🧠 Miscellaneous – Shareholding, Promoters
- 👨👩👧👦 Promoter Holding: 72.54% ✅
- FIIs: 3.67% (newly interested)
- DIIs: 0.34%
- Public: 23.44%
- 🎯 1,217 shareholders as of Mar 2025 (from 100 in 2021)
📋 No pledging. Clean promoter structure.
13. 🧑⚖️ EduInvesting Verdict™
Spectrum Electrical is that student who suddenly starts topping mock tests and everyone assumes he’s a prodigy. But what if he just got lucky on the last two?
📈 Financials have improved.
⚙️ Operations are scaling.
🔋 Profit growth is real.
But the stock price ran way ahead of fundamentals. An 85x P/E for a ₹400 Cr revenue company with declining cash flows? That’s not “growth priced in”—that’s “future borrowed and spent.”
If they sustain ₹25–30 Cr PAT with better working capital and improve FCF, a re-rating could hold. Until then, this remains a strong business, trapped in a weak valuation setup.
Fair Value Range (Based on 25–30x FY26E EPS ₹22–24):
₹550 – ₹720
(That’s not bearish. That’s just being financially literate.)
✍️ Written by Prashant | 📅 July 10, 2025
Tags: Spectrum Electrical, SME Stock, Injection Moulding, Auto Electricals, Microcap Analysis, Profit CAGR, Component Manufacturing, Overvalued Stocks
