Nelco Limited (NELCO) AI Stock Analysis

• Market Cap: ₹13.75B
• Dividend Yield: 0.13%
• Average Volume (3M): 13.81K
• Price to Earnings (P/E): ―
• Beta (1Y): 2.07
• Revenue Growth: -7.50%
• EPS Growth: -79.50%
• Country: IN
• Employees: 94
• Sector: Technology
• Sector Strength: 88
• Industry: Communication Equipment
• EPS (TTM): -0.52
• Shares Outstanding: 22,818,400
• 10 Day Avg. Volume: 6,725
• 30 Day Avg. Volume: 13,809
• PEG Ratio: -3.58
• Price to Book (P/B): 15.92
• Price to Sales (P/S): 6.68
• P/FCF Ratio: 658.92
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 53 Neutral
• Price Target: ₹670.00 ▼(-8.16% Downside)
• Action: Reiterated Date: 01/24/26
• Date: Action: Reiterated 01/24/26

The score is held back mainly by very weak technicals (price below all key moving averages, negative MACD, very low RSI/Stochastic). Financial performance is mixed—strong gross margins but weaker net margins, higher leverage, and declining operating cash flow. Valuation is also a drawback due to a negative P/E and minimal dividend yield.

Positive Factors

Recurring service revenue

A service-led, recurring-fee business (VSAT and managed networks) generates predictable, sticky revenue from enterprise and institutional customers in remote locations. That stability supports medium-term cash flow visibility, contract renewal leverage and lower customer acquisition dependency.

Strong gross margins

Consistently strong gross margins indicate durable operational efficiency and pricing power in core services. High gross margin provides a buffer to absorb input cost pressures, funds reinvestment in networks, and underpins sustainable operating leverage over the next several quarters.

Healthy equity ratio

A healthy equity ratio signals a solid solvency buffer and disciplined capital structure, which supports access to funding and resilience through downturns. This structural balance sheet strength helps the firm pursue network investments without immediate solvency risk.

Negative Factors

Rising leverage

An increasing debt-to-equity trend reduces financial flexibility and raises interest obligations, constraining capacity to fund growth or absorb shocks. Over a multi-quarter horizon higher leverage elevates refinancing and covenant risk if operating cash generation weakens.

Declining operating cash flow

Falling operating cash flow and uneven FCF growth indicate earnings are not reliably converting to cash, stressing working capital and limiting self-funded investments. Persisting this trend would force reliance on external financing and hinder deleveraging or capex plans.

Weaker net margins and uneven revenue

A significant drop in net margins and irregular revenue growth point to margin pressure beyond direct costs, and to demand or competitive instability. These trends reduce retained earnings, drive down ROE over time, and complicate medium-term planning and investment prioritization.

Nelco Limited Business Overview & Revenue Model

Company Description

Nelco Limited provides systems and solutions in the areas of very small aperture terminals (VSAT) connectivity, and integrated security and surveillance in India. It offers VSAT satellite communication services for renewable energy, enterprise, maritime, oil, energy, and gas sectors, as well as to bank ATM and branches. The company is also involved in the design, supply, installation, and maintenance of integrated security and surveillance solutions for application in industrial plants, power stations, broadcasting stations, telecommunications stations, airports, railways, seaports, and borders. In addition, it offers end to end networking solutions; and engages in the sale/rental of VSATs and maintenance of private hubs and hybrid networks. The company serves businesses and government institutions. The company was incorporated in 1940 and is based in Navi Mumbai, India. Nelco Limited operates as a subsidiary of The Tata Power Company Limited.

How the Company Makes Money

NELCO generates revenue through multiple streams, primarily from the sale of technology products and services. This includes hardware sales, software licensing, and cloud-based services which are billed on a subscription basis. Additionally, NELCO earns income from consulting and implementation services that assist clients in deploying and managing their technology solutions. The company also collaborates with strategic partners for joint ventures and projects, which contribute to its revenue through shared service agreements and collaborative sales efforts. Furthermore, NELCO may benefit from government contracts or grants that support specific technology initiatives, further bolstering its financial performance.

Nelco Limited Financial Statement Overview

Summary

Fundamentals are stable but pressured: strong gross margins are offset by a sharp decline in net margin, rising leverage (debt-to-equity), declining ROE, and weakening operating cash flow with inconsistent free cash flow growth.

Income Statement

Nelco Limited's income statement shows a mixed performance. The gross profit margin has been consistently strong, indicating effective cost management. However, the net profit margin has decreased significantly in the last reported year, suggesting challenges in managing non-operational expenses or increased tax burden. Revenue growth has been uneven, with fluctuations indicating market challenges or competitive pressures. Overall, profitability remains decent but with room for improvement in net margins.

Balance Sheet

The balance sheet presents a somewhat leveraged position, with a rising debt-to-equity ratio over the years. Despite this, the company maintains a healthy equity ratio, demonstrating good capital management. Return on equity has shown a declining trend, which could be a concern for investors seeking high returns. The company needs to address its leverage to improve financial stability and potential returns.

Cash Flow

The cash flow statement reflects a decline in operating cash flow over recent years, which could impact the company's ability to fund operations and growth internally. Although free cash flow has been positive, its growth rate has been inconsistent. The ratio of operating cash flow to net income indicates that not all earnings are translating into cash flow, suggesting potential inefficiencies or working capital challenges.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	3.06B	3.05B	3.20B	3.13B	2.60B	2.26B
Gross Profit	2.29B	2.21B	2.32B	2.63B	1.56B	1.41B
EBITDA	435.00M	477.70M	621.30M	672.00M	553.20M	477.10M
Net Income	67.70M	95.30M	236.70M	198.50M	160.80M	123.60M
Balance Sheet
Total Assets	0.00	2.87B	2.82B	2.62B	2.63B	2.46B
Cash, Cash Equivalents and Short-Term Investments	138.50M	180.20M	217.90M	161.60M	156.50M	91.60M
Total Debt	0.00	525.10M	568.70M	631.00M	814.80M	896.20M
Total Liabilities	-1.28B	1.60B	1.58B	1.58B	1.74B	1.70B
Stockholders Equity	1.28B	1.28B	1.24B	1.05B	890.50M	757.80M
Cash Flow
Free Cash Flow	0.00	30.90M	256.60M	329.90M	314.50M	446.60M
Operating Cash Flow	0.00	196.60M	419.70M	580.80M	494.30M	539.60M
Investing Cash Flow	0.00	-165.40M	-192.20M	-249.30M	-160.80M	-75.60M
Financing Cash Flow	0.00	-110.60M	-200.40M	-326.40M	-196.00M	-470.30M

Nelco Limited Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 729.55
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:NELCO, the sentiment is Negative. The current price of 729.55 is above the 20-day moving average (MA) of 644.06, above the 50-day MA of 672.73, and below the 200-day MA of 830.75, indicating a bearish trend. The MACD of -15.37 indicates Positive momentum. The RSI at 35.85 is Neutral, neither overbought nor oversold. The STOCH value of 10.69 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for IN:NELCO.

Nelco Limited Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
BCG	71 Outperform	₹20.52B	2.54	―	―	―	―
KERNEX	66 Neutral	₹17.64B	33.42	―	―	155.87%	―
SASKEN	64 Neutral	₹16.93B	45.95	―	1.83%	77.13%	-39.91%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
NIITLTD	54 Neutral	₹9.35B	42.33	―	1.07%	12.25%	-28.69%
NELCO	53 Neutral	₹13.75B	-741.60	―	0.13%	-7.50%	-79.50%
RAMCOSYS	53 Neutral	₹16.49B	74.42	―	―	20.41%	―