Nelco Limited (NELCO) AI Stock Analysis

• Market Cap: ₹14.57B
• 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: ₹678.00 ▼(-7.07% Downside)

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

Strong gross margins

Consistently strong gross margins signal durable cost control in core service delivery. This provides a structural cushion against revenue volatility, supports reinvestment in network assets and service quality, and allows margin preservation even if top-line growth slows.

Recurring service-led revenue model

A service-led model with recurring connectivity fees creates predictable, sticky cash flows and higher customer retention in remote connectivity markets. This structural revenue base supports steady operating leverage, long-term contract visibility and easier forecasting for multi-year network investments.

Healthy equity ratio maintained

Maintaining a healthy equity ratio provides a solvency buffer versus peers, reducing long-term default risk and supporting access to credit during downturns. This capital structure resilience helps the business fund network upkeep and incremental projects without immediate equity dilution.

Negative Factors

Rising leverage

An increasing debt-to-equity trend raises structural financial risk by amplifying interest obligations and refinancing exposure. Over 2-6 months this can constrain capital allocation for capex or upgrades, limit strategic flexibility and increase vulnerability to rate or demand shocks.

Declining net profit margin

A marked fall in net margins indicates pressures beyond direct cost control, such as higher financing, taxes, or operating overhead. Persistently lower net profitability reduces retained earnings for reinvestment, weakens return on equity, and limits capacity to fund growth internally.

Weakening operating cash flow

Declining operating cash flow shows earnings are not consistently converting to cash, hinting at working capital strain or collection issues. Structurally this limits self-funded expansion and increases dependence on external financing, exacerbating risks given rising leverage.

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	Dec 2025	Dec 2024	Dec 2023	Dec 2022	Dec 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: Negative
• RSI: Neutral
• STOCH: Neutral

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 661.23, above the 50-day MA of 729.18, and below the 200-day MA of 848.41, indicating a bearish trend. The MACD of -26.34 indicates Negative momentum. The RSI at 43.21 is Neutral, neither overbought nor oversold. The STOCH value of 70.66 is Neutral, 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
KERNEX	66 Neutral	₹19.93B	37.62	―	―	155.87%	―
SASKEN	64 Neutral	₹19.01B	48.34	―	1.83%	77.13%	-39.91%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
BCG	59 Neutral	₹20.66B	2.65	―	―	―	―
NIITLTD	54 Neutral	₹10.46B	45.59	―	1.07%	12.25%	-28.69%
NELCO	53 Neutral	₹14.57B	-801.71	―	0.13%	-7.50%	-79.50%
RAMCOSYS	52 Neutral	₹18.19B	84.63	―	―	20.41%	―