SRIT India Ltd

Skip on account of poor business and revenue quality, weak cash generation & governance concerns.
Though SRIT has a 26 year track record in large government IT projects the business quality is poor, profits are not turning into cash and governance raises red flags. ~90% of revenue comes from government bodies and in 66% of FY26 revenue SRIT was not the prime contractor so it gets paid only after the prime contractor is paid. Revenue booked in one go on delivery jumped from 9% of revenue in FY25 to 62% in FY26. Operating cash flow fell from INR 34 Cr in FY24 to -INR 12 Cr in FY26, even as PAT rose from INR 29 Cr to INR 43 Cr, and only INR 40 Cr of the INR 106 Cr three-year profit converted into cash. INR 59 Cr was overdue beyond a year against a loss allowance of just INR 0.9 Cr. The FY25 auditor resigned eight days after signing accounts that carried an emphasis of matter on an INR 56.8 Cr provision, and SRIT plans to buy 50% of a hospital, mainly from a director who joined its board twelve days earlier. At INR 130, it is priced at 19.3x FY26 post-issue earnings and 10.1x EV/EBITDA.
