Sector-Specific Ratios & Metrics

Generic metrics like P/E and ROE will mislead you in this sector. A great EPC company at 40x P/E can be cheap. A road asset company with negative earnings can be a buy. A defence PSU with 30% ROE can be a value trap. The reason is that different sub-segments have fundamentally different economic structures, and measuring them with the same yardstick produces wrong answers. What follows is the complete measurement dictionary, organised by sub-segment, with every metric structured the same way: what it is, what good looks like, what bad looks like, where to find it, and what the trend tells you.

Universal Metrics

These six metrics apply across all sub-segments. They are your first filter for every company in the sector.

1. Order Book to Revenue Ratio (OB/Rev)

The single most important leading indicator in this sector. It tells you how many years of revenue visibility the company currently has by dividing total outstanding order book (unexecuted backlog) by trailing twelve-month revenue.

Where to find it: Company investor presentations (every quarter), DRHP if recently listed, management commentary in earnings calls. Screener.in does not show this directly. You must go to the company's quarterly results PDF or investor presentation on BSE/NSE.

What the trend tells you: Rising OB/Rev with stable margins means a quality pipeline is building, which is positive. Rising OB/Rev with falling margins means the company is accepting low-quality, low-margin orders to fill the book, which is negative. Falling OB/Rev even in a capex boom signals loss of market share or management credibility issues.

2. Order Inflow Growth (YoY)

The revenue growth predictor with an 18 to 24 month lead time. New orders received in a period versus the same period last year. This is the top-of-funnel metric: revenue cannot grow unless orders first come in.

In an expansion phase, 15 to 25% YoY order inflow growth is good. In a capex supercycle like the current Indian environment, 30%+ is achievable for well-positioned companies. Declining order inflows for two or more consecutive quarters is a strong sell signal. The revenue slowdown is coming; it just is not visible yet in reported numbers.

Where to find it: Exchange filings, quarterly results press releases, management commentary. Build a simple tracker in Excel by pulling this from each quarterly result. Order inflows are a 6 to 8 quarter leading indicator for revenue. If you track them diligently, you will see revenue trajectory before the market does.

3. EBITDA Margin (Execution Margin)

EBITDA divided by Revenue. In EPC, this measures how efficiently the company converts project revenue into operating profit after direct costs (materials, subcontracting, labour) but before interest and depreciation.

What the trend tells you: Margin expansion in an order-inflow upcycle means pricing power plus operating leverage. Margin compression despite high revenue growth means commodity cost pressure or project mix deterioration. Sustained margin above the sector average for 5+ years is a genuine competitive moat.

4. Working Capital Days

This separates genuinely good EPC companies from disasters waiting to happen. Calculated as (Debtor Days + Inventory Days) minus Creditor Days, it tells you how many days of revenue are locked in working capital.

Every major EPC blow-up in India, from IL&FS to Lanco to GVK to Jaiprakash, showed dramatically rising working capital days 6 to 8 quarters before the crisis became public. Track this obsessively.

Where to find it: Screener.in Balance Sheet (Debtors, Inventory) plus P&L (Revenue, COGS), then calculate manually. Screener does not show this directly. Build it into your analysis template.

5. Net Debt to EBITDA

The leverage threshold that separates survivors from casualties in a capex downcycle. Calculated as (Total Debt minus Cash and Equivalents) divided by EBITDA.

6. Return on Capital Employed (ROCE)

EBIT divided by (Total Assets minus Current Liabilities). ROCE is preferred over ROE in this sector because EPC companies often use significant debt. ROE can be inflated by leverage. ROCE strips out financing structure and shows raw operational efficiency.

• Quality EPC / Capital Goods: 18 to 25%+ ROCE sustained over a cycle is a genuine compounder.
• MNC industrial subsidiaries (Siemens, ABB): Often 25 to 35% ROCE, reflecting technology moats and asset-light models.
• PSU Capital Goods (BHEL, BEML): Structurally lower at 8 to 15%, reflecting inefficiency and government pricing constraints.
• Road Assets: ROCE is misleading here. Use equity IRR instead. 12 to 15% is good for HAM, 14 to 18% for BOT.

Where to find it: Screener.in directly shows ROCE on the company summary page. Always verify by computing it manually for at least one year to confirm Screener's definition matches your framework.

EPC & Construction Specific Metrics

7. Revenue vs Billing vs Collections

Most retail investors completely miss this, and most analysts gloss over it. In EPC, three numbers matter separately: revenue recognised (on a percentage of completion basis in the P&L), billed amount (invoices raised to the client, which may not match revenue recognised), and cash collected (actual money received, the only real number).

A portfolio manager tracks the gap between revenue and cash collection. A widening gap means either disputes with clients, project delays, or the company is booking aggressive revenue without corresponding cash receipt. Check the cash flow statement: if OCF/Net Profit ratio is consistently below 0.7x, something is wrong. Quality EPC companies show OCF/PAT of 0.9x to 1.2x over a cycle.

The cash conversion ratio is the single best fraud and stress detector in EPC. Problems always appear here first.

8. Subcontracting Ratio

Subcontracting costs as a percentage of project revenue. At 25 to 40%, subcontracting is normal and healthy: companies outsource labour-intensive civil work while retaining high-value engineering and procurement in-house. Above 55 to 60%, the company is essentially a pass-through, adding little engineering value, taking all the project risk, and keeping thin margins. This model is fragile.

Where to find it: Notes to accounts in the annual report under "Construction expenses" or "Subcontracting costs." Not on Screener. Requires annual report reading.

9. L1 Win Rate

The percentage of bids where the company is the lowest bidder (L1) and wins the contract. Disclosed informally by managements on earnings calls. A high L1 win rate with stable margins means pricing discipline. A high L1 win rate with falling margins means the company is bidding aggressively to fill the order book, which is dangerous.

Power Equipment Specific Metrics

10. Capacity Utilisation Rate

Actual production output divided by installed manufacturing capacity. For BHEL, Thermax, and Triveni Turbine, this is the key operating leverage metric. These companies have high fixed costs (plants, engineers). At 60 to 65% utilisation, margins are thin. At 85%+, margins expand dramatically due to operating leverage.

Where to find it: Management commentary and annual report (business review section). Not on Screener.

11. Realisation per Unit

For transformer companies: revenue per MVA (Mega Volt Ampere) of capacity sold. Rising realisation means pricing power and demand exceeding supply. For cable companies: revenue per km or revenue per tonne of conductor. Watch for mix shift, because higher voltage equals higher realisation which equals better margins.

Where to find it: Segment disclosures in annual reports. Polycab and Voltamp occasionally disclose volume data from which you can back-calculate realisation.

Defence Specific Metrics

12. Defence Revenue as % of Total Revenue

Defence revenue carries a structural premium: long-cycle, government-backed, technology-intensive, high-margin. A company increasing its defence mix, like Bharat Forge moving from auto forgings to artillery systems, deserves re-rating. For pure-play defence companies (BEL, HAL, Data Patterns), this should be 80%+.

13. Order-to-Execution Cycle

In defence, an OB/Rev of 5 to 7x is normal and healthy, not a warning sign like in EPC. Defence contracts have 3 to 7 year execution cycles. A company like BEL with 5x order book is showing 5 years of contracted revenue, which is extraordinary visibility, not overcrowding.

What to watch instead: the pace of new order accretion relative to execution. If new orders are not replenishing what is being executed, the pipeline is depleting even if the absolute order book remains large.

14. Indigenisation Content %

The percentage of a weapons system's value manufactured domestically versus imported components. Government policy mandates rising indigenisation levels, currently 50 to 68% across different categories. Companies that increase their indigenisation content capture more value per system and become less vulnerable to import disruptions and forex costs.

Where to find it: HAL and BEL annual reports, DRDO press releases, and defence ministry DPP (Defence Procurement Procedure) documentation.

Infrastructure Asset Metrics

For roads, ports, and airports.

15. Toll Collection Growth

Year-on-year growth in toll revenue from operational road assets. The two components are traffic volume growth and toll rate increases (NHAI revises toll rates annually in April, linked to WPI inflation). A 8 to 12% annual growth rate (4 to 5% traffic plus 5 to 7% rate increase) is the base case. Above 15% indicates strong traffic ramp-up or one-time resets. Flat or declining toll collection despite NHAI rate increases signals traffic is falling.

Where to find it: IRB Infrastructure and Ashoka Buildcon disclose monthly and quarterly toll collection data in exchange filings. This is gold. Track it every month.

16. Debt Service Coverage Ratio (DSCR)

Net Operating Cash Flow divided by Total Debt Service (principal plus interest payments due). This is the critical metric for road, port, and airport assets because these are project finance structures where the asset's cash flows must service specific debt tranches.

17. HAM Grant Disbursement Tracking

Under the Hybrid Annuity Model, NHAI pays 40% of project cost upfront as construction-linked installments and 60% as semi-annual annuities over 15 years post-completion. Track the pace of grant disbursement versus construction progress. Delays in NHAI grant releases directly stress the contractor's cash flows even without any execution failure on the contractor's part.

Where to find it: Quarterly filings for HAM companies (HG Infra, PNC Infratech) and NHAI annual reports.

18. Cargo Volume / TEU Growth (Ports)

Total cargo handled in Million Metric Tonnes (MMT) or container volumes in Twenty-foot Equivalent Units (TEUs). 8 to 12% volume growth for a port gaining market share, 4 to 6% for mature ports in line with India's trade growth. Stagnation despite India's export growth means the port is losing share to competitors.

Where to find it: Adani Ports monthly traffic data (disclosed to exchanges), Ministry of Ports shipping data, Indian Ports Association statistics.

Cables & Wires Specific Metrics

19. Retail vs Institutional Revenue Mix

Revenue from the retail channel (housing wires sold through dealers and distributors) divided by total revenue, versus the institutional or project channel. Retail means higher margins, lower working capital, and more stable demand since housing construction is consistent. Institutional means lower margins, higher working capital, and lumpy demand tied to capex cycles.

Polycab has roughly 40% retail mix, and this is what justifies its premium valuation over pure project-focused cable companies.

20. Copper / Aluminium Pass-Through Mechanism

Copper makes up 50 to 65% of cable raw material cost. A 20% copper price increase can wipe out EBITDA for a company without pass-through clauses in its contracts. Polycab and KEI have largely solved this through pricing mechanisms. Smaller players are more exposed.

What to track: LME copper price (3-month futures) versus company EBITDA margin on a quarterly basis. The lag is typically 1 to 2 quarters. Copper prices are available on macrotrends.net or TradingView.

Master Analysis Dashboard

For every Capital Goods company you analyse, fill this standardised dashboard. It gives you a consistent framework across every sub-segment.

Where to Find the Data