AksharChem (India) Limited

Basic Materials — Specialty Chemicals · NSE

₹417.00+₹6.90 (+1.68%)

DalalBaazaar Score

42 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by short-term liabilities exceed short-term assets, negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

The 60-second version of AksharChem (India) Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

AksharChem (India) Limited manufactures and sells dyes intermediates, pigments, and inorganic chemicals in India.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees211

Annual revenue₹362 Cr

How does it make money?

Turns over ₹362 Cr a year. Of every ₹100 of sales, about ₹-0 reaches shareholders as profit, with ₹5 left at the operating level before interest, tax and depreciation. Each of its 211 employees supports ₹1.71 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.71 Cr

Who are its competitors?

The closest listed comparisons in its industry are ASIAN PAINTS LIMITED, PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 0.6% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE22.3%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +11% while net margin moved -58% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+11%

Margin effect-58%

DalalBaazaar Score

42/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Return on equity is negative

Quality vs. Valuation

Company Quality

35/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

70/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

23.8x

1.3Y Median

44.8x

16 monthly readings · mean 46.1x · range 24.4x–70.4x

Sector Median

40.4x

median of 4 sector peers

🟢Current valuation is approximately 47% below its 1.3y median of 44.8x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 41% below the peer median of 40.4x.

vs. its own history

Cheap

44.8x median over 16 months · -47%

vs. sector peers

Cheap

40.4x median of 4 peers · -41%

vs. generic bands

Fair

15x–35x

EV/EBITDA

26.7x

PEG

—

Red Flags

7 items require attention · 5 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 340% over 3 years, from ₹25 Cr to ₹108 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only 0.3x — little room if earnings dip.
🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴The company is lossmakingFinancial
Net profit of -₹0 Cr in the latest reported year.
🔴Receivables growing faster than salesFinancial
Receivables up 73% against revenue up 11% — sales are being booked faster than they are collected.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 2.3x to 0.3x.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.99 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 47% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 41% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 6.5x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 73% against revenue up 11%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Growth barely outpaces inflation
Revenue compounding at 3.7% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 3%✓ 4.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 6.5x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹34 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 0.3x
How much operating profit can fall before interest stops being comfortably covered.
5Revenue growth stays above 4% a year✗ 3.7% CAGR
Latest reported year was 45.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.

Investment Checklist

6 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹335 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

23.8x

Fair

Fairly valued against the generic band

P/B Ratio

1.28x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹17.51

Profitable

Profitable on a per-share basis

ROE

-0.2%

Weak

Weak capital efficiency

ROCE

0.6%

Weak

Low return on total capital employed

Debt/Equity

0.41x

Low

Conservative leverage

Revenue Growth (YoY)

45.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

2028.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.12%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹34 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

13.0%

Average

Average margins

Net Margin

3.4%

Average

Average bottom-line conversion

Current Ratio

0.99

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.68

Defensive

Steadier than the market

52W Range Position

83%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

389.7 / 367.7

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

58.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹325 Cr	₹302 Cr	₹339 Cr	₹362 Cr	+3.7%
EBITDA	₹16 Cr	₹6 Cr	₹24 Cr	₹17 Cr	+1.2%
EBITDA Margin	4.9%	2.0%	7.2%	4.6%	—
PAT (Net Profit)	-₹1 Cr	-₹19 Cr	₹5 Cr	-₹0 Cr	—
EPS	₹-1.17	₹-23.25	₹5.94	₹-0.55	—
ROE	-0.3%	-7.2%	1.8%	-0.2%	—
ROCE	0.7%	-4.1%	3.5%	0.6%	—
Total Debt	₹25 Cr	₹52 Cr	₹67 Cr	₹108 Cr	+63.9%
Free Cash Flow	₹29 Cr	-₹23 Cr	-₹9 Cr	-₹34 Cr	—

🟢 Revenue has grown at 3.7% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (1.2% a year).

🟡 EBITDA Margin has held roughly flat at 4.6% over 3 years.

🟡 ROE has held roughly flat at -0.2% over 3 years.

🟡 ROCE has held roughly flat at 0.6% over 3 years.

🔴 Total Debt has grown at 63.9% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹29 Cr to -₹34 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹452 Cr

Total Liabilities

₹190 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹2 Cr

Capex

-₹36 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

72.4%

Corporate Actions

Dividend Rate

₹0.5

Ex-Dividend Date

15 Sept 2026

Peer Comparison

Company	P/E	ROE
ASIAN PAINTS LIMITED	46.9x	22.3%
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

1 positive2 mixed3 general

Aksharchem (India) Upper Circuit Streak: Day 2 Price and Data

Univest, 13 Oct

Aksharchem India | Stock Share Price Live

MarketSmith India, 14 May

AksharChem (India) standalone net profit rises 2042.25% in the June 2026 quarter

Business Standard, 13 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

AksharChem commissions 2.4 MWp solar plant at Dahej

scanx.trade, 20 JunCapacity

🟡Mixed / dependsCapacity additions can raise revenue over two to three years, but the capital spend usually pressures free cash flow first. Worth checking whether the capex is funded from operations or from borrowing.

Price Band Hitters on September 4, 2026 at 4:00 PM

HDFC Sky, 04 Sept

AksharChem India Share Price Target 2026 Analyst Forecast Bull and Bear Case

Univest, 15 MayAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongValuation

WeakBusiness Quality · Financial Health · Growth · Profitability · Risk

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 5 high-severity red flags sit above this conclusion and should be read first.

4 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive; Interest cover stays above 3x; Revenue growth stays above 4% a year · see Key things to watch ↑