Ambica Agarbathies Aroma & Industries Limited

Consumer Defensive — Household & Personal Products · NSE

₹24.05−₹0.23 (−0.95%)

DalalBaazaar Score

49 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by moderate debt load, 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, but sales are shrinking. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

The 60-second version of Ambica Agarbathies Aroma & Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Ambica Agarbathies Aroma & Industries Limited manufactures and sells incense sticks in India and internationally. The company operates through Agarbathies Division and Hotel Division segments.

IndustryHousehold & Personal Products

SectorConsumer Defensive

Employees275

Annual revenue₹141 Cr

How does it make money?

Turns over ₹141 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹13 left at the operating level before interest, tax and depreciation. Each of its 275 employees supports ₹51.3 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹51.3 lakh

Who are its competitors?

The closest listed comparisons in its industry are HINDUSTAN UNILEVER LTD., DABUR INDIA LTD, ITC LTD, BRITANNIA INDUSTRIES LTD. 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 8.0% 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 ROE27.4%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +20% while net margin moved +13% 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+20%

Margin effect+13%

DalalBaazaar Score

49/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 3.1% is weak

Quality vs. Valuation

Company Quality

43/ 100

Weak

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

Valuation

85/ 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

12.1x

3Y Median

18.2x

40 monthly readings · mean 14.9x · range 4.4x–27.0x

Sector Median

38.6x

median of 4 sector peers

🟢Current valuation is approximately 33% below its 3y median of 18.2x. 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 69% below the peer median of 38.6x.

vs. its own history

Cheap

18.2x median over 40 months · -33%

vs. sector peers

Cheap

38.6x median of 4 peers · -69%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

7.3x

PEG

1.12

What's Good / What's Bad

🟢 What's Going Well1

Margins are improving
EBITDA margin is up from 11.5% to 13.3% over 3 years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

5 items require attention · 4 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 53% over 3 years, from ₹63 Cr to ₹96 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.4x — little room if earnings dip.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Inventory building faster than salesFinancial
Inventory up 108% against revenue up 20% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹8 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 11.5% to 13.3%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 33% 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 69% 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 5.1x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Growth barely outpaces inflation
Revenue compounding at 6.4% 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.
Several serious flags at once
4 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

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

1EBITDA margin holds above 11%✓ 13.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 5.1x
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✗ -₹8 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.4x
How much operating profit can fall before interest stops being comfortably covered.
5Revenue growth stays above 5% a year✓ 6.4% CAGR
Latest reported year was -18.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.

Investment Checklist

4 / 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

3 good · 3 neutral · 5 weak

Market Cap

₹41 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

12.1x

Cheap

Cheap against the generic band

P/B Ratio

0.56x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹1.98

Profitable

Profitable on a per-share basis

ROE

3.1%

Weak

Weak capital efficiency

ROCE

8.0%

Weak

Low return on total capital employed

Debt/Equity

0.85x

Moderate

Moderate leverage

Revenue Growth (YoY)

-18.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

-3.0%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹8 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

10.1%

Average

Average margins

Net Margin

2.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.62

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.03

Defensive

Steadier than the market

52W Range Position

42%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

24.3 / 24.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

39.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹117 Cr	₹98 Cr	₹124 Cr	₹141 Cr	+6.4%
EBITDA	₹14 Cr	₹10 Cr	₹15 Cr	₹19 Cr	+11.7%
EBITDA Margin	11.5%	10.4%	12.5%	13.3%	—
PAT (Net Profit)	₹3 Cr	-₹4 Cr	₹0 Cr	₹3 Cr	+10.9%
EPS	₹1.47	₹-2.13	₹4.66	₹2.01	+11.0%
ROE	2.4%	-3.6%	0.4%	3.1%	—
ROCE	6.2%	4.5%	7.0%	8.0%	—
Total Debt	₹63 Cr	₹67 Cr	₹82 Cr	₹96 Cr	+15.1%
Free Cash Flow	₹6 Cr	₹1 Cr	-₹7 Cr	-₹8 Cr	—

🟢 Revenue has grown at 6.4% a year over 3 years.

🟢 EBITDA has grown at 11.7% a year over 3 years.

🟢 EBITDA Margin has risen from 11.5% to 13.3% over 3 years (+1.8 pts).

🟢 PAT (Net Profit) has grown at 10.9% a year over 3 years.

🟢 EPS has grown at 11.0% a year over 3 years.

🟡 ROE has held roughly flat at 3.1% over 3 years.

🟢 ROCE has risen from 6.2% to 8.0% over 3 years (+1.8 pts).

🔴 Total Debt has grown at 15.1% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹6 Cr to -₹8 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹245 Cr

Total Liabilities

₹132 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹7 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

71.1%

Corporate Actions

Ex-Dividend Date

07 Feb 2005

Peer Comparison

Company	P/E	ROE
HINDUSTAN UNILEVER LTD.	42.5x	21.5%
DABUR INDIA LTD	34.7x	17.2%
ITC LTD	16.6x	27.4%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%

Recent News

1 mixed5 general

Ambica Agarbathies and Aroma Industries Share Price Target 2026: Rs 28.9 Analyst Forecast

Univest, 05 JunAnalyst view

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

Is Ambica Agarbathies and Aroma Industries the Best Stock in Its Sector? A Look at the Numbers

Univest, 23 Sept

Ambica Agarbathies Share Price: Buy or Sell

Univest, 07 Sept

AMBICA AGARBATHIES Share Price

Upstox, 22 Mar

Ambica Agarbathies adopts FY26 accounts, reappoints CMD Ambica Krishna

scanx.trade, 29 Sept

These 5 stocks trading below ₹50 can potentially soar up to 46%; say charts

Business Standard, 05 Aug

Watch Items

Revenue growth is negative (-18.2%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongValuation

MiddlingBusiness Quality · Financial Health · Growth

WeakProfitability · 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. 4 high-severity red flags sit above this conclusion and should be read first.

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