Asahi Songwon Colors Limited

Basic Materials — Specialty Chemicals · NSE

₹391.65+₹16.95 (+4.52%)

DalalBaazaar Score

58 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by 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. Nothing obvious stands out as stretched — the usual checks on business quality and management still apply.

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 Asahi Songwon Colors Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Asahi Songwon Colors Limited manufactures and sells color pigments and derivatives in India. The company offers copper phthalocyanine (CPC) blue crude, pigment alpha, pigment blue, and pigment beta blue.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees116

Annual revenue₹533 Cr

How does it make money?

Turns over ₹533 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 116 employees supports ₹4.59 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹4.59 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 10.1% 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 +6% while net margin moved -252% 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+6%

Margin effect-252%

DalalBaazaar Score

58/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 2.0% — barely ahead of inflation

Quality vs. Valuation

Company Quality

55/ 100

Average

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

Valuation

80/ 100

Cheap

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

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

13.2x

2Y Median

20.1x

28 monthly readings · mean 19.9x · range 11.1x–29.5x

Sector Median

40.4x

median of 4 sector peers

🟢Current valuation is approximately 34% below its 2y median of 20.1x. 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 67% below the peer median of 40.4x.

vs. its own history

Cheap

20.1x median over 28 months · -34%

vs. sector peers

Cheap

40.4x median of 4 peers · -67%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

10.8x

PEG

—

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 2.0% to 10.4% over 3 years.
Debt is being paid down
Total debt is down 20% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from -5.3% to 6.9%.
Return on capital is rising
ROCE has improved from -1.4% to 10.1%.

🔴 What Needs Attention0

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

Red Flags

2 items require attention · 2 watch

🟡Receivables growing faster than salesFinancial
Receivables up 29% against revenue up 6% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 45% against revenue up 6% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 2.0% to 10.4%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 20% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 34% 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 67% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹38 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 29% against revenue up 6%. 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 2.0% 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 8%✓ 10.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 2.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Interest cover stays above 3x✓ 3.3x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✗ 2.0% CAGR
Latest reported year was 26.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹38 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

7 / 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

6 good · 4 neutral · 1 weak

Market Cap

₹462 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

13.2x

Cheap

Cheap against the generic band

P/B Ratio

1.70x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹29.56

Profitable

Profitable on a per-share basis

ROE

6.9%

Weak

Weak capital efficiency

ROCE

10.1%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.48x

Low

Conservative leverage

Revenue Growth (YoY)

26.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

509.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.38%

Modest

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

Free Cash Flow

₹38 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

14.4%

Average

Average margins

Net Margin

6.1%

Average

Average bottom-line conversion

Current Ratio

1.25

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.27

Defensive

Steadier than the market

52W Range Position

90%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

379.2 / 370.4

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

45.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹503 Cr	₹425 Cr	₹559 Cr	₹533 Cr	+2.0%
EBITDA	₹10 Cr	₹20 Cr	₹60 Cr	₹56 Cr	+75.4%
EBITDA Margin	2.0%	4.8%	10.8%	10.4%	—
PAT (Net Profit)	-₹12 Cr	₹20 Cr	₹20 Cr	₹19 Cr	—
EPS	₹-9.83	₹17.01	₹16.76	₹15.92	—
ROE	-5.3%	8.5%	7.7%	6.9%	—
ROCE	-1.4%	8.3%	11.1%	10.1%	—
Total Debt	₹180 Cr	₹197 Cr	₹167 Cr	₹143 Cr	-7.3%
Free Cash Flow	-₹1 Cr	-₹45 Cr	₹52 Cr	₹38 Cr	—

🟡 Revenue has been broadly flat over 3 years (2.0% a year).

🟢 EBITDA has grown at 75.4% a year over 3 years.

🟢 EBITDA Margin has risen from 2.0% to 10.4% over 3 years (+8.4 pts).

🟢 PAT (Net Profit) has turned positive, from -₹12 Cr to ₹19 Cr.

🟢 EPS has turned positive, from ₹-9.83 to ₹15.92.

🟢 ROE has risen from -5.3% to 6.9% over 3 years (+12.2 pts).

🟢 ROCE has risen from -1.4% to 10.1% over 3 years (+11.5 pts).

🟢 Total Debt has shrunk at 7.3% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹1 Cr to ₹38 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹603 Cr

Total Liabilities

₹305 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

₹43 Cr

Capex

-₹6 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

74.5%

Corporate Actions

Dividend Rate

₹1.5

Ex-Dividend Date

23 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 positive5 general

Asahi Songwon Colors (ASAHISONG.NS) Edges Up 1.74% to ₹376.4, Approaching Key Resistance Zone - Total Put Call

https://www.siam.in/, 07 Oct

Asahi Songwon Colors: Best Stock in Its Sector? Key Metrics

Univest, 23 Sept

Does Asahi Songwon Colors (NSE:ASAHISONG) Deserve A Spot On Your Watchlist?

Simply Wall Street, 31 Jul

Asahi Songwon Colors Q1FY27 net profit jumps 631% to ₹192 crore

scanx.trade, 30 JulResults

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

Asahi Songwon Colors Ltd. Lower Circuit Today: Price, Data and Peers

Univest, 01 Oct

Rajdarshan Industries Ltd leads gainers in 'B' group

Business Standard, 22 Jul

Watch Items

Trading very close to its 52-week high — momentum-driven entries here carry more mean-reversion risk.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health · Valuation

MiddlingBusiness Quality · Profitability

WeakGrowth · Risk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you.

2 of 5 tripwires tripped — Debt / EBITDA stays below 2x; Revenue growth stays above 4% a year · see Key things to watch ↑