Auro Laboratories Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹230.00+₹9.00 (+4.07%)

DalalBaazaar Score

48 / 100

🟡 Moderate

Verdict

NEUTRAL

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, 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, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Auro Laboratories Limited manufactures and sells active pharmaceutical ingredients (APIs), intermediates, and generic formulations in India and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees78

Annual revenue₹31 Cr

How does it make money?

Turns over ₹31 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹39 left at the operating level before interest, tax and depreciation. Each of its 78 employees supports ₹39.4 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹39.4 lakh

Who are its competitors?

The closest listed comparisons in its industry are SUN PHARMACEUTICAL IND L, DR. REDDY S LABORATORIES, CIPLA LTD, DIVI S LABORATORIES 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 9.5% 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 ROE14.5%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -41% while net margin moved +146% 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-41%

Margin effect+146%

DalalBaazaar Score

48/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Debt/Equity of 1.37x is on the heavy side
• Current ratio of 1.08 covers short-term liabilities, without much slack
✗ Free cash flow is negative — growth is being funded by borrowing or fresh equity
✗ Interest cover of only 2.2x — little room if profits dip
✗ Debt has grown 114.5% a year — worth checking what it bought

Quality vs. Valuation

Company Quality

46/ 100

Average

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

Valuation

60/ 100

Fair

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

30.6x

3Y Median

41.1x

40 monthly readings · mean 46.6x · range 14.5x–99.0x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 26% below its 3y median of 41.1x. 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 is priced broadly in line with the peer median of 33.3x.

vs. its own history

Cheap

41.1x median over 40 months · -26%

vs. sector peers

Fair

33.3x median of 4 peers · -8%

vs. generic bands

Fair

15x–35x

EV/EBITDA

17.2x

PEG

2.33

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 10.2% to 38.8% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

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

Red Flags

3 items require attention · 3 high

🔴Debt has risen sharplyFinancial
Total debt is up 887% over 3 years, from ₹6 Cr to ₹63 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴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.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 10.2% to 38.8%. 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 26% 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.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 5.3x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
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
3 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 37%✓ 38.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 5.3x
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✗ -₹13 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 2.2x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 8%✓ 9.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

3 good · 6 neutral · 2 weak

Market Cap

₹143 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

30.6x

Fair

Fairly valued against the generic band

P/B Ratio

3.09x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹7.52

Profitable

Profitable on a per-share basis

ROE

7.6%

Weak

Weak capital efficiency

ROCE

9.5%

Moderate

Moderate return on the capital in the business

Debt/Equity

1.37x

Moderate

Moderate leverage

Revenue Growth (YoY)

216.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

92.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

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

Free Cash Flow

-₹13 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

27.3%

Good

Healthy core-business profitability

Net Margin

12.8%

Good

Strong bottom-line conversion

Current Ratio

1.08

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.06

Defensive

Steadier than the market

52W Range Position

45%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

237.0 / 239.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

40.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹52 Cr	₹54 Cr	₹19 Cr	₹31 Cr	-16.2%
EBITDA	₹5 Cr	₹12 Cr	₹4 Cr	₹12 Cr	+30.8%
EBITDA Margin	10.2%	22.7%	20.8%	38.8%	—
PAT (Net Profit)	₹2 Cr	₹8 Cr	₹2 Cr	₹4 Cr	+13.1%
EPS	₹3.92	₹12.5	₹2.95	₹5.67	+13.1%
ROE	7.1%	18.6%	4.3%	7.6%	—
ROCE	11.3%	17.9%	3.7%	9.5%	—
Total Debt	₹6 Cr	₹26 Cr	₹43 Cr	₹63 Cr	+114.5%
Free Cash Flow	-₹1 Cr	-₹17 Cr	-₹19 Cr	-₹13 Cr	—

🔴 Revenue has shrunk at 16.2% a year over 3 years.

🟢 EBITDA has grown at 30.8% a year over 3 years.

🟢 EBITDA Margin has risen from 10.2% to 38.8% over 3 years (+28.6 pts).

🟢 PAT (Net Profit) has grown at 13.1% a year over 3 years.

🟢 EPS has grown at 13.1% a year over 3 years.

🟡 ROE has held roughly flat at 7.6% over 3 years.

🔴 ROCE has fallen from 11.3% to 9.5% over 3 years (-1.8 pts).

🔴 Total Debt has grown at 114.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹121 Cr

Total Liabilities

₹75 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹2 Cr

Capex

-₹15 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

60.2%

Peer Comparison

Company	P/E	ROE
SUN PHARMACEUTICAL IND L	34.9x	14.5%
DR. REDDY S LABORATORIES	31.0x	8.8%
CIPLA LTD	31.8x	9.8%
DIVI S LABORATORIES LTD	83.0x	17.5%

Recent News

1 mixed5 general

Auro Laboratories Ltd. Share Price News and Stock Analysis

Univest, 14 Aug

Auro Laboratories Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 03 Sept

Aurobindo Pharma Limited (AUROPHARMA.NS) stock price, news, quote and history

Yahoo Finance Australia, 16 Oct

Auro Laboratories Share Price rises 8.21%: AUROLAB update

Univest, 03 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Auro Laboratories Receives Credit Rating Assignment from Acuite Ratings for Rs.79.80 Crore Bank Facilities

scanx.trade, 14 Apr

Auro Laboratories Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 01 Sept

Watch Items

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

DalalBaazaar Thesis

MiddlingBusiness Quality · Profitability · Valuation

WeakFinancial Health · Growth · 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. 3 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 ↑