Brooks Laboratories Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹67.00−₹3.42 (−4.86%)

DalalBaazaar Score

70 / 100

🟢 Good

Verdict

REASONABLE

Risk

High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

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

What does this company do?

Brooks Laboratories Limited operates as a pharmaceutical manufacturer in India and internationally. It operates in two segments, Manufacturing and Trading.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees347

Annual revenue₹85 Cr

How does it make money?

Turns over ₹85 Cr a year. Of every ₹100 of sales, about ₹29 reaches shareholders as profit, with ₹31 left at the operating level before interest, tax and depreciation. Each of its 347 employees supports ₹24.6 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹24.6 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?Some evidence

ROCE of 20.0% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

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 +37% while net margin moved -186% 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+37%

Margin effect-186%

DalalBaazaar Score

70/ 100

Good

Weighted across six categories. Every point is explained below.

• Beta of 1.15 — moves roughly with the market
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ Profits have swung sharply from year to year — earnings are hard to forecast

Quality vs. Valuation

Company Quality

74/ 100

Good

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

Valuation

83/ 100

Cheap

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

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

14.9x

Sector Median

33.3x

median of 4 sector peers

🟢Against its sector it trades 55% below the peer median of 33.3x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

33.3x median of 4 peers · -55%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

7.5x

PEG

—

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from -47.9% to 31.0% 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 -28.3% to 20.0%.
Return on capital is rising
ROCE has improved from -47.6% to 20.0%.
High return on capital employed
ROCE of 20.0% is the mark of a business that converts capital into profit efficiently.

🔴 What Needs Attention0

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

Red Flags

2 items require attention · 1 high · 1 watch

🔴High leverageFinancial
Debt/Equity of 6.94x — earnings must service borrowings before shareholders see anything.
🟡Debt is increasingFinancial
Total debt is up 31% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 20.0% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from -47.9% to 31.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 55% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 6.94x. Interest is payable whether or not the business has a good year.
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

1Revenue growth stays above 8% a year✓ 11.0% CAGR
Latest reported year was -10.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 29%✓ 31.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹6 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 17%✓ 20.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 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 · 3 neutral · 2 weak

Market Cap

₹197 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

14.9x

Cheap

Cheap against the generic band

P/B Ratio

1.61x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹4.49

Profitable

Profitable on a per-share basis

ROE

20.0%

Strong

Strong capital efficiency

ROCE

20.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

6.94x

High

High leverage

Revenue Growth (YoY)

-10.0%

Shrinking

Sales are contracting

Profit Growth (YoY)

346.6%

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

₹6 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

11.5x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

6.3%

Average

Average margins

Net Margin

15.9%

Good

Strong bottom-line conversion

Current Ratio

1.72

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

1.15

Market-like

Moves roughly in line with the market

52W Range Position

35%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

61.6 / 62.4

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

61.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹62 Cr	₹79 Cr	₹82 Cr	₹85 Cr	+11.0%
EBITDA	-₹30 Cr	-₹17 Cr	-₹4 Cr	₹26 Cr	—
EBITDA Margin	-47.9%	-21.7%	-5.2%	31.0%	—
PAT (Net Profit)	-₹21 Cr	-₹20 Cr	-₹10 Cr	₹25 Cr	—
EPS	₹-12.57	₹-7.67	₹-3.72	₹8.35	—
ROE	-28.3%	-29.9%	-10.2%	20.0%	—
ROCE	-47.6%	-28.0%	-8.9%	20.0%	—
Total Debt	₹7 Cr	₹6 Cr	₹8 Cr	₹9 Cr	+9.4%
Free Cash Flow	-₹15 Cr	-₹10 Cr	₹2 Cr	₹6 Cr	—

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

🟢 EBITDA has turned positive, from -₹30 Cr to ₹26 Cr.

🟢 EBITDA Margin has risen from -47.9% to 31.0% over 3 years (+78.8 pts).

🟢 PAT (Net Profit) has turned positive, from -₹21 Cr to ₹25 Cr.

🟢 EPS has turned positive, from ₹-12.57 to ₹8.35.

🟢 ROE has risen from -28.3% to 20.0% over 3 years (+48.3 pts).

🟢 ROCE has risen from -47.6% to 20.0% over 3 years (+67.6 pts).

🔴 Total Debt has grown at 9.4% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹15 Cr to ₹6 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹148 Cr

Total Liabilities

₹26 Cr

Cash & Equivalents

₹7 Cr

Operating Cash Flow

₹9 Cr

Capex

-₹4 Cr

Shareholding (proxy)

Institutional Holding

9.9%

Insider Holding

54.8%

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

6 general

Brooks Laboratories NSE:BROOKS Price Movement Clarification

Kalkine India, 13 Oct

Brooks Laboratories Ltd is Rated Strong Sell

MarketsMojo, 17 Oct

Brooks Laboratories approves demerger of manufacturing business

scanx.trade, 14 Oct

Brooks Laboratories Upper Circuit Today: Price, Data and Peers

Univest, 08 Oct

Market Trading Guide: Deepa Jewellers among 2 stock recommendations for Friday

The Economic Times, 08 Oct

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

Value Research, 30 Aug

Watch Items

Revenue growth is negative (-10.0%) 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

StrongBusiness Quality · Financial Health · Profitability · Valuation

MiddlingGrowth

WeakRisk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 1 high-severity red flag sits above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑