Caprolactam Chemicals Limited

Basic Materials — Chemicals · BSE

₹47.48+₹2.26 (+5.00%)

DalalBaazaar Score

50 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

High

Driven by moderate debt load, short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

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

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:48 pm

Understanding the Business

Company site ↗

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

What does this company do?

Caprolactam Chemicals Limited engages in the manufacture and sale of chemicals in India. The company was formerly known as Vamotiwala Chemicals Industries Limited and changed its name to Caprolactam Chemicals Limited.

IndustryChemicals

SectorBasic Materials

Annual revenue₹11 Cr

How does it make money?

Turns over ₹11 Cr a year. Of every ₹100 of sales, about ₹17 reaches shareholders as profit, with ₹42 left at the operating level before interest, tax and depreciation.

Who are its competitors?

The closest listed comparisons in its industry are 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?Some evidence

ROCE of 43.3% 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 ROE15.4%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +7% while net margin moved -36% 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+7%

Margin effect-36%

DalalBaazaar Score

50/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 2.4% — barely ahead of inflation
✗ Profit has declined at 11.6% a year
✗ Latest-year revenue growth of -81.8% is below the longer-term trend — momentum is fading

Quality vs. Valuation

Company Quality

50/ 100

Average

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

Valuation

57/ 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

53.3x

3Y Median

102.5x

40 monthly readings · mean 73.4x · range 9.3x–170.7x

Sector Median

33.8x

median of 3 sector peers

🟢Current valuation is approximately 48% below its 3y median of 102.5x. 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 58% above the peer median of 33.8x.

vs. its own history

Cheap

102.5x median over 40 months · -48%

vs. sector peers

Expensive

33.8x median of 3 peers · +58%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

6.9x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
High return on capital employed
ROCE of 43.3% is the mark of a business that converts capital into profit efficiently.

🔴 What Needs Attention1

Return on equity is falling
ROE has dropped from 47.7% to 26.8% — each rupee of shareholder capital earns less than it did.

Red Flags

5 items require attention · 3 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 62% over 3 years, from ₹6 Cr to ₹9 Cr.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.2 points, from 47.7% to 42.5%.
🔴Inventory building faster than salesFinancial
Inventory up 86% against revenue up 7% — stock may not be moving.
🟡Profit is decliningFinancial
Net profit is down 31% over 3 years.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.63 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 43.3% 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.
Priced below its own history
The stock trades 48% 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.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 47.7% to 42.5%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
A premium to the sector to defend
It trades 58% above the peer median. That premium needs a reason that persists, or it closes.
Growth barely outpaces inflation
Revenue compounding at 2.4% 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.
Returns on shareholder capital are falling
ROE has dropped from 47.7% to 26.8%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
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.

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

1EBITDA margin holds above 40%✓ 42.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 2.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Interest cover stays above 3x✓ 4.0x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✗ 2.4% CAGR
Latest reported year was -81.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹0 Cr
Profit that never becomes cash eventually stops being profit.

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 · 4 neutral · 2 weak

Market Cap

₹22 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

53.3x

Expensive

Expensive — verify against sector peers

P/B Ratio

3.32x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹0.89

Profitable

Profitable on a per-share basis

ROE

26.8%

Strong

Strong capital efficiency

ROCE

43.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.40x

Moderate

Moderate leverage

Revenue Growth (YoY)

-81.8%

Shrinking

Sales are contracting

Profit Growth (YoY)

348.5%

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

₹0 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

-173.6%

Weak

Thin margins leave little room for error

Net Margin

4.9%

Average

Average bottom-line conversion

Current Ratio

0.63

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.15

Defensive

Steadier than the market

52W Range Position

24%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

46.5 / 46.0

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

52.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹10 Cr	₹7 Cr	₹7 Cr	₹11 Cr	+2.4%
EBITDA	₹5 Cr	₹2 Cr	₹2 Cr	₹4 Cr	-1.5%
EBITDA Margin	47.7%	33.8%	23.8%	42.5%	—
PAT (Net Profit)	₹3 Cr	₹0 Cr	-₹1 Cr	₹2 Cr	-11.6%
EPS	₹5.54	₹0.43	₹-1.54	₹3.83	-11.6%
ROE	47.7%	3.6%	-14.7%	26.8%	—
ROCE	44.1%	13.8%	-1.0%	43.3%	—
Total Debt	₹6 Cr	₹6 Cr	₹9 Cr	₹9 Cr	+17.5%
Free Cash Flow	-₹1 Cr	₹0 Cr	-₹2 Cr	₹0 Cr	—

🟢 Revenue has grown at 2.4% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (-1.5% a year).

🔴 EBITDA Margin has fallen from 47.7% to 42.5% over 3 years (-5.2 pts).

🔴 PAT (Net Profit) has shrunk at 11.6% a year over 3 years.

🔴 EPS has shrunk at 11.6% a year over 3 years.

🔴 ROE has fallen from 47.7% to 26.8% over 3 years (-21.0 pts).

🟡 ROCE has held roughly flat at 43.3% over 3 years.

🔴 Total Debt has grown at 17.5% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹1 Cr to ₹0 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹17 Cr

Total Liabilities

₹10 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹2 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

56.9%

Corporate Actions

Ex-Dividend Date

15 Sept 1994

Peer Comparison

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

Recent News

6 general

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Univest, 10 Aug

Caprolactam Chemicals posts ₹176.1 lakh net profit in FY26 turnaround

scanx.trade, 02 Sept

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Simply Wall Street, 11 Jul

Ammonium Sulfate Market Size, Share & Forecast Report, 2035

SNS Insider, 16 Jun

CAPROLACTAM CHEMICALS LTD. Share Price

Upstox, 06 Apr

Fertilizers and Chemicals Travancore Share Price Forecast to 2030

Univest, 17 Jul

Watch Items

Revenue growth is negative (-81.8%) 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

MiddlingFinancial Health · Profitability · Valuation

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. 3 high-severity red flags sit above this conclusion and should be read first.

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