Choksi Laboratories Limited

Healthcare — Diagnostics & Research · BSE

₹202.35−₹10.60 (−4.98%)

DalalBaazaar Score

37 / 100

🔴 Weak

Verdict

CAUTION

Risk

Very High

Driven by moderate debt load, short-term liabilities exceed short-term assets, negative free cash flow.

In simple words: The business is earning a fairly low return on the money invested in it, with modest growth. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:28 pm

Understanding the Business

Company site ↗

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

What does this company do?

Choksi Laboratories Limited provides contract testing and analytical services in India.

IndustryDiagnostics & Research

SectorHealthcare

Employees364

Annual revenue₹46 Cr

How does it make money?

Turns over ₹46 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹28 left at the operating level before interest, tax and depreciation. Each of its 364 employees supports ₹12.6 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹12.6 lakh

Who are its competitors?

The closest listed comparisons in its industry are SUN PHARMACEUTICAL IND L, CIPLA LTD, DR. REDDY S LABORATORIES, APOLLO HOSPITALS ENTER. L. 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 12.3% 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 +34% while net margin moved -54% 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+34%

Margin effect-54%

DalalBaazaar Score

37/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ P/E of 65.1x is demanding — it needs sustained high growth to justify
✗ P/E is 27% above its own historical median of 51.2x — expensive by its own standards
✗ P/B of 5.53x is a steep premium to book

Quality vs. Valuation

Company Quality

39/ 100

Weak

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

Valuation

31/ 100

Expensive

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

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

65.1x

3Y Median

51.2x

40 monthly readings · mean 49.6x · range 9.2x–118.6x

Sector Median

33.3x

median of 4 sector peers

⚠️Current valuation is approximately 27% above its 3y median of 51.2x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

⚠️Against its sector it trades 95% above the peer median of 33.3x.

vs. its own history

Expensive

51.2x median over 40 months · +27%

vs. sector peers

Expensive

33.3x median of 4 peers · +95%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

13.8x

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 15.2% to 7.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 15.1% to 12.3% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 1 high · 4 watch

🔴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.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹0 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 39% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 3.3 points over 3 years.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.82 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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?

Margins are being competed away
EBITDA margin has fallen from 30.9% to 27.6%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The price already assumes success
The stock trades 27% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 15.2% to 7.7%. 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.
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✓ 10.1% CAGR
Latest reported year was 7.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 26%✓ 27.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Free cash flow remains positive✗ -₹0 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 2.1x
How much operating profit can fall before interest stops being comfortably covered.

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

2 good · 5 neutral · 4 weak

Market Cap

₹141 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

65.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

5.53x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹3.11

Profitable

Profitable on a per-share basis

ROE

7.7%

Weak

Weak capital efficiency

ROCE

12.3%

Moderate

Moderate return on the capital in the business

Debt/Equity

1.34x

Moderate

Moderate leverage

Revenue Growth (YoY)

7.3%

Modest

Modest growth

Profit Growth (YoY)

52.7%

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 burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

10.9%

Average

Average margins

Net Margin

4.6%

Average

Average bottom-line conversion

Current Ratio

0.82

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.30

Defensive

Steadier than the market

52W Range Position

83%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

194.5 / 167.8

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

58.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹34 Cr	₹37 Cr	₹42 Cr	₹46 Cr	+10.1%
EBITDA	₹11 Cr	₹10 Cr	₹12 Cr	₹13 Cr	+6.1%
EBITDA Margin	30.9%	28.3%	27.6%	27.6%	—
PAT (Net Profit)	₹3 Cr	₹1 Cr	₹2 Cr	₹2 Cr	-15.1%
EPS	₹4.61	₹1.59	₹2.19	₹2.82	-15.1%
ROE	15.2%	5.0%	6.5%	7.7%	—
ROCE	15.1%	10.8%	11.6%	12.3%	—
Total Debt	₹32 Cr	₹31 Cr	₹29 Cr	₹34 Cr	+1.8%
Free Cash Flow	₹4 Cr	₹4 Cr	₹4 Cr	-₹0 Cr	—

🟢 Revenue has grown at 10.1% a year over 3 years.

🟢 EBITDA has grown at 6.1% a year over 3 years.

🔴 EBITDA Margin has fallen from 30.9% to 27.6% over 3 years (-3.3 pts).

🔴 PAT (Net Profit) has shrunk at 15.1% a year over 3 years.

🔴 EPS has shrunk at 15.1% a year over 3 years.

🔴 ROE has fallen from 15.2% to 7.7% over 3 years (-7.5 pts).

🔴 ROCE has fallen from 15.1% to 12.3% over 3 years (-2.8 pts).

🟡 Total Debt has been broadly flat over 3 years (1.8% a year).

🔴 Free Cash Flow has turned negative, from ₹4 Cr to -₹0 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹72 Cr

Total Liabilities

₹46 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹8 Cr

Capex

-₹8 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

60.8%

Peer Comparison

Company	P/E	ROE
SUN PHARMACEUTICAL IND L	34.9x	14.5%
CIPLA LTD	31.8x	9.8%
DR. REDDY S LABORATORIES	31.0x	8.8%
APOLLO HOSPITALS ENTER. L	54.3x	22.0%

Recent News

6 general

Choksi Laboratories holds EGM to approve convertible warrant issuance

scanx.trade, 18 Oct

Choksi Laboratories Lower Circuit Today: Price, Data and Peers

Univest, 05 Oct

Choksi Laboratories approves ₹6.19 crore warrant issue to promoters

scanx.trade, 17 Oct

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

Value Research, 29 Aug

Compare with CHOKSI LAB.

Equitymaster, 09 Oct

Choksi Laboratories Ltd. Lower Circuit Streak: Day 2 Price and Data

Univest, 01 Oct

Watch Items

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

DalalBaazaar Thesis

MiddlingBusiness Quality

WeakFinancial Health · Growth · Profitability · Valuation · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 1 high-severity red flag sits above this conclusion and should be read first.

3 of 5 tripwires tripped — Debt / EBITDA stays below 2x; Free cash flow remains positive; Interest cover stays above 3x · see Key things to watch ↑