Denis Chem Lab Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹62.00−₹0.22 (−0.35%)

DalalBaazaar Score

46 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Very High

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

In simple words: Reasonable but unspectacular business quality, with modest growth. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

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

What does this company do?

Denis Chem Lab Limited, a pharmaceutical company, engages in the manufacturing and marketing of sterile intravenous injectable products for human and veterinary use in India.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Annual revenue₹182 Cr

How does it make money?

Turns over ₹182 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹11 left at the operating level before interest, tax and depreciation.

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 13.3% 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?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +13% while net margin moved -5% 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+13%

Margin effect-5%

DalalBaazaar Score

46/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 9.2% is weak

Quality vs. Valuation

Company Quality

40/ 100

Weak

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

Valuation

77/ 100

Cheap

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

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

10.8x

3Y Median

16.0x

40 monthly readings · mean 17.7x · range 9.7x–33.6x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 32% below its 3y median of 16.0x. 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 68% below the peer median of 33.3x.

vs. its own history

Cheap

16.0x median over 40 months · -32%

vs. sector peers

Cheap

33.3x median of 4 peers · -68%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

4.4x

PEG

4.73

What's Good / What's Bad

🟢 What's Going Well1

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

🔴 What Needs Attention1

Margins are compressing
EBITDA margin has slipped from 13.1% to 11.3% over 3 years.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 116% over 3 years, from ₹2 Cr to ₹4 Cr.
🔴High leverageFinancial
Debt/Equity of 4.57x — earnings must service borrowings before shareholders see anything.
🔴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 -₹1 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 32% 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 68% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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 13.1% to 11.3%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 4.57x. Interest is payable whether or not the business has a good year.
Growth barely outpaces inflation
Revenue compounding at 4.2% 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.
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 9%✓ 11.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹1 Cr
Profit that never becomes cash eventually stops being profit.
3Revenue growth stays above 4% a year✓ 4.2% CAGR
Latest reported year was 4.9%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 10%✓ 13.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 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

₹86 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

10.8x

Cheap

Cheap against the generic band

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

₹5.75

Profitable

Profitable on a per-share basis

ROE

9.2%

Moderate

Moderate capital efficiency

ROCE

13.3%

Moderate

Moderate return on the capital in the business

Debt/Equity

4.57x

High

High leverage

Revenue Growth (YoY)

4.9%

Modest

Modest growth

Profit Growth (YoY)

4.1%

Modest

Slow profit growth

Dividend Yield

4.03%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

-₹1 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

0.0%

Weak

Thin margins leave little room for error

Net Margin

0.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.70

Comfortable

Healthy short-term liquidity

52W Range Position

15%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

66.5 / 69.0

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

14.3

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹161 Cr	₹168 Cr	₹173 Cr	₹182 Cr	+4.2%
EBITDA	₹21 Cr	₹23 Cr	₹19 Cr	₹21 Cr	-0.9%
EBITDA Margin	13.1%	13.8%	11.0%	11.3%	—
PAT (Net Profit)	₹8 Cr	₹11 Cr	₹8 Cr	₹8 Cr	+2.3%
EPS	₹5.66	₹8.04	₹5.82	₹6.06	+2.3%
ROE	10.9%	13.9%	9.5%	9.2%	—
ROCE	14.9%	18.8%	13.0%	13.3%	—
Total Debt	₹2 Cr	₹1 Cr	₹1 Cr	₹4 Cr	+29.3%
Free Cash Flow	₹12 Cr	₹11 Cr	₹4 Cr	-₹1 Cr	—

🟢 Revenue has grown at 4.2% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (-0.9% a year).

🔴 EBITDA Margin has fallen from 13.1% to 11.3% over 3 years (-1.8 pts).

🟢 PAT (Net Profit) has grown at 2.3% a year over 3 years.

🟢 EPS has grown at 2.3% a year over 3 years.

🔴 ROE has fallen from 10.9% to 9.2% over 3 years (-1.7 pts).

🔴 ROCE has fallen from 14.9% to 13.3% over 3 years (-1.6 pts).

🔴 Total Debt has grown at 29.3% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹12 Cr to -₹1 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹125 Cr

Total Liabilities

₹33 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹4 Cr

Capex

-₹5 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

73.2%

Corporate Actions

Dividend Rate

₹2.5

Ex-Dividend Date

18 Sept 2026

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 positive1 mixed4 general

VS Holding BV reduces stake in Denis Chem Lab to 14.41%

scanx.trade, 16 Oct

ADVANCED ENZYME TECHNOLOGIES Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 15 Oct

Denis Chem Lab Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 02 Sept

Denis Chem Lab Q1 FY27 Results: Revenue Rs 43 Cr, PAT Falls 17%

Univest, 17 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Denis Chem Lab recommends ₹2.50 dividend for FY26 at upcoming AGM

scanx.trade, 18 AugCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

QRG Investments and Holdings sells 1% stake in Jana Small Finance Bank

Moneycontrol.com, 14 Jul

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
1 metric couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongValuation

MiddlingFinancial Health

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 3 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑