Fairchem Organics Limited

Basic Materials — Specialty Chemicals · NSE

₹765.00+₹6.45 (+0.85%)

DalalBaazaar Score

37 / 100

🔴 Weak

Verdict

CAUTION

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

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

What does this company do?

Fairchem Organics Limited manufactures and sells specialty oleo chemicals and intermediate nutraceuticals.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees212

Annual revenue₹459 Cr

How does it make money?

Turns over ₹459 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹5 left at the operating level before interest, tax and depreciation. Each of its 212 employees supports ₹2.16 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.16 Cr

Who are its competitors?

The closest listed comparisons in its industry are ASIAN PAINTS LIMITED, 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?Little sign of one

Returns on capital of 3.8% 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 ROE22.3%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -29% while net margin moved -82% 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-29%

Margin effect-82%

DalalBaazaar Score

37/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 10.8% a year
✗ Profit has declined at 49.7% a year

Quality vs. Valuation

Company Quality

37/ 100

Weak

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

Valuation

26/ 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

67.6x

3Y Median

37.8x

40 monthly readings · mean 49.7x · range 25.7x–179.3x

Sector Median

40.4x

median of 4 sector peers

⚠️Current valuation is approximately 79% above its 3y median of 37.8x. 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 67% above the peer median of 40.4x.

vs. its own history

Expensive

37.8x median over 40 months · +79%

vs. sector peers

Expensive

40.4x median of 4 peers · +67%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

45.8x

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 16.8% to 2.1% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 23.5% to 3.8% — often a sign of competition or overexpansion.

Red Flags

4 items require attention · 2 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 67% over 3 years, from ₹50 Cr to ₹84 Cr.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 6.3 points, from 11.3% to 5.0%.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 9.2x to 3.0x.
🟡Profit is decliningFinancial
Net profit is down 87% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Self-funding with balance-sheet headroom
Positive free cash flow of ₹26 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
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 11.3% to 5.0%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 3.7x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
The price already assumes success
The stock trades 79% 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 16.8% to 2.1%. 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

1EBITDA margin holds above 3%✓ 5.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.7x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Interest cover stays above 3x✗ 3.0x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹26 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ 3.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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 · 3 neutral · 3 weak

Market Cap

₹964 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

67.6x

Expensive

Expensive — verify against sector peers

P/B Ratio

3.66x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹11.32

Profitable

Profitable on a per-share basis

ROE

2.1%

Weak

Weak capital efficiency

ROCE

3.8%

Weak

Low return on total capital employed

Debt/Equity

0.32x

Low

Conservative leverage

Revenue Growth (YoY)

34.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

783.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.13%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹26 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

8.6%

Average

Average margins

Net Margin

2.8%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.65

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.46

Defensive

Steadier than the market

52W Range Position

80%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

698.5 / 683.5

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

70.2

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹646 Cr	₹618 Cr	₹536 Cr	₹459 Cr	-10.8%
EBITDA	₹73 Cr	₹68 Cr	₹44 Cr	₹23 Cr	-32.1%
EBITDA Margin	11.3%	11.0%	8.3%	5.0%	—
PAT (Net Profit)	₹44 Cr	₹41 Cr	₹22 Cr	₹6 Cr	-49.7%
EPS	₹33.41	₹31.1	₹16.88	₹4.28	-49.6%
ROE	16.8%	14.0%	7.3%	2.1%	—
ROCE	23.5%	19.1%	10.4%	3.8%	—
Total Debt	₹50 Cr	₹7 Cr	₹63 Cr	₹84 Cr	+18.6%
Free Cash Flow	₹35 Cr	₹56 Cr	-₹43 Cr	₹26 Cr	-9.0%

🔴 Revenue has shrunk at 10.8% a year over 3 years.

🔴 EBITDA has shrunk at 32.1% a year over 3 years.

🔴 EBITDA Margin has fallen from 11.3% to 5.0% over 3 years (-6.3 pts).

🔴 PAT (Net Profit) has shrunk at 49.7% a year over 3 years.

🔴 EPS has shrunk at 49.6% a year over 3 years.

🔴 ROE has fallen from 16.8% to 2.1% over 3 years (-14.7 pts).

🔴 ROCE has fallen from 23.5% to 3.8% over 3 years (-19.7 pts).

🔴 Total Debt has grown at 18.6% a year over 3 years.

🔴 Free Cash Flow has shrunk at 9.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹391 Cr

Total Liabilities

₹128 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹42 Cr

Capex

-₹15 Cr

Shareholding (proxy)

Institutional Holding

2.2%

Insider Holding

69.9%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

20 Jul 2026

Peer Comparison

Company	P/E	ROE
ASIAN PAINTS LIMITED	46.9x	22.3%
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

2 positive2 mixed2 general

Fairchem Organics schedules Q2FY27 earnings call for Oct 23

scanx.trade, 14 OctResults

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

Fairchem Organics Ltd. Lower Circuit Today: Price, Data and Peers

Univest, 01 Oct

Fairchem Organics Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 01 Sept

Fairchem Organics hits the roof after Q1 PAT zooms 8-fold YoY

Business Standard, 27 JulResults

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

Fairchem Organics Q1 Standalone Net Profit Rises to ₹10 Crore vs ₹1.2 Crore YoY

Sahi, 27 JulResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Fairchem Organics board approves buyback of 4.25 lakh shares at ₹800, 15% premium

Livemint, 20 NovCapital return

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

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

StrongFinancial Health

MiddlingRisk

WeakBusiness Quality · Growth · Profitability · Valuation

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

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑