Fermenta Biotech Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹487.50+₹1.00 (+0.21%)

DalalBaazaar Score

71 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

Driven by micro-cap size, which brings thin liquidity, falling profits.

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

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Fermenta Biotech Limited, together with its subsidiaries, engages in the manufacturing and marketing of chemicals, bulk drugs, enzymes, pharmaceutical formulations, and environmental solution products in India, Europe, the United States, and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees630

Annual revenue₹524 Cr

How does it make money?

Turns over ₹524 Cr a year. Of every ₹100 of sales, about ₹14 reaches shareholders as profit, with ₹23 left at the operating level before interest, tax and depreciation. Each of its 630 employees supports ₹83.1 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹83.1 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 24.2% 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 +50% while net margin moved -194% 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+50%

Margin effect-194%

DalalBaazaar Score

71/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of -0.38 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast

Quality vs. Valuation

Company Quality

76/ 100

Good

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

Valuation

69/ 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

23.5x

Sector Median

33.3x

median of 4 sector peers

🟢Against its sector it trades 29% 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 · -29%

vs. generic bands

Fair

15x–35x

EV/EBITDA

12.5x

PEG

—

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 8.6% to 22.6% over 3 years.
Debt is being paid down
Total debt is down 48% over 3 years.
Return on equity is rising
ROE has improved from -16.2% to 17.7%.
Return on capital is rising
ROCE has improved from -7.6% to 24.2%.
High return on capital employed
ROCE of 24.2% is the mark of a business that converts capital into profit efficiently.
Very low debt
Debt/Equity of 0.28x leaves the balance sheet with plenty of headroom.

🔴 What Needs Attention0

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

Red Flags

1 item require attention · 1 high

🔴Receivables growing faster than salesFinancial
Receivables up 168% against revenue up 50% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 24.2% 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 8.6% to 22.6%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 48% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 29% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹62 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 168% against revenue up 50%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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 11% a year✓ 14.5% CAGR
Latest reported year was -10.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 21%✓ 22.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹62 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 21%✓ 24.2%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 10 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

Price history

Quick Metrics

5 good · 4 neutral · 2 weak

Market Cap

₹1,398 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

23.5x

Fair

Fairly valued against the generic band

P/B Ratio

3.44x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹20.74

Profitable

Profitable on a per-share basis

ROE

17.7%

Strong

Strong capital efficiency

ROCE

24.2%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.28x

Low

Conservative leverage

Revenue Growth (YoY)

-10.6%

Shrinking

Sales are contracting

Profit Growth (YoY)

-55.3%

Falling

Profits are shrinking

Dividend Yield

0.77%

Modest

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

Free Cash Flow

₹62 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

10.6%

Average

Average margins

Net Margin

11.7%

Good

Strong bottom-line conversion

Current Ratio

1.86

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.38

Defensive

Steadier than the market

52W Range Position

39%

Mid-range

Technical Snapshot

RSI (14)

54.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹349 Cr	₹333 Cr	₹467 Cr	₹524 Cr	+14.5%
EBITDA	₹30 Cr	₹39 Cr	₹124 Cr	₹118 Cr	+58.1%
EBITDA Margin	8.6%	11.5%	26.6%	22.6%	—
PAT (Net Profit)	-₹51 Cr	-₹23 Cr	₹77 Cr	₹72 Cr	—
EPS	₹-17.7	₹-7.99	₹26.35	₹24.51	—
ROE	-16.2%	-8.0%	21.2%	17.7%	—
ROCE	-7.6%	1.6%	23.9%	24.2%	—
Total Debt	₹220 Cr	₹139 Cr	₹115 Cr	₹113 Cr	-19.8%
Free Cash Flow	₹76 Cr	₹86 Cr	₹19 Cr	₹62 Cr	-6.2%

🟢 Revenue has grown at 14.5% a year over 3 years.

🟢 EBITDA has grown at 58.1% a year over 3 years.

🟢 EBITDA Margin has risen from 8.6% to 22.6% over 3 years (+14.0 pts).

🟢 PAT (Net Profit) has turned positive, from -₹51 Cr to ₹72 Cr.

🟢 EPS has turned positive, from ₹-17.7 to ₹24.51.

🟢 ROE has risen from -16.2% to 17.7% over 3 years (+33.9 pts).

🟢 ROCE has risen from -7.6% to 24.2% over 3 years (+31.7 pts).

🟢 Total Debt has shrunk at 19.8% a year over 3 years.

🔴 Free Cash Flow has shrunk at 6.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹648 Cr

Total Liabilities

₹247 Cr

Cash & Equivalents

₹32 Cr

Operating Cash Flow

₹93 Cr

Capex

-₹30 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

65.9%

Corporate Actions

Dividend Rate

₹3.75

Ex-Dividend Date

05 Aug 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 positive5 general

Fermenta Biotech (BSE:506414) - Stock Analysis

Simply Wall Street, 15 Oct

Is Fermenta Biotech the Best Stock in Its Sector? A Look at the Numbers

Univest, 16 Oct

Fermenta Biotech standalone profit rises 7% in Q1FY27 despite consolidated decline

scanx.trade, 11 AugResults

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

FERMENTA Stock Price and Chart — NSE:FERMENTA

TradingView, 20 Apr

Fermenta Biotech Applies for NSE Listing to Enable Trading of 2.91 Crore Equity Shares

Sahi, 17 Jun

Fermenta Biotech | Stock Share Price Live

MarketSmith India, 13 Jul

Watch Items

Revenue growth is negative (-10.6%) 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

MiddlingGrowth · Valuation

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 ↑