Foseco India Limited

Basic Materials — Chemicals · NSE

₹6,270.00−₹6.50 (−0.10%)

DalalBaazaar Score

68 / 100

🟢 Good

Verdict

REASONABLE

Risk

Low

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

In simple words: Reasonable but unspectacular business quality, 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, 8:27 pm

Understanding the Business

Company site ↗

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

What does this company do?

Foseco India Limited engages in manufacturing of additives and consumables for the metallurgical industry in India and internationally.

IndustryChemicals

SectorBasic Materials

Employees221

Annual revenue₹642 Cr

How does it make money?

Turns over ₹642 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹22 left at the operating level before interest, tax and depreciation. Each of its 221 employees supports ₹2.91 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹2.91 Cr

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?Little sign of one

Returns on capital of 9.0% 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 ROE15.4%

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 +58% while net margin moved -1% 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+58%

Margin effect-1%

DalalBaazaar Score

68/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 48.1x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 43.6x

Quality vs. Valuation

Company Quality

73/ 100

Good

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

Valuation

34/ 100

Expensive

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

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

Historical Valuation

Current P/E

48.1x

4Y Median

43.6x

44 monthly readings · mean 43.6x · range 30.1x–58.5x

Sector Median

33.8x

median of 3 sector peers

⚠️Current valuation is approximately 10% above its 4y median of 43.6x. 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 42% above the peer median of 33.8x.

vs. its own history

Fair

43.6x median over 44 months · +10%

vs. sector peers

Expensive

33.8x median of 3 peers · +42%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

33.0x

PEG

2.95

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 17.6% to 22.0% over 3 years.
Cash generation is improving
Free cash flow is up 75% over 3 years.
Very low debt
Debt/Equity of 0.20x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 19.2% to 7.0% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 25.6% to 9.0% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Inventory building faster than salesFinancial
Inventory up 167% against revenue up 58% — stock may not be moving.
🟡Receivables growing faster than salesFinancial
Receivables up 80% against revenue up 58% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 17.6% to 22.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹89 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?

Sales are being booked faster than collected
Receivables are up 80% against revenue up 58%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 42% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 19.2% to 7.0%. 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 12% a year✓ 16.5% CAGR
Latest reported year was 47.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 20%✓ 22.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹89 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 9.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 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 · 5 neutral · 1 weak

Market Cap

₹4,749 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

48.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

4.73x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹130.35

Profitable

Profitable on a per-share basis

ROE

13.3%

Moderate

Moderate capital efficiency

ROCE

9.0%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.20x

Low

Conservative leverage

Revenue Growth (YoY)

47.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

32.7%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.40%

Modest

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

Free Cash Flow

₹87 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

ROA

9.0%

Good

Assets are working hard

Operating Margin

19.5%

Good

Healthy core-business profitability

Net Margin

12.8%

Good

Strong bottom-line conversion

Current Ratio

2.87

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.19

Defensive

Steadier than the market

52W Range Position

64%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

6403.1 / 6117.0

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

40.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY22	FY23	FY24	FY25	3Y CAGR
Revenue	₹406 Cr	₹477 Cr	₹524 Cr	₹642 Cr	+16.5%
EBITDA	₹71 Cr	₹91 Cr	₹109 Cr	₹141 Cr	+25.6%
EBITDA Margin	17.6%	19.1%	20.8%	22.0%	—
PAT (Net Profit)	₹46 Cr	₹73 Cr	₹73 Cr	₹72 Cr	+16.3%
EPS	₹71.98	₹114.28	₹114.35	₹110.46	+15.3%
ROE	19.2%	25.5%	21.3%	7.0%	—
ROCE	25.6%	33.1%	28.6%	9.0%	—
Total Debt	—	₹1 Cr	₹2 Cr	₹3 Cr	—
Free Cash Flow	₹51 Cr	₹45 Cr	₹27 Cr	₹89 Cr	+20.5%

🟢 Revenue has grown at 16.5% a year over 3 years.

🟢 EBITDA has grown at 25.6% a year over 3 years.

🟢 EBITDA Margin has risen from 17.6% to 22.0% over 3 years (+4.4 pts).

🟢 PAT (Net Profit) has grown at 16.3% a year over 3 years.

🟢 EPS has grown at 15.3% a year over 3 years.

🔴 ROE has fallen from 19.2% to 7.0% over 3 years (-12.3 pts).

🔴 ROCE has fallen from 25.6% to 9.0% over 3 years (-16.6 pts).

🟢 Free Cash Flow has grown at 20.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2025

Total Assets

₹1,368 Cr

Total Liabilities

₹248 Cr

Cash & Equivalents

₹97 Cr

Operating Cash Flow

₹98 Cr

Capex

-₹9 Cr

Shareholding (proxy)

Institutional Holding

11.3%

Insider Holding

73.3%

Corporate Actions

Dividend Rate

₹25

Ex-Dividend Date

03 Jun 2026

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

1 positive2 mixed1 negative2 general

Foseco India: Morgan Advanced Materials sells entire 15.26% stake

BusinessLine, 28 Aug

Foseco India Share Price Target 2027 to 2030: Analyst Outlook

Univest, 17 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Should You Buy Foseco India Limited (NSE:FOSECOIND) For Its Upcoming Dividend?

Simply Wall Street, 30 MayCapital return

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

Foseco India - 11 stocks added by more than 15 MF schemes in August; shares surge up to 240% in CY26

The Economic Times, 22 SeptPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Block deals today: Apollo Tyres, Foseco India give up early gains after Rs 1,600-crore equity stakes sale

Moneycontrol.com, 27 Aug

Morgan Advanced Exits Foseco India With ₹678 Cr Stake Sale

HDFC Sky, 28 AugOwnership

🔴Potentially negativePromoter selling or pledging is a signal worth understanding, though the reason is often personal rather than about the business.

Watch Items

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

DalalBaazaar Thesis

StrongFinancial Health · Growth

MiddlingBusiness Quality · Profitability · Valuation · Risk

Points for each in the Score ↑

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you. 1 high-severity red flag sits above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑