Fredun Pharmaceuticals Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹1,480.00+₹17.90 (+1.22%)

DalalBaazaar Score

57 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by moderate debt load, negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:02 pm

Understanding the Business

Company site ↗

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

What does this company do?

Fredun Pharmaceuticals Limited manufactures and sells pharmaceutical formulations, dietary/herbal supplements, nutraceuticals, animal healthcare products, cosmeceuticals, mobility and rehabilitation products, and other healthcare products in India, Africa, Southeast Asia, Commonwealth of Independent States countries, MENA region, and Latin America.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees736

Annual revenue₹633 Cr

How does it make money?

Turns over ₹633 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹15 left at the operating level before interest, tax and depreciation. Each of its 736 employees supports ₹86.0 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹86.0 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?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 24.5%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 11.6% against a peer median of 14.5% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

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 +131% while net margin moved +31% 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+131%

Margin effect+31%

DalalBaazaar Score

57/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 54.3x is demanding — it needs sustained high growth to justify
✗ P/B of 8.74x is a steep premium to book

Quality vs. Valuation

Company Quality

66/ 100

Good

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

Valuation

33/ 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

54.3x

Sector Median

33.3x

median of 4 sector peers

⚠️Against its sector it trades 63% above the peer median of 33.3x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

33.3x median of 4 peers · +63%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

29.0x

PEG

1.22

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 10.1% to 14.7% over 3 years.
Return on capital is rising
ROCE has improved from 21.3% to 24.5%.
High return on capital employed
ROCE of 24.5% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

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

Red Flags

4 items require attention · 2 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 180% over 3 years, from ₹87 Cr to ₹242 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🟡Receivables growing faster than salesFinancial
Receivables up 168% against revenue up 131% — sales are being booked faster than they are collected.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 21% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 24.5% 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 10.1% to 14.7%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
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 168% against revenue up 131%. 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 63% above the peer median. That premium needs a reason that persists, or it closes.
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
2 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

1Revenue growth stays above 24% a year✓ 32.2% CAGR
Latest reported year was 90.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 13%✓ 14.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Free cash flow remains positive✗ -₹62 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 2.3x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

6 / 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

4 good · 4 neutral · 3 weak

Market Cap

₹2,528 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

54.3x

Expensive

Expensive — verify against sector peers

P/B Ratio

8.74x

Rich

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

EPS (TTM)

₹27.24

Profitable

Profitable on a per-share basis

ROE

11.6%

Moderate

Moderate capital efficiency

ROCE

24.5%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.87x

Moderate

Moderate leverage

Revenue Growth (YoY)

90.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

281.4%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.05%

Modest

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

Free Cash Flow

-₹62 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

12.6%

Average

Average margins

Net Margin

5.2%

Average

Average bottom-line conversion

Current Ratio

1.68

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.86

Market-like

Moves roughly in line with the market

52W Range Position

61%

Mid-range

Technical Snapshot

RSI (14)

62.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹274 Cr	₹347 Cr	₹452 Cr	₹633 Cr	+32.2%
EBITDA	₹28 Cr	₹38 Cr	₹53 Cr	₹93 Cr	+49.7%
EBITDA Margin	10.1%	10.9%	11.7%	14.7%	—
PAT (Net Profit)	₹11 Cr	₹16 Cr	₹20 Cr	₹33 Cr	+44.5%
EPS	₹7.64	₹11.11	—	—	—
ROE	11.2%	12.9%	14.0%	11.6%	—
ROCE	21.3%	24.1%	30.1%	24.5%	—
Total Debt	₹87 Cr	₹106 Cr	₹168 Cr	₹242 Cr	+40.9%
Free Cash Flow	-₹24 Cr	-₹8 Cr	-₹23 Cr	-₹62 Cr	—

🟢 Revenue has grown at 32.2% a year over 3 years.

🟢 EBITDA has grown at 49.7% a year over 3 years.

🟢 EBITDA Margin has risen from 10.1% to 14.7% over 3 years (+4.6 pts).

🟢 PAT (Net Profit) has grown at 44.5% a year over 3 years.

🟡 ROE has held roughly flat at 11.6% over 3 years.

🟢 ROCE has risen from 21.3% to 24.5% over 3 years (+3.2 pts).

🔴 Total Debt has grown at 40.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹642 Cr

Total Liabilities

₹360 Cr

Cash & Equivalents

₹65 Cr

Operating Cash Flow

₹12 Cr

Capex

-₹74 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

54.5%

Corporate Actions

Dividend Rate

₹0.7

Ex-Dividend Date

23 Jun 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

2 positive1 mixed3 general

Fredun Pharmaceuticals net profit surges 95% in Q1FY27 on revenue jump

scanx.trade, 16 OctResults

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

Fredun Pharmaceuticals | Stock Share Price Live

MarketSmith India, 12 Oct

Beta Drugs vs Dishman Carbogen Amcis vs Fredun Pharmaceuticals

Univest, 16 Oct

Bonus issue alert! Last day to buy this microcap pharma stock that rallied 200% in one year

The Economic Times, 15 JulCapital return

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

778% rally in five years! Multibagger pharma stock close to record high after Q1 results 2026

Livemint, 07 AugResults

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

Fredun Pharmaceuticals Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

Watch Items

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

DalalBaazaar Thesis

StrongBusiness Quality · Growth

MiddlingFinancial Health · Profitability

WeakValuation · 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. 2 high-severity red flags sit 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 ↑