Gem Aromatics Limited

Basic Materials — Chemicals · NSE

₹149.50+₹3.72 (+2.55%)

DalalBaazaar Score

30 / 100

🔴 Weak

Verdict

CAUTION

Risk

Very High

Driven by negative free cash flow, the company is currently loss-making, micro-cap size, which brings thin liquidity.

In simple words: The company is currently losing money, though profits are falling even as sales grow. Cash generation 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 Gem Aromatics Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Gem Aromatics Limited manufactures and sells specialty ingredients in India, the United States, China, Brazil, Singapore, and internationally.

IndustryChemicals

SectorBasic Materials

Employees251

Annual revenue₹363 Cr

How does it make money?

Turns over ₹363 Cr a year. Of every ₹100 of sales, about ₹0 reaches shareholders as profit, with ₹13 left at the operating level before interest, tax and depreciation. Each of its 251 employees supports ₹1.45 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.45 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 3.7% 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?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -13% while net margin moved -96% 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-96%

DalalBaazaar Score

30/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 4.6% a year
✗ Profit has declined at 68.3% a year
✗ Profit fell 97.3% in the latest year

Quality vs. Valuation

Company Quality

29/ 100

Weak

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

Valuation

31/ 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.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

N/A

No P/E — the company is lossmaking

EV/EBITDA

20.2x

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 24.9% to 0.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 33.9% to 3.7% — often a sign of competition or overexpansion.

Red Flags

7 items require attention · 3 high · 4 watch

🔴Debt has risen sharplyFinancial
Total debt is up 68% over 3 years, from ₹90 Cr to ₹152 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.6x — little room if earnings dip.
🔴Inventory building faster than salesFinancial
Inventory up 64% against revenue up -13% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 10.4x to 1.6x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹66 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 97% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 3.3 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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 15.9% to 12.6%. 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 3.3x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Returns on shareholder capital are falling
ROE has dropped from 24.9% to 0.3%. 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.
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 11%✓ 12.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.3x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹66 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.6x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 8%✗ 3.7%
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

2 good · 3 neutral · 6 weak

Market Cap

₹781 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not meaningful

Loss-making

Earnings are negative, so a P/E multiple can't be read here

P/B Ratio

1.74x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹-2.45

Loss-making

Negative earnings per share — the business is losing money

ROE

0.3%

Weak

Weak capital efficiency

ROCE

3.7%

Weak

Low return on total capital employed

Debt/Equity

0.34x

Low

Conservative leverage

Revenue Growth (YoY)

12.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-97.3%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹66 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

-5.9%

Weak

Thin margins leave little room for error

Net Margin

-3.8%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.16

Comfortable

Healthy short-term liquidity

52W Range Position

14%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

152.2 / 162.2

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

36.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹419 Cr	₹446 Cr	₹495 Cr	₹363 Cr	-4.6%
EBITDA	₹67 Cr	₹79 Cr	₹90 Cr	₹46 Cr	-11.8%
EBITDA Margin	15.9%	17.7%	18.1%	12.6%	—
PAT (Net Profit)	₹45 Cr	₹50 Cr	₹53 Cr	₹1 Cr	-68.3%
EPS	₹8.55	₹9.59	₹10.22	₹0.28	-68.0%
ROE	24.9%	21.7%	18.8%	0.3%	—
ROCE	33.9%	28.9%	23.2%	3.7%	—
Total Debt	₹90 Cr	₹112 Cr	₹227 Cr	₹152 Cr	+19.0%
Free Cash Flow	₹1 Cr	₹1 Cr	-₹130 Cr	-₹66 Cr	—

🔴 Revenue has shrunk at 4.6% a year over 3 years.

🔴 EBITDA has shrunk at 11.8% a year over 3 years.

🔴 EBITDA Margin has fallen from 15.9% to 12.6% over 3 years (-3.3 pts).

🔴 PAT (Net Profit) has shrunk at 68.3% a year over 3 years.

🔴 EPS has shrunk at 68.0% a year over 3 years.

🔴 ROE has fallen from 24.9% to 0.3% over 3 years (-24.6 pts).

🔴 ROCE has fallen from 33.9% to 3.7% over 3 years (-30.2 pts).

🔴 Total Debt has grown at 19.0% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹1 Cr to -₹66 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹642 Cr

Total Liabilities

₹192 Cr

Cash & Equivalents

₹8 Cr

Operating Cash Flow

₹30 Cr

Capex

-₹95 Cr

Shareholding (proxy)

Institutional Holding

1.8%

Insider Holding

77.4%

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

2 mixed4 general

Gem Aromatics Share Price Target 2026: Rs 195 Analyst Forecast

Univest, 11 JunAnalyst view

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

Gem Aromatics promoter Yash Parekh raises stake to 9.38%

scanx.trade, 04 Jun

Should Weakness in Gem Aromatics Limited's (NSE:GEMAROMA) Stock Be Seen As A Sign That Market Will Correct The Share Price Given Decent Financials?

Simply Wall Street, 01 Feb

GEM AROMATICS LIMITED Share Price

Upstox, 05 May

Gem Aromatics reports consolidated net loss of Rs 7.87 crore in the June 2026 quarter

Business Standard, 14 AugResults

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

Volume Gainers on July 8, 2026: Jindal Drilling, Gem Aromatics, Master Trust Lead Surge in Trading Activity

HDFC Sky, 08 Jul

Watch Items

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

DalalBaazaar Thesis

MiddlingFinancial Health

WeakBusiness Quality · Growth · Profitability · Valuation · Risk

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

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