Healthcare — Drug Manufacturers - Specialty & Generic · NSE
₹216.00−₹0.47 (−0.22%)
DalalBaazaar Score
32 / 100
🔴 Weak
Verdict
CAUTION
Risk
High
Driven by the company is currently loss-making, micro-cap size, which brings thin liquidity, falling profits.
In simple words: The company is currently losing money, though profits are falling even as sales grow. The direction of profits is the main factor to watch.
The 60-second version of Hikal Limited — what it does, how it earns, and who it competes with, before any of the numbers below.
What does this company do?
Hikal Limited, together with its subsidiaries, manufactures and sells various chemical intermediates, specialty chemicals, and active pharma ingredients to pharmaceutical, biotechnology, life sciences, animal health, crop protection, and specialty chemicals industries.
IndustryDrug Manufacturers - Specialty & Generic
SectorHealthcare
Employees2,152
Annual revenue₹1,695 Cr
How does it make money?
Turns over ₹1,695 Cr a year. Of every ₹100 of sales, about ₹-3 reaches shareholders as profit, with ₹14 left at the operating level before interest, tax and depreciation. Each of its 2,152 employees supports ₹78.8 lakh of revenue a year, the signature of a people-led business.
Revenue / employee₹78.8 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.
What is its competitive advantage?Little sign of one
Returns on capital of -1.1% 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 ROE14.5%
What is the outlook?
1 analysts covering the stock expect revenue to grow about 14.1% and earnings to grow about 200.0% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.
Est. revenue growth+14.1%
Est. earnings growth+200.0%
Analysts1
What has been driving growth?
Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -15% while net margin moved -174% 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-15%
Margin effect-174%
DalalBaazaar Score
32/ 100
Weak
Weighted across six categories. Every point is explained below.
✗ Revenue has contracted at 5.4% a year
✗ Profit fell 153.7% in the latest year
Quality vs. Valuation
Company Quality
30/ 100
Weak
How good the business is, ignoring the share price entirely.
vs
Valuation
39/ 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
14.4x
PEG
—
What's Good / What's Bad
🟢 What's Going Well1
Cash generation is improving
Free cash flow is up 1113% over 3 years.
🔴 What Needs Attention2
Return on equity is falling
ROE has dropped from 6.9% to -4.1% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 8.5% to -1.1% — often a sign of competition or overexpansion.
Red Flags
3 items require attention · 2 high · 1 watch
🔴Thin interest coverageFinancial
Operating profit covers interest only -0.3x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹49 Cr in the latest reported year.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 2.7x to -0.3x.
Investment Thesis
🟢 Bull CaseWhat could make this work?
No clear supporting case emerges from the available numbers.
🔴 Bear CaseWhat could go wrong?
Returns on shareholder capital are falling
ROE has dropped from 6.9% to -4.1%. 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.
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.
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
1EBITDA margin holds above 12%✓ 13.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 3.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Interest cover stays above 3x✗ -0.3x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹154 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ -1.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
Investment Checklist
8 / 12 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
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish
Price history
Quick Metrics
2 good · 4 neutral · 5 weak
Market Cap
₹2,663 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
2.22x
Fair
Moderate premium to the company's book value
EPS (TTM)
₹-2.74
Loss-making
Negative earnings per share — the business is losing money
ROE
-4.1%
Weak
Weak capital efficiency
ROCE
-1.1%
Weak
Low return on total capital employed
Debt/Equity
0.57x
Low
Conservative leverage
Revenue Growth (YoY)
5.9%
Modest
Modest growth
Profit Growth (YoY)
-153.7%
Falling
Profits are shrinking
Dividend Yield
0.28%
Modest
Small cash return — most of the return has to come from the price
Free Cash Flow
₹154 Cr
Cash generative
Generates cash even after funding its capex
More Metrics
P/E (Forward)
24.0x
Operating Margin
-1.4%
Weak
Thin margins leave little room for error
Net Margin
-1.9%
Weak
Very little revenue reaches the bottom line
Current Ratio
1.30
Comfortable
Healthy short-term liquidity
Beta (vs Nifty)
0.57
Defensive
Steadier than the market
52W Range Position
61%
Mid-range
Mid-range
Technical Snapshot
SMA 20 / SMA 50
218.9 / 218.8
Bullish alignment (short > long)
Price vs SMA 200
Above
Long-term uptrend
RSI (14)
48.4
Neutral momentum
Financial Trend (4-Year)
Metric
FY23
FY24
FY25
FY26
3Y CAGR
Revenue
₹2,005 Cr
₹1,769 Cr
₹1,844 Cr
₹1,695 Cr
-5.4%
EBITDA
₹255 Cr
₹266 Cr
₹331 Cr
₹232 Cr
-3.1%
EBITDA Margin
12.7%
15.0%
18.0%
13.7%
—
PAT (Net Profit)
₹78 Cr
₹70 Cr
₹91 Cr
-₹49 Cr
—
EPS
₹6.36
₹5.64
₹7.36
₹-3.96
—
ROE
6.9%
5.9%
7.2%
-4.1%
—
ROCE
8.5%
8.6%
11.3%
-1.1%
—
Total Debt
₹748 Cr
₹818 Cr
₹765 Cr
₹684 Cr
-3.0%
Free Cash Flow
₹13 Cr
-₹18 Cr
₹143 Cr
₹154 Cr
+129.8%
🔴 Revenue has shrunk at 5.4% a year over 3 years.
🔴 EBITDA has shrunk at 3.1% a year over 3 years.
🟡 EBITDA Margin has held roughly flat at 13.7% over 3 years.
🔴 PAT (Net Profit) has turned negative, from ₹78 Cr to -₹49 Cr.
🔴 EPS has turned negative, from ₹6.36 to ₹-3.96.
🔴 ROE has fallen from 6.9% to -4.1% over 3 years (-11.0 pts).
🔴 ROCE has fallen from 8.5% to -1.1% over 3 years (-9.5 pts).
🟢 Total Debt has shrunk at 3.0% a year over 3 years.
🟢 Free Cash Flow has grown at 129.8% a year over 3 years.
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 stays below 2x; Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑
