Indoco Remedies Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹244.80+₹3.75 (+1.56%)

DalalBaazaar Score

36 / 100

🔴 Weak

Verdict

CAUTION

Risk

High

Driven by moderate debt load, micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

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

What does this company do?

Indoco Remedies Limited manufactures and markets formulations and active pharmaceutical ingredients in India and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees6,000

Annual revenue₹1,793 Cr

How does it make money?

Turns over ₹1,793 Cr a year. Of every ₹100 of sales, about ₹-5 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation. Each of its 6,000 employees supports ₹29.9 lakh of revenue a year, the signature of a people-led business.

EBITDA margin8.1%

Net margin-5.3%

Revenue / employee₹29.9 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.

SUN PHARMACEUTICAL IND LP/E 34.9x · ROE 14.5%

DR. REDDY S LABORATORIESP/E 31.0x · ROE 8.8%

CIPLA LTDP/E 31.8x · ROE 9.8%

DIVI S LABORATORIES LTDP/E 83.0x · ROE 17.5%

What is its competitive advantage?Little sign of one

Returns on capital of 1.0% 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.

ROCE1.0%

ROE-10.1%

Peer median ROE14.5%

What is the outlook?

4 analysts covering the stock expect revenue to grow about 13.9% and earnings to grow about 575.0% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+13.9%

Est. earnings growth+575.0%

Analysts4

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +9% while net margin moved -161% 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+9%

Margin effect-161%

DalalBaazaar Score

36/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Return on equity is negative
✗ ROE has fallen by 24.0 points over the period

Quality vs. Valuation

Company Quality

36/ 100

Weak

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

Valuation

29/ 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.

Historical Valuation

Current P/E

765.0x

3Y Median

22.8x

40 monthly readings · mean 23.6x · range 15.4x–33.9x

Sector Median

33.3x

median of 4 sector peers

⚠️Current valuation is approximately 3255% above its 3y median of 22.8x. 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 2195% above the peer median of 33.3x.

vs. its own history

Expensive

22.8x median over 40 months · +3255%

vs. sector peers

Expensive

33.3x median of 4 peers · +2195%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

765.0x

P/B

2.19x

EV/EBITDA

22.9x

PEG

—

Dividend Yield

0.08%

What's Good / What's Bad

🟢 What's Going Well1

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.

🔴 What Needs Attention6

Margins are compressing
EBITDA margin has slipped from 17.6% to 8.1% over 3 years.
Debt is rising
Total debt is up 227% over 3 years — worth checking what it funded.
Return on equity is falling
ROE has dropped from 13.8% to -10.1% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 17.6% to 1.0% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 39% against revenue growth of 9% — customers are taking longer to pay.
Valuation above its historical average
At 765.0x the stock trades 3255% above its own median of 22.8x.

Red Flags

5 items require attention · 4 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 227% over 3 years, from ₹333 Cr to ₹1,090 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only 0.1x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹95 Cr in the latest reported year.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 9.5 points, from 17.6% to 8.1%.
🟡Receivables growing faster than salesFinancial
Receivables up 39% against revenue up 9% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

No clear supporting case emerges from the available numbers.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 17.6% to 8.1%. 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 7.5x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 39% against revenue up 9%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
The price already assumes success
The stock trades 3255% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Growth barely outpaces inflation
Revenue compounding at 3.0% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 6%✓ 8.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 7.5x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Interest cover stays above 3x✗ 0.1x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✗ 3.0% CAGR
Latest reported year was 6.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹101 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

6 / 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 · 5 neutral · 4 weak

Market Cap

₹2,256 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

765.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

2.19x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹0.32

Profitable

Profitable on a per-share basis

ROE

-10.1%

Weak

Weak capital efficiency

ROCE

1.0%

Weak

Low return on total capital employed

Debt/Equity

1.17x

Moderate

Moderate leverage

Revenue Growth (YoY)

6.8%

Modest

Modest growth

Profit Growth (YoY)

-29.0%

Falling

Profits are shrinking

Dividend Yield

0.08%

Modest

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

Free Cash Flow

₹101 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹244.8

P/E (Forward)

20.1x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

1.4%

Weak

Thin margins leave little room for error

Net Margin

0.3%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.13

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.62

Defensive

Steadier than the market

52W Range Position

64%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

246.7 / 240.9

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

45.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,640 Cr	₹1,788 Cr	₹1,641 Cr	₹1,793 Cr	+3.0%
EBITDA	₹288 Cr	₹259 Cr	₹105 Cr	₹145 Cr	-20.5%
EBITDA Margin	17.6%	14.5%	6.4%	8.1%	—
PAT (Net Profit)	₹142 Cr	₹98 Cr	-₹74 Cr	-₹95 Cr	—
EPS	₹15.42	₹10.67	₹-8	₹-10.31	—
ROE	13.8%	8.9%	-7.2%	-10.1%	—
ROCE	17.6%	11.1%	-0.5%	1.0%	—
Total Debt	₹333 Cr	₹672 Cr	₹994 Cr	₹1,090 Cr	+48.5%
Free Cash Flow	-₹28 Cr	-₹271 Cr	-₹168 Cr	₹101 Cr	—

🟢 Revenue has grown at 3.0% a year over 3 years.

🔴 EBITDA has shrunk at 20.5% a year over 3 years.

🔴 EBITDA Margin has fallen from 17.6% to 8.1% over 3 years (-9.5 pts).

🔴 PAT (Net Profit) has turned negative, from ₹142 Cr to -₹95 Cr.

🔴 EPS has turned negative, from ₹15.42 to ₹-10.31.

🔴 ROE has fallen from 13.8% to -10.1% over 3 years (-24.0 pts).

🔴 ROCE has fallen from 17.6% to 1.0% over 3 years (-16.5 pts).

🔴 Total Debt has grown at 48.5% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹28 Cr to ₹101 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,593 Cr

Total Liabilities

₹1,661 Cr

Total Debt

₹1,090 Cr

Cash & Equivalents

₹26 Cr

Operating Cash Flow

₹226 Cr

Capex

-₹125 Cr

Shareholding (proxy)

Institutional Holding

17.7%

Insider Holding

60.9%

Corporate Actions

Dividend Rate

₹0.2

Ex-Dividend Date

10 Sept 2026

Analyst Consensus

Recommendations

1 Buy · 2 Hold · 1 Sell

Target Price (Mean)

₹264

+7.8% vs CMP

Target Range

₹231 – ₹325

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

4 mixed1 negative1 general

Indoco Remedies (NSEI:INDOCO) Stock Forecast & Analyst Predictions

Simply Wall Street, 05 OctAnalyst view

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

Indoco Remedies Share Price Rise: Fundamentals and Sector

Univest, 29 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.

Indoco Remedies promoters buy 4,000 shares in open market on Sept 1

scanx.trade, 01 Sept

Indoco Remedies reports turnaround Q1 performance

Business Standard, 28 JulResults

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

Indoco Remedies shares jump 4% on EU GMP certification for Baddi facility

Moneycontrol.com, 29 MayPrice 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.

Earnings call transcript: Indoco Remedies Q1 2026 revenue miss sends shares down 8%

Investing.com, 28 JulResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Watch Items

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

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟡Financial HealthAdequate9.6/20

🔴GrowthWeak7.6/20

🔴ProfitabilityWeak3.8/15

🔴ValuationDemanding4.9/15

🔴RiskHigh4.4/10

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

This thesis breaks if

✓EBITDA margin holds above 6%8.1%
✗Debt / EBITDA falls below 3x7.5x
✗Interest cover stays above 3x0.1x
✗Revenue growth stays above 4% a year3.0% CAGR
✓Free cash flow remains positive₹101 Cr