Kothari Sugars and Chemicals Limited

Consumer Defensive — Confectioners · NSE

₹25.70−₹0.33 (−1.27%)

DalalBaazaar Score

35 / 100

🔴 Weak

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, falling profits.

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. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

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

What does this company do?

Kothari Sugars and Chemicals Limited manufactures and sells sugar and its by-products in India and internationally. It operates through Sugar, Power, and Distillery segments. The company produces white sugar products; and cogenerates power from bagasse.

IndustryConfectioners

SectorConsumer Defensive

Employees441

Annual revenue₹247 Cr

How does it make money?

Turns over ₹247 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹-4 left at the operating level before interest, tax and depreciation. Each of its 441 employees supports ₹55.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹55.9 lakh

Who are its competitors?

The closest listed comparisons in its industry are HINDUSTAN UNILEVER LTD., ITC LTD, NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES 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?Little sign of one

Returns on capital of 0.5% 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 ROE51.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved -59% while net margin moved -61% 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-59%

Margin effect-61%

DalalBaazaar Score

35/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 25.9% a year
✗ Profit has declined at 46.0% a year
✗ Profit fell 93.3% in the latest year

Quality vs. Valuation

Company Quality

31/ 100

Weak

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

Valuation

43/ 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

38.9x

3Y Median

13.9x

40 monthly readings · mean 16.8x · range 9.1x–41.2x

Sector Median

43.3x

median of 4 sector peers

⚠️Current valuation is approximately 180% above its 3y median of 13.9x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟡Against its sector it is priced broadly in line with the peer median of 43.3x.

vs. its own history

Expensive

13.9x median over 40 months · +180%

vs. sector peers

Fair

43.3x median of 4 peers · -10%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

—

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.24x 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 16.3% to 2.2% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 20.2% to 0.5% — often a sign of competition or overexpansion.

Red Flags

6 items require attention · 3 high · 3 watch

🔴Debt has risen sharplyFinancial
Total debt is up 83% over 3 years, from ₹39 Cr to ₹70 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only 0.4x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 15.4 points, from 10.9% to -4.5%.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 6.0x to 0.4x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹38 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 84% 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 10.9% to -4.5%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The price already assumes success
The stock trades 180% 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.
Returns on shareholder capital are falling
ROE has dropped from 16.3% to 2.2%. 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 -6%✓ -4.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹38 Cr
Profit that never becomes cash eventually stops being profit.
3Interest cover stays above 3x✗ 0.4x
How much operating profit can fall before interest stops being comfortably covered.
4ROCE stays above 8%✗ 0.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Valuation vs its own median of 13.9x✗ 38.9x today
A re-rating above its own history needs a reason; without one it is just a higher price.

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

4 good · 3 neutral · 4 weak

Market Cap

₹213 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

38.9x

Fair

Fairly valued against the generic band

P/B Ratio

0.72x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.66

Profitable

Profitable on a per-share basis

ROE

2.2%

Weak

Weak capital efficiency

ROCE

0.5%

Weak

Low return on total capital employed

Debt/Equity

0.24x

Low

Conservative leverage

Revenue Growth (YoY)

25.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-93.3%

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

-₹38 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

-11.9%

Weak

Thin margins leave little room for error

Net Margin

2.1%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.13

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.20

Defensive

Steadier than the market

52W Range Position

18%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

26.3 / 28.2

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

27.7

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹605 Cr	₹503 Cr	₹309 Cr	₹247 Cr	-25.9%
EBITDA	₹66 Cr	₹60 Cr	₹20 Cr	-₹11 Cr	—
EBITDA Margin	10.9%	11.9%	6.5%	-4.5%	—
PAT (Net Profit)	₹42 Cr	₹29 Cr	₹10 Cr	₹7 Cr	-46.0%
EPS	₹5.06	₹3.56	₹1.26	₹0.8	-45.9%
ROE	16.3%	10.6%	3.6%	2.2%	—
ROCE	20.2%	14.3%	6.2%	0.5%	—
Total Debt	₹39 Cr	₹70 Cr	₹50 Cr	₹70 Cr	+22.2%
Free Cash Flow	₹24 Cr	-₹2 Cr	₹47 Cr	-₹38 Cr	—

🔴 Revenue has shrunk at 25.9% a year over 3 years.

🔴 EBITDA has turned negative, from ₹66 Cr to -₹11 Cr.

🔴 EBITDA Margin has fallen from 10.9% to -4.5% over 3 years (-15.4 pts).

🔴 PAT (Net Profit) has shrunk at 46.0% a year over 3 years.

🔴 EPS has shrunk at 45.9% a year over 3 years.

🔴 ROE has fallen from 16.3% to 2.2% over 3 years (-14.0 pts).

🔴 ROCE has fallen from 20.2% to 0.5% over 3 years (-19.7 pts).

🔴 Total Debt has grown at 22.2% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹24 Cr to -₹38 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹446 Cr

Total Liabilities

₹150 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹14 Cr

Capex

-₹24 Cr

Corporate Actions

Ex-Dividend Date

20 Feb 2024

Peer Comparison

Company	P/E	ROE
HINDUSTAN UNILEVER LTD.	42.5x	21.5%
ITC LTD	16.6x	27.4%
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%

Recent News

5 mixed1 general

Kothari Sugars and Chemicals gets NSE no objection for merger with Kothari Petrochemicals

ChiniMandi, 20 AugM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Kothari Sugars & Chems. | Stock Share Price Live

MarketSmith India, 09 Sept

Kothari Petrochemicals approves merger with Kothari Sugars

scanx.trade, 19 MayM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Kothari Sugars And Chemicals Ltd. (KOTARISUG) Share Price Rises 13.52% Today

Univest, 21 AugPrice 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.

Kothari Sugars approves merger with Kothari Petrochemicals

scanx.trade, 19 MayM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Kothari Sugars And Chemicals Share Price: NSE Stock Declines

Univest, 25 AugPrice move

🟡Mixed / dependsA price move rather than a change in the business. If the figures on this page have not moved, the fall is either an opportunity or news they have yet to catch up with.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

MiddlingFinancial Health · Valuation

WeakBusiness Quality · Growth · Profitability · 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 — Free cash flow remains positive; Interest cover stays above 3x; ROCE stays above 8%; Valuation vs its own median of 13.9x · see Key things to watch ↑