Lactose (India) Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹106.00+₹3.90 (+3.82%)

DalalBaazaar Score

57 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

High

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

In simple words: Reasonable but unspectacular business quality, 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, 6:55 pm

Understanding the Business

Company site ↗

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

What does this company do?

Lactose (India) Limited engages in the manufacture and trading of pharmaceutical products in India and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Annual revenue₹163 Cr

How does it make money?

Turns over ₹163 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation.

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?Little sign of one

Returns on capital of 14.4% 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 has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +151% while net margin moved +100% 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+151%

Margin effect+100%

DalalBaazaar Score

57/ 100

Moderate

Weighted across six categories. Every point is explained below.

✓ Beta of 0.76 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

56/ 100

Average

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

Valuation

77/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

19.6x

3Y Median

28.5x

40 monthly readings · mean 57.2x · range 16.5x–187.4x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 31% below its 3y median of 28.5x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 41% below the peer median of 33.3x.

vs. its own history

Cheap

28.5x median over 40 months · -31%

vs. sector peers

Cheap

33.3x median of 4 peers · -41%

vs. generic bands

Fair

15x–35x

EV/EBITDA

10.2x

PEG

0.28

What's Good / What's Bad

🟢 What's Going Well3

Return on equity is rising
ROE has improved from 3.0% to 9.4%.
Return on capital is rising
ROCE has improved from 9.9% to 14.4%.
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 · 3 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 61% over 3 years, from ₹38 Cr to ₹62 Cr.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 6.9 points, from 18.6% to 11.7%.
🔴Receivables growing faster than salesFinancial
Receivables up 211% against revenue up 151% — sales are being booked faster than they are collected.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹5 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 31% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 41% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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 18.6% to 11.7%. 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 3.2x 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 211% against revenue up 151%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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.

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

1Revenue growth stays above 27% a year✓ 36.0% CAGR
Latest reported year was 18.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 10%✓ 11.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 3.2x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹5 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 2.8x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

7 / 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

3 good · 7 neutral · 1 weak

Market Cap

₹133 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

19.6x

Fair

Fairly valued against the generic band

P/B Ratio

2.06x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹5.41

Profitable

Profitable on a per-share basis

ROE

9.4%

Moderate

Moderate capital efficiency

ROCE

14.4%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.96x

Moderate

Moderate leverage

Revenue Growth (YoY)

18.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

62.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

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

Free Cash Flow

-₹5 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

9.4%

Average

Average margins

Net Margin

4.1%

Average

Average bottom-line conversion

Current Ratio

1.10

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.76

Defensive

Steadier than the market

52W Range Position

50%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

105.2 / 103.7

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

37.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹65 Cr	₹114 Cr	₹116 Cr	₹163 Cr	+36.0%
EBITDA	₹12 Cr	₹20 Cr	₹18 Cr	₹19 Cr	+16.6%
EBITDA Margin	18.6%	17.7%	15.1%	11.7%	—
PAT (Net Profit)	₹1 Cr	₹7 Cr	₹5 Cr	₹6 Cr	+71.2%
EPS	₹0.96	₹5.39	₹4.06	₹4.68	+69.6%
ROE	3.0%	14.4%	8.8%	9.4%	—
ROCE	9.9%	19.8%	13.8%	14.4%	—
Total Debt	₹38 Cr	₹39 Cr	₹57 Cr	₹62 Cr	+17.3%
Free Cash Flow	₹6 Cr	₹7 Cr	-₹15 Cr	-₹5 Cr	—

🟢 Revenue has grown at 36.0% a year over 3 years.

🟢 EBITDA has grown at 16.6% a year over 3 years.

🔴 EBITDA Margin has fallen from 18.6% to 11.7% over 3 years (-6.9 pts).

🟢 PAT (Net Profit) has grown at 71.2% a year over 3 years.

🟢 EPS has grown at 69.6% a year over 3 years.

🟢 ROE has risen from 3.0% to 9.4% over 3 years (+6.4 pts).

🟢 ROCE has risen from 9.9% to 14.4% over 3 years (+4.5 pts).

🔴 Total Debt has grown at 17.3% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹6 Cr to -₹5 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹183 Cr

Total Liabilities

₹118 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹6 Cr

Capex

-₹10 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

58.7%

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 mixed2 negative2 general

NCLT sanctions Lactose India-Vitanosh merger to boost capacity

scanx.trade, 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.

Lactose (India) Ltd Downgraded to Hold Amid Mixed Technical and Valuation Signals

MarketsMojo, 01 OctAnalyst view

🔴Potentially negativeAn analyst opinion changing, which moves the price without changing the business.

Lactose India spurts after Q4 PAT climbs 194% YoY to Rs 2 cr

Business Standard, 20 MayResults

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

MERCURY LAB. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 08 Oct

Lactose (India) amalgamation with Vitanosh becomes operative

scanx.trade, 05 Sept

Lactose (India) Ltd Downgraded to Sell Amid Technical Weakness and Promoter Pledge Concerns

MarketsMojo, 06 AugAnalyst view

🔴Potentially negativeAn analyst opinion changing, which moves the price without changing the business.

Watch Items

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

DalalBaazaar Thesis

StrongGrowth · Valuation

MiddlingBusiness Quality · Financial Health · Profitability

WeakRisk

Points for each in the Score ↑

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 3 high-severity red flags sit above this conclusion and should be read first.

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