Laffans Petrochemicals Limited

Basic Materials — Chemicals · BSE

₹25.90−₹1.61 (−5.85%)

DalalBaazaar Score

36 / 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, 6:08 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 Laffans Petrochemicals Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Laffans Petrochemicals Limited engages in wholesale trading of specialty chemicals and commodities through its network of distributors in India. It is also involved in providing Leasing and Rental Services. The company was incorporated in 1992 and is based in Mumbai, India.

IndustryChemicals

SectorBasic Materials

Employees15

Annual revenue₹5 Cr

How does it make money?

Turns over ₹5 Cr a year. Of every ₹100 of sales, about ₹8 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation. Each of its 15 employees supports ₹32.9 lakh of revenue a year, the signature of a people-led business.

EBITDA margin16.2%

Net margin8.4%

Revenue / employee₹32.9 lakh

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.

PIDILITE INDUSTRIES LTDP/E 57.8x · ROE 24.4%

SRF LTDP/E 33.8x · ROE 15.4%

UPL LIMITEDP/E 21.5x · ROE 6.1%

What is its competitive advantage?Little sign of one

Returns on capital of 0.4% 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.

ROCE0.4%

ROE0.6%

Peer median ROE15.4%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved -70% while net margin moved +75% 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-70%

Margin effect+75%

DalalBaazaar Score

36/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 33.3% a year
✗ Profit has declined at 19.6% a year
✗ Profit fell 22.6% in the latest year

Quality vs. Valuation

Company Quality

33/ 100

Weak

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

Valuation

30/ 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

P/E (Trailing)

Not meaningful

P/B

0.32x

EV/EBITDA

26.5x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from -2.1% to 16.2% over 3 years.
Debt is being paid down
Total debt is down 11% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Free cash flow is negative
The business is not currently covering its capital spending from operations.

Red Flags

3 items require attention · 1 high · 2 watch

🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 32.8x to 4.0x.
🟡Profit is decliningFinancial
Net profit is down 48% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -2.1% to 16.2%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
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?

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

1EBITDA margin holds above 14%✓ 16.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹0 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 8%✗ 0.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Interest cover stays above 4x✓ 4.0x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

6 / 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

₹21 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

0.32x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹-1.3

Loss-making

Negative earnings per share — the business is losing money

ROE

0.6%

Weak

Weak capital efficiency

ROCE

0.4%

Weak

Low return on total capital employed

Debt/Equity

0.77x

Moderate

Moderate leverage

Revenue Growth (YoY)

261.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-22.6%

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

-₹0 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹25.9

Operating Margin

-73.2%

Weak

Thin margins leave little room for error

Net Margin

-18.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

5.39

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.00

Defensive

Steadier than the market

52W Range Position

19%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

29.2 / 28.1

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

41.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹17 Cr	₹6 Cr	₹8 Cr	₹5 Cr	-33.3%
EBITDA	-₹0 Cr	-₹1 Cr	₹3 Cr	₹1 Cr	—
EBITDA Margin	-2.1%	-15.1%	40.4%	16.2%	—
PAT (Net Profit)	₹1 Cr	₹3 Cr	₹2 Cr	₹0 Cr	-19.6%
EPS	₹0.99	₹3.25	₹2.5	₹0.51	-19.8%
ROE	1.3%	4.2%	3.1%	0.6%	—
ROCE	2.3%	6.1%	4.0%	0.4%	—
Total Debt	₹1 Cr	₹0 Cr	₹0 Cr	₹0 Cr	-3.9%
Free Cash Flow	-₹0 Cr	-₹2 Cr	-₹7 Cr	-₹0 Cr	—

🔴 Revenue has shrunk at 33.3% a year over 3 years.

🟢 EBITDA has turned positive, from -₹0 Cr to ₹1 Cr.

🟢 EBITDA Margin has risen from -2.1% to 16.2% over 3 years (+18.3 pts).

🔴 PAT (Net Profit) has shrunk at 19.6% a year over 3 years.

🔴 EPS has shrunk at 19.8% a year over 3 years.

🟡 ROE has held roughly flat at 0.6% over 3 years.

🔴 ROCE has fallen from 2.3% to 0.4% over 3 years (-2.0 pts).

🟢 Total Debt has shrunk at 3.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹67 Cr

Total Liabilities

₹3 Cr

Total Debt

₹0 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹0 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

63.4%

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

1 positive5 general

Laffans Petrochemicals submits scrutinizer report for 33rd AGM

scanx.trade, 05 Oct

Laffans Petrochemicals Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 30 Aug

Laffans Petrochemicals Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Laffans Petrochemicals sets Sept 22 AGM, proposes secretarial auditor

scanx.trade, 25 Aug

Cubical Financial Services standalone net profit rises 228.57% in the June 2026 quarter

Business Standard, 11 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Laffans Petrochemicals Ltd. Financials – Balance Sheet, Profit & Loss, Cash Flow

Value Research, 30 Aug

Watch Items

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

DalalBaazaar Thesis

🔴Business QualityWeak7.7/20

🟡Financial HealthAdequate11.8/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak2.6/15

🟡ValuationFair7.1/15

🔴RiskHigh4/10

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. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 14%16.2%
✗Free cash flow remains positive-₹0 Cr
✓Debt / EBITDA stays below 2x0.6x
✗ROCE stays above 8%0.4%
✓Interest cover stays above 4x4.0x