Lyka Labs Limited

Healthcare — Biotechnology · NSE

₹87.79+₹4.18 (+5.00%)

DalalBaazaar Score

43 / 100

🟡 Moderate

Verdict

CAUTION

Risk

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, 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, 6:10 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 Lyka Labs Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Lyka Labs Limited, a pharmaceutical company, develops, manufactures, and markets pharmaceutical formulations for human and animal healthcare in India and internationally.

IndustryBiotechnology

SectorHealthcare

Employees648

Annual revenue₹128 Cr

How does it make money?

Turns over ₹128 Cr a year. Of every ₹100 of sales, about ₹-8 reaches shareholders as profit, with ₹-0 left at the operating level before interest, tax and depreciation. Each of its 648 employees supports ₹19.8 lakh of revenue a year, the signature of a people-led business.

EBITDA margin-0.1%

Net margin-7.8%

Revenue / employee₹19.8 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?Little sign of one

Returns on capital of -7.1% 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.

ROCE-7.1%

ROE-10.9%

Peer median ROE32.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +45% while net margin moved -48% 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+45%

Margin effect-48%

DalalBaazaar Score

43/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of -7.1% is below 10% — capital is not working hard
✗ ROCE has fallen by 5.9 points — returns are eroding
✗ EBITDA margin of -0.1% is thin — little cushion if costs rise
✗ The business is lossmaking at the net level
• Revenue has compounded at 13.3% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

45/ 100

Average

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.

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

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

3.39x

EV/EBITDA

—

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 34% over 3 years.
Return on equity is rising
ROE has improved from -29.1% to -10.9%.

🔴 What Needs Attention5

Margins are compressing
EBITDA margin has slipped from 22.7% to -0.1% over 3 years.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on capital is falling
ROCE has declined from -1.2% to -7.1% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 74% against revenue growth of 45% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 96% against revenue growth of 45% — stock may not be moving.

Red Flags

7 items require attention · 4 high · 3 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only -2.7x — little room if earnings dip.
🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴The company is lossmakingFinancial
Net profit of -₹10 Cr in the latest reported year.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 22.9 points, from 22.7% to -0.1%.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 5.9x to -2.7x.
🟡Receivables growing faster than salesFinancial
Receivables up 74% against revenue up 45% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 96% against revenue up 45% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 34% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 22.7% to -0.1%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Sales are being booked faster than collected
Receivables are up 74% against revenue up 45%. 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.
Several serious flags at once
4 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

1Revenue growth stays above 10% a year✓ 13.3% CAGR
Latest reported year was 28.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above -2%✓ -0.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹6 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ -2.7x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 8%✗ -7.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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 · 3 neutral · 5 weak

Market Cap

₹317 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

3.39x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹-2.5

Loss-making

Negative earnings per share — the business is losing money

ROE

-10.9%

Weak

Weak capital efficiency

ROCE

-7.1%

Weak

Low return on total capital employed

Debt/Equity

0.54x

Low

Conservative leverage

Revenue Growth (YoY)

28.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

128.0%

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

-₹6 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹87.79

Operating Margin

6.0%

Average

Average margins

Net Margin

-6.6%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.17

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.58

Defensive

Steadier than the market

52W Range Position

80%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

80.9 / 77.0

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

53.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹88 Cr	₹105 Cr	₹138 Cr	₹128 Cr	+13.3%
EBITDA	₹20 Cr	₹17 Cr	₹20 Cr	-₹0 Cr	—
EBITDA Margin	22.7%	16.1%	14.6%	-0.1%	—
PAT (Net Profit)	-₹13 Cr	-₹2 Cr	₹8 Cr	-₹10 Cr	—
EPS	₹-4.63	₹-0.75	₹2.22	₹-2.81	—
ROE	-29.1%	-3.7%	7.7%	-10.9%	—
ROCE	-1.2%	3.2%	10.3%	-7.1%	—
Total Debt	₹74 Cr	₹58 Cr	₹38 Cr	₹49 Cr	-12.8%
Free Cash Flow	₹1 Cr	-₹7 Cr	-₹14 Cr	-₹6 Cr	—

🟢 Revenue has grown at 13.3% a year over 3 years.

🔴 EBITDA has turned negative, from ₹20 Cr to -₹0 Cr.

🔴 EBITDA Margin has fallen from 22.7% to -0.1% over 3 years (-22.9 pts).

🟢 ROE has risen from -29.1% to -10.9% over 3 years (+18.2 pts).

🔴 ROCE has fallen from -1.2% to -7.1% over 3 years (-5.9 pts).

🟢 Total Debt has shrunk at 12.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹1 Cr to -₹6 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹175 Cr

Total Liabilities

₹84 Cr

Total Debt

₹49 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹5 Cr

Capex

-₹11 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

60.4%

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

2 positive4 general

Lyka Labs Upper Circuit Streak: Day 2 Price and Data

Univest, 14 Oct

Lyka Labs standalone profit surges 159% in Q1FY27 on export strength

scanx.trade, 10 AugResults

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

Lyka Labs consolidated net profit rises 122.58% in the June 2026 quarter

Business Standard, 10 AugResults

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

Lyka Labs Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

Are Lyka Labs Limited's (NSE:LYKALABS) Fundamentals Good Enough to Warrant Buying Given The Stock's Recent Weakness?

Simply Wall Street, 19 Nov

Lyka Labs Ltd. Lower Circuit Streak: Day 2 Price and Data

Univest, 29 Sept

Watch Items

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

DalalBaazaar Thesis

🔴Business QualityWeak4.7/20

🟡Financial HealthAdequate10.1/20

🟢GrowthStrong13.6/20

🔴ProfitabilityWeak5/15

🔴ValuationDemanding5.1/15

🔴RiskHigh4/10

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

This thesis breaks if

✓Revenue growth stays above 10% a year13.3% CAGR
✓EBITDA margin holds above -2%-0.1%
✗Free cash flow remains positive-₹6 Cr
✗Interest cover stays above 3x-2.7x
✗ROCE stays above 8%-7.1%