Mercury Laboratories Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹755.00−₹5.00 (−0.66%)

DalalBaazaar Score

53 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Low

Driven by micro-cap size, which brings thin liquidity, falling profits.

In simple words: Reasonable but unspectacular business quality, but sales are shrinking. The direction of profits is 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 Mercury Laboratories Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Mercury Laboratories Limited engages in manufacturing, selling, exporting, and dealing in various pharmaceutical drugs and medicines for mother and child healthcare in India and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees510

Annual revenue₹76 Cr

How does it make money?

Turns over ₹76 Cr a year. Of every ₹100 of sales, about ₹6 reaches shareholders as profit, with ₹14 left at the operating level before interest, tax and depreciation. Each of its 510 employees supports ₹14.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹14.9 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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 10.1% 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.

Peer median ROE14.5%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +1% while net margin moved -14% 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+1%

Margin effect-14%

DalalBaazaar Score

53/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 0.3% — barely ahead of inflation
✗ Profit has declined at 4.7% a year
✗ Latest-year revenue growth of -12.0% is below the longer-term trend — momentum is fading
✗ Profit fell 69.2% in the latest year

Quality vs. Valuation

Company Quality

51/ 100

Average

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

Valuation

67/ 100

Fair

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

21.8x

3Y Median

19.7x

40 monthly readings · mean 22.6x · range 16.8x–33.0x

Sector Median

33.3x

median of 4 sector peers

⚠️Current valuation is approximately 11% above its 3y median of 19.7x. 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 35% below the peer median of 33.3x.

vs. its own history

Fair

19.7x median over 40 months · +11%

vs. sector peers

Cheap

33.3x median of 4 peers · -35%

vs. generic bands

Fair

15x–35x

EV/EBITDA

9.2x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.15x 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 12.2% to 8.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 15.0% to 10.1% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 1 high · 2 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🟡Debt is increasingFinancial
Total debt is up 44% over 3 years.
🟡Receivables growing faster than salesFinancial
Receivables up 21% against revenue up 1% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 35% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹1 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
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?

Sales are being booked faster than collected
Receivables are up 21% against revenue up 1%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Growth barely outpaces inflation
Revenue compounding at 0.3% 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.
Returns on shareholder capital are falling
ROE has dropped from 12.2% to 8.3%. 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.

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

1EBITDA margin holds above 12%✓ 14.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✗ 0.3% CAGR
Latest reported year was -12.0%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹1 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 10.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

3 good · 6 neutral · 2 weak

Market Cap

₹91 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

21.8x

Fair

Fairly valued against the generic band

P/B Ratio

1.56x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹34.69

Profitable

Profitable on a per-share basis

ROE

8.3%

Moderate

Moderate capital efficiency

ROCE

10.1%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.15x

Low

Conservative leverage

Revenue Growth (YoY)

-12.0%

Shrinking

Sales are contracting

Profit Growth (YoY)

-69.2%

Falling

Profits are shrinking

Dividend Yield

0.46%

Modest

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

Free Cash Flow

₹1 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

2.9%

Weak

Thin margins leave little room for error

Net Margin

5.6%

Average

Average bottom-line conversion

Current Ratio

3.85

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.41

Defensive

Steadier than the market

52W Range Position

43%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

778.9 / 777.6

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

25.9

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹75 Cr	₹76 Cr	₹75 Cr	₹76 Cr	+0.3%
EBITDA	₹10 Cr	₹11 Cr	₹11 Cr	₹11 Cr	+0.4%
EBITDA Margin	13.9%	14.8%	14.6%	14.0%	—
PAT (Net Profit)	₹6 Cr	₹6 Cr	₹3 Cr	₹5 Cr	-4.7%
EPS	₹46.49	₹47.12	₹26.21	₹40.28	-4.7%
ROE	12.2%	11.1%	5.9%	8.3%	—
ROCE	15.0%	12.6%	8.2%	10.1%	—
Total Debt	₹6 Cr	₹6 Cr	₹5 Cr	₹8 Cr	+13.0%
Free Cash Flow	₹1 Cr	₹2 Cr	-₹4 Cr	₹1 Cr	-8.3%

🟡 Revenue has been broadly flat over 3 years (0.3% a year).

🟡 EBITDA has been broadly flat over 3 years (0.4% a year).

🟡 EBITDA Margin has held roughly flat at 14.0% over 3 years.

🔴 PAT (Net Profit) has shrunk at 4.7% a year over 3 years.

🔴 EPS has shrunk at 4.7% a year over 3 years.

🔴 ROE has fallen from 12.2% to 8.3% over 3 years (-3.9 pts).

🔴 ROCE has fallen from 15.0% to 10.1% over 3 years (-4.9 pts).

🔴 Total Debt has grown at 13.0% a year over 3 years.

🔴 Free Cash Flow has shrunk at 8.3% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹79 Cr

Total Liabilities

₹21 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹4 Cr

Capex

-₹3 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

86.3%

Corporate Actions

Dividend Rate

₹3.5

Ex-Dividend Date

21 Sept 2026

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

1 negative5 general

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

Equitymaster, 08 Oct

MERCURY TRADE LINKS LTD. Share Price

Upstox, 16 Oct

Mercury Laboratories standalone net profit declines 69.07% in the June 2026 quarter

Business Standard, 25 JulResults

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

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IndexBox, 14 Oct

HESTER BIOSCIENCES Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 17 Oct

Europe Mercury Analyzer Market Size, Share,Trends, Growth Analysis Report, 2029

MarketsandMarkets, 11 Sept

Watch Items

Revenue growth is negative (-12.0%) on the latest reported period — check if this is one-off or a trend.
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

StrongFinancial Health

MiddlingBusiness Quality · Valuation · Risk

WeakGrowth · Profitability

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

1 of 5 tripwires tripped — Revenue growth stays above 4% a year · see Key things to watch ↑