Morepen Laboratories Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹123.70−₹1.90 (−1.51%)

DalalBaazaar Score

52 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Low

Driven by negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: The business is earning a fairly low return on the money invested in it, 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, 6:50 pm

Understanding the Business

Company site ↗

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

What does this company do?

Morepen Laboratories Limited develops, manufactures, markets, and sells active pharmaceutical ingredients (APIs), branded and generic formulations, and home health products in India, the United States, and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees1,919

Annual revenue₹1,801 Cr

How does it make money?

Turns over ₹1,801 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation. Each of its 1,919 employees supports ₹93.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹93.9 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 9.4% 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?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +27% while net margin moved +93% 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+27%

Margin effect+93%

DalalBaazaar Score

52/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ P/E of 48.3x is demanding — it needs sustained high growth to justify
• P/E is close to its own historical median of 42.0x
✗ P/B of 5.58x is a steep premium to book

Quality vs. Valuation

Company Quality

57/ 100

Average

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

Valuation

39/ 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.

Historical Valuation

Current P/E

48.3x

3Y Median

42.0x

40 monthly readings · mean 42.0x · range 15.3x–77.5x

Sector Median

33.3x

median of 4 sector peers

⚠️Current valuation is approximately 15% above its 3y median of 42.0x. 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 45% above the peer median of 33.3x.

vs. its own history

Fair

42.0x median over 40 months · +15%

vs. sector peers

Expensive

33.3x median of 4 peers · +45%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

47.4x

PEG

1.39

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 6.1% to 8.1% over 3 years.
Return on capital is rising
ROCE has improved from 7.3% to 9.4%.
Very low debt
Debt/Equity of 0.17x leaves the balance sheet with plenty of headroom.
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

2 items require attention · 2 high

🔴Debt has risen sharplyFinancial
Total debt is up 726% over 3 years, from ₹25 Cr to ₹208 Cr.
🔴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.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 6.1% to 8.1%. 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?

A premium to the sector to defend
It trades 45% above the peer median. That premium needs a reason that persists, or it closes.
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
Small 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
2 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%✓ 8.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹128 Cr
Profit that never becomes cash eventually stops being profit.
3Revenue growth stays above 6% a year✓ 8.4% CAGR
Latest reported year was 34.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Debt / EBITDA stays below 2x✓ 1.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 9.4%
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

4 good · 3 neutral · 4 weak

Market Cap

₹6,778 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

48.3x

Expensive

Expensive — verify against sector peers

P/B Ratio

5.58x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹2.56

Profitable

Profitable on a per-share basis

ROE

7.6%

Weak

Weak capital efficiency

ROCE

9.4%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.17x

Low

Conservative leverage

Revenue Growth (YoY)

34.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

415.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.16%

Modest

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

Free Cash Flow

-₹128 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

13.0%

Average

Average margins

Net Margin

7.2%

Average

Average bottom-line conversion

Current Ratio

2.37

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.91

Market-like

Moves roughly in line with the market

52W Range Position

77%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

127.1 / 110.5

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

52.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,414 Cr	₹1,682 Cr	₹1,804 Cr	₹1,801 Cr	+8.4%
EBITDA	₹86 Cr	₹173 Cr	₹192 Cr	₹147 Cr	+19.6%
EBITDA Margin	6.1%	10.3%	10.6%	8.1%	—
PAT (Net Profit)	₹39 Cr	₹96 Cr	₹118 Cr	₹95 Cr	+34.9%
EPS	₹0.77	₹1.88	₹2.2	₹1.73	+31.0%
ROE	5.1%	11.3%	10.2%	7.6%	—
ROCE	7.3%	15.6%	12.8%	9.4%	—
Total Debt	₹25 Cr	₹29 Cr	₹105 Cr	₹208 Cr	+102.1%
Free Cash Flow	-₹137 Cr	-₹8 Cr	-₹182 Cr	-₹128 Cr	—

🟢 Revenue has grown at 8.4% a year over 3 years.

🟢 EBITDA has grown at 19.6% a year over 3 years.

🟢 EBITDA Margin has risen from 6.1% to 8.1% over 3 years (+2.1 pts).

🟢 PAT (Net Profit) has grown at 34.9% a year over 3 years.

🟢 EPS has grown at 31.0% a year over 3 years.

🟢 ROE has risen from 5.1% to 7.6% over 3 years (+2.5 pts).

🟢 ROCE has risen from 7.3% to 9.4% over 3 years (+2.1 pts).

🔴 Total Debt has grown at 102.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,936 Cr

Total Liabilities

₹689 Cr

Cash & Equivalents

₹31 Cr

Operating Cash Flow

₹33 Cr

Capex

-₹161 Cr

Shareholding (proxy)

Institutional Holding

1.5%

Insider Holding

42.0%

Corporate Actions

Dividend Rate

₹0.2

Ex-Dividend Date

18 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 positive2 mixed3 general

Morepen Labs zooms 112% in 6 weeks; stock hits multi-year high; here's why

Business Standard, 02 Sept

Morepen Laboratories Share Price Target 2027 to 2030: Analyst Out

Univest, 14 AugAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Morepen Lab Share Price Surges 20% After Q1 Net Profit Jumps Five-Fold

NDTV Profit, 04 AugResults

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

Why Morepen Laboratories Share Price is Rising

Equitymaster, 10 Jun

Morepen Laboratories (MOREPENLAB.NS) Slides 5.48% to ₹138.91 as Pharma Stock Retreats Toward Key Support - SMA Signal

https://www.siam.in/, 08 Oct

Morepen Laboratories' (NSE:MOREPENLAB) Shareholders Have More To Worry About Than Only Soft Earnings

Simply Wall Street, 02 JunResults

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

Watch Items

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

DalalBaazaar Thesis

StrongFinancial Health · Growth

WeakBusiness Quality · Profitability · Valuation · Risk

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

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑