Natural Capsules Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹160.00+₹3.10 (+1.98%)

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

What does this company do?

Natural Capsules Limited engages in the manufacture and sale of hard gelatin and cellulose capsule shells in India and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees615

Annual revenue₹183 Cr

How does it make money?

Turns over ₹183 Cr a year. Of every ₹100 of sales, about ₹-13 reaches shareholders as profit, with ₹0 left at the operating level before interest, tax and depreciation. Each of its 615 employees supports ₹29.8 lakh of revenue a year, the signature of a people-led business.

EBITDA margin0.4%

Net margin-13.5%

Revenue / employee₹29.8 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.

SUN PHARMACEUTICAL IND LP/E 34.9x · ROE 14.5%

DR. REDDY S LABORATORIESP/E 31.0x · ROE 8.8%

CIPLA LTDP/E 31.8x · ROE 9.8%

DIVI S LABORATORIES LTDP/E 83.0x · ROE 17.5%

What is its competitive advantage?Little sign of one

Returns on capital of -5.8% 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-5.8%

ROE-11.1%

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 +11% while net margin moved -220% 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+11%

Margin effect-220%

DalalBaazaar Score

36/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Return on equity is negative
✗ ROE has fallen by 26.1 points over the period

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

0.75x

EV/EBITDA

369.7x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well0

Nothing stands out as clearly improving on the years of data available.

🔴 What Needs Attention6

Margins are compressing
EBITDA margin has slipped from 21.7% to 0.4% over 3 years.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 15.0% to -11.1% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 12.8% to -5.8% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 37% against revenue growth of 11% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 198% against revenue growth of 11% — stock may not be moving.

Red Flags

7 items require attention · 5 high · 2 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only -1.6x — little room if earnings dip.
🔴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.
🔴The company is lossmakingFinancial
Net profit of -₹25 Cr in the latest reported year.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 21.3 points, from 21.7% to 0.4%.
🔴Inventory building faster than salesFinancial
Inventory up 198% against revenue up 11% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 1.4x to -1.6x.
🟡Receivables growing faster than salesFinancial
Receivables up 37% against revenue up 11% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

No clear supporting case emerges from the available numbers.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 21.7% to 0.4%. 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 151.5x 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 37% against revenue up 11%. 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 3.6% 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 15.0% to -11.1%. 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.

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

1EBITDA margin holds above -2%✓ 0.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 151.5x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹1 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ -1.6x
How much operating profit can fall before interest stops being comfortably covered.
5Revenue growth stays above 4% a year✗ 3.6% CAGR
Latest reported year was 7.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.

Investment Checklist

5 / 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

₹167 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

0.75x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹-24.01

Loss-making

Negative earnings per share — the business is losing money

ROE

-11.1%

Weak

Weak capital efficiency

ROCE

-5.8%

Weak

Low return on total capital employed

Debt/Equity

0.49x

Low

Conservative leverage

Revenue Growth (YoY)

7.8%

Modest

Modest growth

Profit Growth (YoY)

-4094.7%

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

-₹1 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹160

Operating Margin

-6.6%

Weak

Thin margins leave little room for error

Net Margin

-8.1%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.03

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.01

Defensive

Steadier than the market

52W Range Position

24%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

163.8 / 172.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

38.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹165 Cr	₹151 Cr	₹164 Cr	₹183 Cr	+3.6%
EBITDA	₹36 Cr	₹22 Cr	₹19 Cr	₹1 Cr	-72.3%
EBITDA Margin	21.7%	14.5%	11.4%	0.4%	—
PAT (Net Profit)	₹18 Cr	₹6 Cr	₹1 Cr	-₹25 Cr	—
EPS	₹19.86	₹5.97	₹0.63	₹-23.84	—
ROE	15.0%	2.7%	0.3%	-11.1%	—
ROCE	12.8%	4.4%	2.9%	-5.8%	—
Total Debt	₹97 Cr	₹109 Cr	₹105 Cr	₹115 Cr	+6.1%
Free Cash Flow	-₹89 Cr	-₹80 Cr	-₹18 Cr	-₹1 Cr	—

🟢 Revenue has grown at 3.6% a year over 3 years.

🔴 EBITDA has shrunk at 72.3% a year over 3 years.

🔴 EBITDA Margin has fallen from 21.7% to 0.4% over 3 years (-21.3 pts).

🔴 PAT (Net Profit) has turned negative, from ₹18 Cr to -₹25 Cr.

🔴 EPS has turned negative, from ₹19.86 to ₹-23.84.

🔴 ROE has fallen from 15.0% to -11.1% over 3 years (-26.1 pts).

🔴 ROCE has fallen from 12.8% to -5.8% over 3 years (-18.6 pts).

🔴 Total Debt has grown at 6.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹424 Cr

Total Liabilities

₹189 Cr

Total Debt

₹115 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹11 Cr

Capex

-₹12 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

65.3%

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 mixed5 general

Natural Capsules completes dispatch of annual report for FY 2025-26

scanx.trade, 14 Oct

Natural Capsules Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 29 Aug

Empty Capsule Market

Future Market Insights, 13 May

Natural Capsules Ltd. (NATCAPSUQ) Share Price rises 9.11% as stock gains today

Univest, 26 AugPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Natural Capsules shareholders approve all six AGM resolutions

scanx.trade, 12 Aug

Natural Capsules NATCAPSUQ EGM September 2026 Preferential Issue

Kalkine India, 09 Sept

Watch Items

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

DalalBaazaar Thesis

🔴Business QualityWeak4.7/20

🟡Financial HealthAdequate9.6/20

🔴GrowthWeak7.6/20

🔴ProfitabilityWeak2.5/15

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

This thesis breaks if

✓EBITDA margin holds above -2%0.4%
✗Debt / EBITDA falls below 3x151.5x
✗Free cash flow remains positive-₹1 Cr
✗Interest cover stays above 3x-1.6x
✗Revenue growth stays above 4% a year3.6% CAGR