Nikhil Adhesives Limited

Basic Materials — Specialty Chemicals · BSE

₹67.08−₹1.24 (−1.81%)

DalalBaazaar Score

48 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, 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, 7:03 pm

Understanding the Business

Company site ↗

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

What does this company do?

Nikhil Adhesives Limited manufactures and sells polymer emulsions and adhesives in India.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees365

Annual revenue₹547 Cr

How does it make money?

Turns over ₹547 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹7 left at the operating level before interest, tax and depreciation. Each of its 365 employees supports ₹1.50 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.50 Cr

Who are its competitors?

The closest listed comparisons in its industry are ASIAN PAINTS LIMITED, PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. 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?Some evidence

ROCE of 17.4% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE22.3%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved -25% while net margin moved +36% 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-25%

Margin effect+36%

DalalBaazaar Score

48/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 9.2% a year
✗ Profit CAGR of only 0.6%

Quality vs. Valuation

Company Quality

42/ 100

Weak

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.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

15.2x

3Y Median

31.9x

40 monthly readings · mean 30.7x · range 17.2x–47.4x

Sector Median

40.4x

median of 4 sector peers

🟢Current valuation is approximately 52% below its 3y median of 31.9x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 62% below the peer median of 40.4x.

vs. its own history

Cheap

31.9x median over 40 months · -52%

vs. sector peers

Cheap

40.4x median of 4 peers · -62%

vs. generic bands

Fair

15x–35x

EV/EBITDA

10.0x

PEG

24.44

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 4.5% to 6.9% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 16.8% to 11.9% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 21.7% to 17.4% — often a sign of competition or overexpansion.

Red Flags

4 items require attention · 4 high

🔴Debt has risen sharplyFinancial
Total debt is up 95% over 3 years, from ₹35 Cr to ₹68 Cr.
🔴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.
🔴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.
🔴Receivables growing faster than salesFinancial
Receivables up 44% against revenue up -25% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 4.5% to 6.9%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 52% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 62% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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 44% against revenue up -25%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 16.8% to 11.9%. 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.
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

1EBITDA margin holds above 5%✓ 6.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹4 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 1.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 14%✓ 17.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Interest cover stays above 4x✓ 5.5x
How much operating profit can fall before interest stops being comfortably covered.

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

5 good · 5 neutral · 1 weak

Market Cap

₹308 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

15.2x

Fair

Fairly valued against the generic band

P/B Ratio

2.11x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹4.41

Profitable

Profitable on a per-share basis

ROE

11.9%

Moderate

Moderate capital efficiency

ROCE

17.4%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.46x

Low

Conservative leverage

Revenue Growth (YoY)

52.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

103.8%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.33%

Modest

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

Free Cash Flow

-₹4 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

5.8%

Average

Average margins

Net Margin

3.1%

Average

Average bottom-line conversion

Current Ratio

1.42

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.25

Defensive

Steadier than the market

52W Range Position

16%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

78.8 / 79.5

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

9.1

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹730 Cr	₹556 Cr	₹583 Cr	₹547 Cr	-9.2%
EBITDA	₹33 Cr	₹31 Cr	₹36 Cr	₹38 Cr	+4.4%
EBITDA Margin	4.5%	5.6%	6.1%	6.9%	—
PAT (Net Profit)	₹17 Cr	₹13 Cr	₹17 Cr	₹17 Cr	+0.6%
EPS	₹3.71	₹2.88	₹3.62	₹3.78	+0.6%
ROE	16.8%	11.7%	12.9%	11.9%	—
ROCE	21.7%	16.7%	17.6%	17.4%	—
Total Debt	₹35 Cr	₹53 Cr	₹59 Cr	₹68 Cr	+24.9%
Free Cash Flow	₹1 Cr	-₹3 Cr	-₹4 Cr	-₹4 Cr	—

🔴 Revenue has shrunk at 9.2% a year over 3 years.

🟢 EBITDA has grown at 4.4% a year over 3 years.

🟢 EBITDA Margin has risen from 4.5% to 6.9% over 3 years (+2.3 pts).

🟡 PAT (Net Profit) has been broadly flat over 3 years (0.6% a year).

🟡 EPS has been broadly flat over 3 years (0.6% a year).

🔴 ROE has fallen from 16.8% to 11.9% over 3 years (-4.8 pts).

🔴 ROCE has fallen from 21.7% to 17.4% over 3 years (-4.2 pts).

🔴 Total Debt has grown at 24.9% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹1 Cr to -₹4 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹337 Cr

Total Liabilities

₹191 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

-₹0 Cr

Capex

-₹4 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

76.7%

Corporate Actions

Dividend Rate

₹0.22

Ex-Dividend Date

15 Sept 2026

Peer Comparison

Company	P/E	ROE
ASIAN PAINTS LIMITED	46.9x	22.3%
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

1 positive3 mixed2 general

Nikhil Adhesives FY26 net profit rises 6.4% to ₹235.73 crore

scanx.trade, 27 MayResults

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

Nikhil Adhesive Q1 Results FY27: PAT Rs 7 Cr, Revenue Rs 188 cror

Univest, 14 AugResults

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

Nikhil Adhesives Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Nikhil Adhesives Share Price Gains 9.13%: Stock Analysis

Univest, 20 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.

JYOTIRES Stock Price and Chart — NSE:JYOTIRES

TradingView, 17 Aug

Nikhil Adhesives discloses AGM voting results; all 11 resolutions pass

scanx.trade, 22 SeptResults

🟡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.
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

StrongValuation

MiddlingFinancial Health · Risk

WeakBusiness Quality · Growth · Profitability

Points for each in the Score ↑

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. 4 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 ↑