Pakka Limited

Basic Materials — Paper & Paper Products · NSE

₹71.10−₹0.28 (−0.39%)

DalalBaazaar Score

32 / 100

🔴 Weak

Verdict

CAUTION

Risk

High

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

In simple words: The business is earning a fairly low return on the money invested in it, 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, 7:03 pm

Understanding the Business

Company site ↗

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

What does this company do?

Pakka Limited engages in the manufacture and dealing of paper and moulded products in India and internationally. It operates through Paper, Pulp, and Other Products; and Moulded Products segments.

IndustryPaper & Paper Products

SectorBasic Materials

Employees565

Annual revenue₹356 Cr

How does it make money?

Turns over ₹356 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 565 employees supports ₹63.1 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹63.1 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, ULTRATECH CEMENT LIMITED, ASIAN PAINTS 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?Little sign of one

Returns on capital of 2.6% 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 ROE22.3%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -13% while net margin moved -84% 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-13%

Margin effect-84%

DalalBaazaar Score

32/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 4.4% a year
✗ Profit has declined at 47.9% a year
✗ Profit fell 82.7% in the latest year

Quality vs. Valuation

Company Quality

28/ 100

Weak

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

Valuation

32/ 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.

Historical Valuation

Current P/E

49.0x

3Y Median

18.2x

40 monthly readings · mean 17.8x · range 7.9x–30.9x

Sector Median

28.7x

median of 4 sector peers

⚠️Current valuation is approximately 170% above its 3y median of 18.2x. 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 71% above the peer median of 28.7x.

vs. its own history

Expensive

18.2x median over 40 months · +170%

vs. sector peers

Expensive

28.7x median of 4 peers · +71%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

19.1x

PEG

—

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 22.4% to 1.4% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 29.6% to 2.6% — often a sign of competition or overexpansion.

Red Flags

7 items require attention · 5 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 343% over 3 years, from ₹104 Cr to ₹460 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.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 10.3 points, from 21.8% to 11.5%.
🔴Receivables growing faster than salesFinancial
Receivables up 88% against revenue up -13% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 49% against revenue up -13% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 6.3x to 2.3x.
🟡Profit is decliningFinancial
Net profit is down 86% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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?

Margins are being competed away
EBITDA margin has fallen from 21.8% to 11.5%. 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 11.2x 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 88% against revenue up -13%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
The price already assumes success
The stock trades 170% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 22.4% to 1.4%. 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 10%✓ 11.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 11.2x
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✗ -₹298 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 2.3x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 8%✗ 2.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

4 / 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

₹339 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

49.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

0.69x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹1.45

Profitable

Profitable on a per-share basis

ROE

1.4%

Weak

Weak capital efficiency

ROCE

2.6%

Weak

Low return on total capital employed

Debt/Equity

0.99x

Moderate

Moderate leverage

Revenue Growth (YoY)

43.0%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-82.7%

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

-₹298 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

11.3%

Average

Average margins

Net Margin

3.6%

Average

Average bottom-line conversion

Current Ratio

1.28

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.39

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

73.4 / 76.2

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

41.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹408 Cr	₹405 Cr	₹406 Cr	₹356 Cr	-4.4%
EBITDA	₹89 Cr	₹86 Cr	₹76 Cr	₹41 Cr	-22.8%
EBITDA Margin	21.8%	21.3%	18.6%	11.5%	—
PAT (Net Profit)	₹46 Cr	₹41 Cr	₹38 Cr	₹7 Cr	-47.9%
EPS	₹12.03	₹10.47	₹8.95	—	—
ROE	22.4%	16.4%	8.3%	1.4%	—
ROCE	29.6%	18.4%	9.7%	2.6%	—
Total Debt	₹104 Cr	₹184 Cr	₹206 Cr	₹460 Cr	+64.2%
Free Cash Flow	₹12 Cr	-₹13 Cr	-₹180 Cr	-₹298 Cr	—

🔴 Revenue has shrunk at 4.4% a year over 3 years.

🔴 EBITDA has shrunk at 22.8% a year over 3 years.

🔴 EBITDA Margin has fallen from 21.8% to 11.5% over 3 years (-10.3 pts).

🔴 PAT (Net Profit) has shrunk at 47.9% a year over 3 years.

🔴 ROE has fallen from 22.4% to 1.4% over 3 years (-21.0 pts).

🔴 ROCE has fallen from 29.6% to 2.6% over 3 years (-27.0 pts).

🔴 Total Debt has grown at 64.2% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹12 Cr to -₹298 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,117 Cr

Total Liabilities

₹653 Cr

Cash & Equivalents

₹18 Cr

Operating Cash Flow

₹75 Cr

Capex

-₹373 Cr

Shareholding (proxy)

Institutional Holding

5.4%

Insider Holding

40.8%

Corporate Actions

Ex-Dividend Date

22 Sept 2023

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
ULTRATECH CEMENT LIMITED	37.6x	11.1%
ASIAN PAINTS LIMITED	46.9x	22.3%

Recent News

4 mixed1 negative1 general

Pakka Limited FY26 profit falls 68%, revenue declines

scanx.trade, 14 OctResults

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

Pakka Ltd. Share Price Rise: Paper Stock Price and Analysis

Univest, 17 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.

Pakka Limited's (NSE:PAKKA) Shareholders Might Be Looking For Exit

Simply Wall Street, 14 Jan

Earnings call transcript: Pakka posts record Q1 2026 revenue, shares jump 8%

Investing.com, 18 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.

Pakka Gets ₹224 Cr Incentive Nod; Shares Rise 5.42%

HDFC Sky, 25 MarPrice 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.

Pakka reports consolidated net profit of Rs 5.89 crore in the June 2026 quarter

Business Standard, 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.

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

WeakBusiness Quality · Financial Health · Growth · Profitability · Valuation · Risk

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

4 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive; Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑