Panchsheel Organics Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹106.40+₹4.30 (+4.21%)

DalalBaazaar Score

52 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity, falling profits.

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. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:49 pm

Understanding the Business

Company site ↗

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

What does this company do?

Panchsheel Organics Limited engages in the manufacture and trade of bulk drugs and intermediates in India and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees191

Annual revenue₹107 Cr

How does it make money?

Turns over ₹107 Cr a year. Of every ₹100 of sales, about ₹10 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation. Each of its 191 employees supports ₹55.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹55.9 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 10.0% 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 +4% while net margin moved -26% 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+4%

Margin effect-26%

DalalBaazaar Score

52/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 1.3% — barely ahead of inflation
✗ Profit has declined at 8.4% a year
✗ Profit fell 18.5% in the latest year

Quality vs. Valuation

Company Quality

47/ 100

Average

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

Valuation

79/ 100

Cheap

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

13.6x

3Y Median

15.0x

40 monthly readings · mean 15.2x · range 8.6x–26.7x

Sector Median

33.3x

median of 4 sector peers

🟡Currently trading close to its 3y median of 15.0x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 59% below the peer median of 33.3x.

vs. its own history

Fair

15.0x median over 40 months · -9%

vs. sector peers

Cheap

33.3x median of 4 peers · -59%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

6.7x

PEG

—

What's Good / What's Bad

🟢 What's Going Well2

Cash flow has turned positive
Free cash flow moved from negative to positive 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 14.6% to 7.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 19.4% to 10.0% — often a sign of competition or overexpansion.

Red Flags

4 items require attention · 1 high · 3 watch

🔴High leverageFinancial
Debt/Equity of 4.01x — earnings must service borrowings before shareholders see anything.
🟡Profit is decliningFinancial
Net profit is down 23% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 4.3 points over 3 years.
🟡Inventory building faster than salesFinancial
Inventory up 39% against revenue up 4% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 59% 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?

Margins are being competed away
EBITDA margin has fallen from 20.2% to 15.9%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 4.01x. Interest is payable whether or not the business has a good year.
Growth barely outpaces inflation
Revenue compounding at 1.3% 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 14.6% to 7.7%. 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 14%✓ 15.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✗ 1.3% CAGR
Latest reported year was 4.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹3 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✓ 10.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

5 good · 3 neutral · 3 weak

Market Cap

₹110 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

13.6x

Cheap

Cheap against the generic band

P/B Ratio

1.00x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹7.82

Profitable

Profitable on a per-share basis

ROE

7.7%

Weak

Weak capital efficiency

ROCE

10.0%

Moderate

Moderate return on the capital in the business

Debt/Equity

4.01x

High

High leverage

Revenue Growth (YoY)

4.7%

Modest

Modest growth

Profit Growth (YoY)

-18.5%

Falling

Profits are shrinking

Dividend Yield

3.01%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹3 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

10.9%

Average

Average margins

Net Margin

9.5%

Average

Average bottom-line conversion

Current Ratio

3.40

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.07

Defensive

Steadier than the market

52W Range Position

30%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

105.6 / 110.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

49.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹103 Cr	₹105 Cr	₹107 Cr	₹107 Cr	+1.3%
EBITDA	₹21 Cr	₹21 Cr	₹20 Cr	₹17 Cr	-6.5%
EBITDA Margin	20.2%	20.2%	19.0%	15.9%	—
PAT (Net Profit)	₹14 Cr	₹14 Cr	₹14 Cr	₹11 Cr	-8.4%
EPS	₹11.94	₹10.71	₹10.47	₹8.22	-11.7%
ROE	14.6%	11.3%	10.3%	7.7%	—
ROCE	19.4%	15.0%	13.1%	10.0%	—
Total Debt	₹6 Cr	₹6 Cr	₹5 Cr	₹6 Cr	+0.4%
Free Cash Flow	-₹4 Cr	-₹0 Cr	-₹12 Cr	₹3 Cr	—

🟡 Revenue has been broadly flat over 3 years (1.3% a year).

🔴 EBITDA has shrunk at 6.5% a year over 3 years.

🔴 EBITDA Margin has fallen from 20.2% to 15.9% over 3 years (-4.3 pts).

🔴 PAT (Net Profit) has shrunk at 8.4% a year over 3 years.

🔴 EPS has shrunk at 11.7% a year over 3 years.

🔴 ROE has fallen from 14.6% to 7.7% over 3 years (-7.0 pts).

🔴 ROCE has fallen from 19.4% to 10.0% over 3 years (-9.4 pts).

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

🟢 Free Cash Flow has turned positive, from -₹4 Cr to ₹3 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹172 Cr

Total Liabilities

₹31 Cr

Cash & Equivalents

₹4 Cr

Operating Cash Flow

₹10 Cr

Capex

-₹7 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

61.9%

Corporate Actions

Dividend Rate

₹3.2

Ex-Dividend Date

21 Aug 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 positive1 mixed4 general

Panchsheel Organics Ltd is Rated Sell

MarketsMojo, 18 Oct

Panchsheel Organics informs on demise of promoter MD Mahendra Turakhia

scanx.trade, 03 Aug

Panchsheel Organics Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 15 Sept

Panchsheel Organics submits voting results for 37th AGM

scanx.trade, 03 OctResults

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

Dividend stocks: Adani Enterprises, Infosys, 37 others go ex-date next week

Business Standard, 05 JunCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

PANCHSHEEL ORGANICS Share Price

Upstox, 06 Apr

Watch Items

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

DalalBaazaar Thesis

StrongFinancial Health · Valuation

MiddlingBusiness Quality · 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 ↑