Parnax Lab Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹112.93+₹4.93 (+4.56%)

DalalBaazaar Score

54 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Very High

Driven by moderate debt load, short-term liabilities exceed short-term assets, negative free cash flow.

In simple words: Strong business and financial position, 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, 7:49 pm

Understanding the Business

Company site ↗

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

What does this company do?

Parnax Lab Limited engages in the manufacture and export of pharmaceutical formulations in India and internationally. The company offers pharmaceutical products in the form of liquids, ointments, gels, creams, tablets, and capsules; cosmetic; herbal; and nutraceutical products.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees12

Annual revenue₹249 Cr

How does it make money?

Turns over ₹249 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹13 left at the operating level before interest, tax and depreciation. Each of its 12 employees supports ₹20.71 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹20.71 Cr

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?Some evidence

ROCE of 16.3% 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 ROE14.5%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +48% while net margin moved -8% 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+48%

Margin effect-8%

DalalBaazaar Score

54/ 100

Moderate

Weighted across six categories. Every point is explained below.

• ROE of 12.4% is moderate

Quality vs. Valuation

Company Quality

49/ 100

Average

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

Valuation

78/ 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

15.2x

Sector Median

33.3x

median of 4 sector peers

🟢Against its sector it trades 55% below the peer median of 33.3x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

33.3x median of 4 peers · -55%

vs. generic bands

Fair

15x–35x

EV/EBITDA

6.4x

PEG

1.38

What's Good / What's Bad

🟢 What's Going Well1

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

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 20.9% to 16.3% — often a sign of competition or overexpansion.

Red Flags

4 items require attention · 2 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 51% over 3 years, from ₹55 Cr to ₹83 Cr.
🔴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.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹27 Cr in the latest year.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.97 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 55% 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?

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
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

1Revenue growth stays above 11% a year✓ 14.0% CAGR
Latest reported year was 6.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 11%✓ 13.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Free cash flow remains positive✗ -₹27 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✓ 3.9x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

5 / 10 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

Price history

Quick Metrics

3 good · 6 neutral · 2 weak

Market Cap

₹130 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

1.36x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹7.45

Profitable

Profitable on a per-share basis

ROE

12.4%

Moderate

Moderate capital efficiency

ROCE

16.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.87x

Moderate

Moderate leverage

Revenue Growth (YoY)

6.4%

Modest

Modest growth

Profit Growth (YoY)

-87.0%

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

-₹27 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

3.7%

Weak

Thin margins leave little room for error

Net Margin

3.5%

Average

Average bottom-line conversion

Current Ratio

0.97

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.05

Defensive

Steadier than the market

52W Range Position

20%

Mid-range

Technical Snapshot

RSI (14)

43.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹168 Cr	₹189 Cr	₹188 Cr	₹249 Cr	+14.0%
EBITDA	₹24 Cr	₹24 Cr	₹29 Cr	₹33 Cr	+11.6%
EBITDA Margin	14.3%	12.8%	15.2%	13.4%	—
PAT (Net Profit)	₹9 Cr	₹10 Cr	₹12 Cr	₹12 Cr	+11.0%
EPS	₹7.79	₹8.37	₹10.05	₹10.27	+9.7%
ROE	13.9%	13.4%	13.9%	12.4%	—
ROCE	20.9%	16.2%	18.1%	16.3%	—
Total Debt	₹55 Cr	₹81 Cr	₹70 Cr	₹83 Cr	+14.8%
Free Cash Flow	₹10 Cr	-₹17 Cr	₹14 Cr	-₹27 Cr	—

🟢 Revenue has grown at 14.0% a year over 3 years.

🟢 EBITDA has grown at 11.6% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 13.4% over 3 years.

🟢 PAT (Net Profit) has grown at 11.0% a year over 3 years.

🟢 EPS has grown at 9.7% a year over 3 years.

🔴 ROE has fallen from 13.9% to 12.4% over 3 years (-1.5 pts).

🔴 ROCE has fallen from 20.9% to 16.3% over 3 years (-4.7 pts).

🔴 Total Debt has grown at 14.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹10 Cr to -₹27 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹228 Cr

Total Liabilities

₹132 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹8 Cr

Capex

-₹35 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

85.3%

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

2 mixed4 general

Parnax Lab Share Price News: Price Rise, Valuation View

Univest, 22 SeptPrice 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.

ADVANCED ENZYME TECHNOLOGIES Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 15 Oct

Parnax Lab Share Price Rises 9.84%: Analysis

Univest, 28 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.

Parnax Lab reports FY26 net profit of ₹1,177.68 lakh

scanx.trade, 28 May

MERCURY LAB. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 08 Oct

BALPHARMA Stock Price and Chart — NSE:BALPHARMA

TradingView, 22 Jul

Watch Items

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

DalalBaazaar Thesis

StrongValuation

MiddlingBusiness Quality · Growth · Risk

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

2 of 5 tripwires tripped — Debt / EBITDA stays below 2x; Free cash flow remains positive · see Key things to watch ↑