Patel Chem Specialities Limited

Basic Materials — Chemicals · BSE

₹155.00−₹8.40 (−5.14%)

DalalBaazaar Score

60 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

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

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, 7:46 pm

Understanding the Business

Company site ↗

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

What does this company do?

Patel Chem Specialities Limited manufactures and sells cellulose-based excipients.

IndustryChemicals

SectorBasic Materials

Employees137

Annual revenue₹137 Cr

How does it make money?

Turns over ₹137 Cr a year. Of every ₹100 of sales, about ₹9 reaches shareholders as profit, with ₹14 left at the operating level before interest, tax and depreciation. Each of its 137 employees supports ₹1.00 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.00 Cr

Who are its competitors?

The closest listed comparisons in its industry are 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 16.4% 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 ROE15.4%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +98% while net margin moved +120% 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+98%

Margin effect+120%

DalalBaazaar Score

60/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

69/ 100

Good

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

Valuation

51/ 100

Fair

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

30.7x

1.3Y Median

21.6x

16 monthly readings · mean 22.9x · range 14.5x–36.5x

Sector Median

33.8x

median of 3 sector peers

⚠️Current valuation is approximately 42% above its 1.3y median of 21.6x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟡Against its sector it is priced broadly in line with the peer median of 33.8x.

vs. its own history

Expensive

21.6x median over 16 months · +42%

vs. sector peers

Fair

33.8x median of 3 peers · -9%

vs. generic bands

Fair

15x–35x

EV/EBITDA

19.4x

PEG

0.49

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 8.3% to 13.8% over 3 years.
Very low debt
Debt/Equity of 0.18x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 24.3% to 12.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 29.4% to 16.4% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 1 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 55% over 3 years, from ₹12 Cr to ₹18 Cr.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹9 Cr in the latest year.
🟡Inventory building faster than salesFinancial
Inventory up 155% against revenue up 98% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 8.3% to 13.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
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?

The price already assumes success
The stock trades 42% 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 24.3% to 12.6%. 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.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
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

1Revenue growth stays above 19% a year✓ 25.5% CAGR
Latest reported year was 38.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 12%✓ 13.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹9 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.0x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 13%✓ 16.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 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 · 4 neutral · 2 weak

Market Cap

₹385 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

30.7x

Fair

Fairly valued against the generic band

P/B Ratio

3.87x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹5.05

Profitable

Profitable on a per-share basis

ROE

18.6%

Strong

Strong capital efficiency

ROCE

16.4%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.18x

Low

Conservative leverage

Revenue Growth (YoY)

38.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-27.1%

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

-₹14 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

9.8%

Good

Assets are working hard

Operating Margin

10.9%

Average

Average margins

Net Margin

9.1%

Average

Average bottom-line conversion

Current Ratio

2.67

Comfortable

Healthy short-term liquidity

52W Range Position

89%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

127.7 / 111.4

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

73.6

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹69 Cr	₹82 Cr	₹105 Cr	₹137 Cr	+25.5%
EBITDA	₹6 Cr	₹12 Cr	₹16 Cr	₹19 Cr	+48.6%
EBITDA Margin	8.3%	14.4%	14.9%	13.8%	—
PAT (Net Profit)	₹3 Cr	₹8 Cr	₹11 Cr	₹13 Cr	+63.2%
EPS	₹1.16	₹3.08	₹4.25	—	—
ROE	24.3%	39.2%	29.8%	12.6%	—
ROCE	29.4%	42.1%	34.2%	16.4%	—
Total Debt	₹12 Cr	₹15 Cr	₹15 Cr	₹18 Cr	+15.8%
Free Cash Flow	-₹2 Cr	₹3 Cr	-₹8 Cr	-₹9 Cr	—

🟢 Revenue has grown at 25.5% a year over 3 years.

🟢 EBITDA has grown at 48.6% a year over 3 years.

🟢 EBITDA Margin has risen from 8.3% to 13.8% over 3 years (+5.5 pts).

🟢 PAT (Net Profit) has grown at 63.2% a year over 3 years.

🔴 ROE has fallen from 24.3% to 12.6% over 3 years (-11.7 pts).

🔴 ROCE has fallen from 29.4% to 16.4% over 3 years (-13.0 pts).

🔴 Total Debt has grown at 15.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹142 Cr

Total Liabilities

₹43 Cr

Cash & Equivalents

₹37 Cr

Operating Cash Flow

₹10 Cr

Capex

-₹19 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

77.6%

Peer Comparison

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

Recent News

6 general

PATELCHE Share Price near 52-week high: price, valuation

Univest, 16 Oct

Compare KELTECH EN. with

Equitymaster, 18 Oct

Patel Chem Specialities expands Talod plant capacity to 4,500 MT

scanx.trade, 06 Oct

Patel Chem Specialities Ltd Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

PATEL CHEM SPECIALITIES LIMITE Share Price

Upstox, 05 May

Patel Chem Specialities Ltd IPO Status, GMP, Price & Dates Today

Alice Blue, 25 Jun

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

StrongFinancial Health · Growth

MiddlingBusiness Quality · Profitability

WeakValuation · Risk

Points for each in the Score ↑

Good business at a fair price

A sound business at a reasonable valuation. Suitable for a long-term holding, with the valuation and the direction of margins worth watching rather than the business itself. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑