Phaarmasia Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹80.00−₹6.00 (−6.98%)

DalalBaazaar Score

72 / 100

🟢 Good

Verdict

REASONABLE

Risk

High

Driven by high debt relative to equity, 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. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:47 pm

Understanding the Business

Company site ↗

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

What does this company do?

Phaarmasia Limited manufactures and sells oral contraceptive pills in India. It also engages in the manufacture and marketing of cosmetics and combi pack with iron tablets. Phaarmasia Limited was incorporated in 1981 and is based in Hyderabad, India.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees47

Annual revenue₹47 Cr

How does it make money?

Turns over ₹47 Cr a year. Of every ₹100 of sales, about ₹37 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 47 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 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 96.5% 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?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +72% while net margin moved -913% 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+72%

Margin effect-913%

DalalBaazaar Score

72/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.79 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ 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

76/ 100

Good

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

Valuation

74/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

2.9x

Sector Median

33.3x

median of 4 sector peers

🟢Against its sector it trades 91% 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 · -91%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

16.1x

PEG

0.12

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from -3.8% to 5.9% over 3 years.
Return on equity is rising
ROE has improved from -11.6% to 79.5%.
Return on capital is rising
ROCE has improved from -12.6% to 96.5%.
High return on capital employed
ROCE of 96.5% is the mark of a business that converts capital into profit efficiently.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 310% over 3 years, from ₹0 Cr to ₹1 Cr.
🔴High leverageFinancial
Debt/Equity of 5.08x — earnings must service borrowings before shareholders see anything.
🔴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 -₹16 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 96.5% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from -3.8% to 5.9%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 91% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 5.08x. Interest is payable whether or not the business has a good year.
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.
Several serious flags at once
3 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 15% a year✓ 19.8% CAGR
Latest reported year was 20.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 4%✓ 5.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹16 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 94%✓ 96.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 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

6 good · 3 neutral · 2 weak

Market Cap

₹55 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

2.9x

Cheap

Cheap against the generic band

P/B Ratio

2.47x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹27.79

Profitable

Profitable on a per-share basis

ROE

79.5%

Strong

Strong capital efficiency

ROCE

96.5%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

5.08x

High

High leverage

Revenue Growth (YoY)

20.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

25.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹16 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

3.8%

Weak

Thin margins leave little room for error

Net Margin

36.3%

Good

Strong bottom-line conversion

Current Ratio

3.46

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.79

Defensive

Steadier than the market

52W Range Position

49%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

88.2 / 85.8

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

33.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹27 Cr	₹31 Cr	₹24 Cr	₹47 Cr	+19.8%
EBITDA	-₹1 Cr	-₹0 Cr	-₹1 Cr	₹3 Cr	—
EBITDA Margin	-3.8%	-0.6%	-5.2%	5.9%	—
PAT (Net Profit)	-₹1 Cr	-₹1 Cr	-₹2 Cr	₹18 Cr	—
EPS	₹-1.84	₹-0.76	₹-2.33	₹25.74	—
ROE	-11.6%	-5.0%	-18.2%	79.5%	—
ROCE	-12.6%	-5.0%	-17.8%	96.5%	—
Total Debt	₹0 Cr	₹0 Cr	₹0 Cr	₹1 Cr	+60.0%
Free Cash Flow	₹1 Cr	₹0 Cr	-₹0 Cr	-₹16 Cr	—

🟢 Revenue has grown at 19.8% a year over 3 years.

🟢 EBITDA has turned positive, from -₹1 Cr to ₹3 Cr.

🟢 EBITDA Margin has risen from -3.8% to 5.9% over 3 years (+9.7 pts).

🟢 PAT (Net Profit) has turned positive, from -₹1 Cr to ₹18 Cr.

🟢 EPS has turned positive, from ₹-1.84 to ₹25.74.

🟢 ROE has risen from -11.6% to 79.5% over 3 years (+91.2 pts).

🟢 ROCE has risen from -12.6% to 96.5% over 3 years (+109.1 pts).

🔴 Total Debt has grown at 60.0% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹1 Cr to -₹16 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹30 Cr

Total Liabilities

₹8 Cr

Cash & Equivalents

₹11 Cr

Operating Cash Flow

-₹16 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

80.1%

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

6 general

Phaarmasia sets Sept 25 AGM; approves FY26 profit of ₹1,757.3 lakh

scanx.trade, 03 Sept

PHAARMASIA LTD. Share Price

Upstox, 06 Apr

Phaarmasia Limited Relocates Registered Office Within Hyderabad's IDA Jeedimetla

scanx.trade, 15 Apr

SUNLOC Stock Price and Chart — NSE:SUNLOC

TradingView, 06 Mar

Amrit Corp - These 9 stocks will get delisted from exchanges soon. Do you own any?

The Economic Times, 22 Feb

VIVIMEDLAB Stock Price and Chart — NSE:VIVIMEDLAB

TradingView, 22 Jul

Watch Items

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

DalalBaazaar Thesis

StrongBusiness Quality · Growth · Profitability · Valuation

MiddlingFinancial Health

WeakRisk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 3 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 ↑