Primo Chemicals Limited

Basic Materials — Chemicals · NSE

₹25.30−₹0.67 (−2.58%)

DalalBaazaar Score

39 / 100

🔴 Weak

Verdict

CAUTION

Risk

Moderate

Driven by short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Short-term liquidity is 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 Primo Chemicals Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Primo Chemicals Limited engages in the manufacture and sale of chemicals in India. The company offers caustic soda lye and flakes; hydrochloric acid; liquid chlorine; sodium hypochlorite; hydrogen gas; stable bleaching powder; and aluminium chloride.

IndustryChemicals

SectorBasic Materials

Employees384

Annual revenue₹562 Cr

How does it make money?

Turns over ₹562 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹16 left at the operating level before interest, tax and depreciation. Each of its 384 employees supports ₹1.46 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.46 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?Little sign of one

Returns on capital of 7.1% 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 ROE15.4%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -21% while net margin moved -86% 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-21%

Margin effect-86%

DalalBaazaar Score

39/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 7.4% a year
✗ Profit has declined at 51.8% a year

Quality vs. Valuation

Company Quality

34/ 100

Weak

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

Valuation

55/ 100

Fair

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

38.9x

2Y Median

133.7x

20 monthly readings · mean 100.3x · range 4.5x–171.4x

Sector Median

33.8x

median of 3 sector peers

🟢Current valuation is approximately 71% below its 2y median of 133.7x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

⚠️Against its sector it trades 15% above the peer median of 33.8x.

vs. its own history

Cheap

133.7x median over 20 months · -71%

vs. sector peers

Fair

33.8x median of 3 peers · +15%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

8.5x

PEG

3.30

What's Good / What's Bad

🟢 What's Going Well1

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 33.3% to 3.8% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 34.6% to 7.1% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 3 high · 2 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.9x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 15.8 points, from 31.4% to 15.6%.
🔴Inventory building faster than salesFinancial
Inventory up 83% against revenue up -21% — stock may not be moving.
🟡Profit is decliningFinancial
Net profit is down 89% over 3 years.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.56 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 71% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹39 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 31.4% to 15.6%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Returns on shareholder capital are falling
ROE has dropped from 33.3% to 3.8%. 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.
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

1EBITDA margin holds above 14%✓ 15.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Interest cover stays above 3x✗ 1.9x
How much operating profit can fall before interest stops being comfortably covered.
3Free cash flow remains positive✓ ₹39 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✗ 7.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 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

4 good · 4 neutral · 3 weak

Market Cap

₹613 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

38.9x

Fair

Fairly valued against the generic band

P/B Ratio

1.51x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹0.65

Profitable

Profitable on a per-share basis

ROE

3.8%

Weak

Weak capital efficiency

ROCE

7.1%

Weak

Low return on total capital employed

Debt/Equity

0.32x

Low

Conservative leverage

Revenue Growth (YoY)

-1.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

11.8%

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

₹39 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

8.9%

Average

Average margins

Net Margin

2.9%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.56

Tight

Tight short-term liquidity

Beta (vs Nifty)

-0.14

Defensive

Steadier than the market

52W Range Position

67%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

25.2 / 23.4

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

50.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹707 Cr	₹397 Cr	₹556 Cr	₹562 Cr	-7.4%
EBITDA	₹222 Cr	₹27 Cr	₹89 Cr	₹88 Cr	-26.6%
EBITDA Margin	31.4%	6.7%	15.9%	15.6%	—
PAT (Net Profit)	₹137 Cr	-₹25 Cr	₹4 Cr	₹15 Cr	-51.8%
EPS	₹5.67	₹-1.05	₹0.15	₹0.63	-51.9%
ROE	33.3%	-6.5%	0.9%	3.8%	—
ROCE	34.6%	-2.6%	7.6%	7.1%	—
Total Debt	₹145 Cr	₹178 Cr	₹169 Cr	₹131 Cr	-3.2%
Free Cash Flow	-₹33 Cr	-₹54 Cr	₹24 Cr	₹39 Cr	—

🔴 Revenue has shrunk at 7.4% a year over 3 years.

🔴 EBITDA has shrunk at 26.6% a year over 3 years.

🔴 EBITDA Margin has fallen from 31.4% to 15.6% over 3 years (-15.8 pts).

🔴 PAT (Net Profit) has shrunk at 51.8% a year over 3 years.

🔴 EPS has shrunk at 51.9% a year over 3 years.

🔴 ROE has fallen from 33.3% to 3.8% over 3 years (-29.5 pts).

🔴 ROCE has fallen from 34.6% to 7.1% over 3 years (-27.5 pts).

🟢 Total Debt has shrunk at 3.2% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹33 Cr to ₹39 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹692 Cr

Total Liabilities

₹286 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹65 Cr

Capex

-₹26 Cr

Shareholding (proxy)

Institutional Holding

1.9%

Insider Holding

64.4%

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

3 mixed3 general

Compare COCHIN MIN. with PUNJAB ALKALIES

Equitymaster, 18 Oct

Primo Chemicals Reports Q1 Revenue Of 1.4B Rupees With 36M Net Profit

Sahi, 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.

Primo Chemicals approves merger with subsidiary Flow Tech

scanx.trade, 25 SeptM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Primo Chemicals Share Price rise; market cap at Rs 551.57 Cr

Univest, 25 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.

Why Is Primo Chemicals (NSE: PRIMO) Among Today's Top Gainers?

Kalkine India, 05 Jun

Primo Chemicals Acquires 51% Ownership Of Flow Tech

Sahi, 16 Sept

Watch Items

Revenue growth is negative (-1.2%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

MiddlingFinancial Health · Valuation

WeakBusiness Quality · Growth · Profitability · 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. 3 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑