Qualitek Labs Limited

Healthcare — Diagnostics & Research · BSE

₹553.00+₹6.75 (+1.24%)

DalalBaazaar Score

54 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

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

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:52 pm

Understanding the Business

Company site ↗

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

What does this company do?

Qualitek Labs Limited offers technical testing and analysis services in India and internationally.

IndustryDiagnostics & Research

SectorHealthcare

Employees677

Annual revenue₹125 Cr

How does it make money?

Turns over ₹125 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹24 left at the operating level before interest, tax and depreciation. Each of its 677 employees supports ₹18.4 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹18.4 lakh

Who are its competitors?

The closest listed comparisons in its industry are SUN PHARMACEUTICAL IND L, CIPLA LTD, DR. REDDY S LABORATORIES, APOLLO HOSPITALS ENTER. L. 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 10.7% 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?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +551% while net margin moved -29% 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+551%

Margin effect-29%

DalalBaazaar Score

54/ 100

Moderate

Weighted across six categories. Every point is explained below.

✓ Beta of 0.23 — historically steadier than the index
✗ 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

57/ 100

Average

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

Valuation

47/ 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

44.3x

3Y Median

45.1x

35 monthly readings · mean 50.0x · range 30.2x–83.3x

Sector Median

33.3x

median of 4 sector peers

🟡Currently trading close to its 3y median of 45.1x — the market is paying about what it usually pays for this company.

⚠️Against its sector it trades 33% above the peer median of 33.3x.

vs. its own history

Fair

45.1x median over 35 months · -2%

vs. sector peers

Expensive

33.3x median of 4 peers · +33%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

24.1x

PEG

0.66

What's Good / What's Bad

🟢 What's Going Well1

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

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 29.8% to 8.9% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 22.2% to 10.7% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 3 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 299% over 3 years, from ₹23 Cr to ₹94 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Receivables growing faster than salesFinancial
Receivables up 623% against revenue up 551% — sales are being booked faster than they are collected.
🟡Margins are compressingFinancial
EBITDA margin is down 4.8 points over 3 years.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 58% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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 29.2% to 24.4%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 3.1x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 623% against revenue up 551%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
A premium to the sector to defend
It trades 33% above the peer median. That premium needs a reason that persists, or it closes.
Returns on shareholder capital are falling
ROE has dropped from 29.8% to 8.9%. 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.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 65% a year✓ 86.7% CAGR
Latest reported year was 77.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 22%✓ 24.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 3.1x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹32 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✓ 10.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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

3 good · 6 neutral · 2 weak

Market Cap

₹644 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

44.3x

Expensive

Expensive — verify against sector peers

P/B Ratio

4.23x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹12.49

Profitable

Profitable on a per-share basis

ROE

11.9%

Moderate

Moderate capital efficiency

ROCE

10.7%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.61x

Moderate

Moderate leverage

Revenue Growth (YoY)

77.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

116.2%

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

-₹33 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

6.6%

Average

Average asset productivity

Operating Margin

20.6%

Good

Healthy core-business profitability

Net Margin

10.9%

Good

Strong bottom-line conversion

Current Ratio

1.04

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.23

Defensive

Steadier than the market

52W Range Position

75%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

580.3 / 513.2

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

27.8

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹19 Cr	₹29 Cr	₹70 Cr	₹125 Cr	+86.7%
EBITDA	₹6 Cr	₹8 Cr	₹17 Cr	₹30 Cr	+75.8%
EBITDA Margin	29.2%	27.9%	24.3%	24.4%	—
PAT (Net Profit)	₹3 Cr	₹4 Cr	₹6 Cr	₹14 Cr	+66.6%
EPS	₹3.99	₹7.46	₹7.08	—	—
ROE	29.8%	13.3%	7.3%	8.9%	—
ROCE	22.2%	15.4%	10.0%	10.7%	—
Total Debt	₹23 Cr	₹12 Cr	₹50 Cr	₹94 Cr	+58.7%
Free Cash Flow	-₹10 Cr	-₹5 Cr	-₹13 Cr	-₹32 Cr	—

🟢 Revenue has grown at 86.7% a year over 3 years.

🟢 EBITDA has grown at 75.8% a year over 3 years.

🔴 EBITDA Margin has fallen from 29.2% to 24.4% over 3 years (-4.8 pts).

🟢 PAT (Net Profit) has grown at 66.6% a year over 3 years.

🔴 ROE has fallen from 29.8% to 8.9% over 3 years (-20.8 pts).

🔴 ROCE has fallen from 22.2% to 10.7% over 3 years (-11.4 pts).

🔴 Total Debt has grown at 58.7% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹271 Cr

Total Liabilities

₹119 Cr

Cash & Equivalents

₹6 Cr

Operating Cash Flow

₹14 Cr

Capex

-₹46 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

77.4%

Peer Comparison

Company	P/E	ROE
SUN PHARMACEUTICAL IND L	34.9x	14.5%
CIPLA LTD	31.8x	9.8%
DR. REDDY S LABORATORIES	31.0x	8.8%
APOLLO HOSPITALS ENTER. L	54.3x	22.0%

Recent News

2 mixed4 general

Qualitek Labs discloses EGM voting results for preferential issue

scanx.trade, 18 OctResults

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

Qualitek Labs Lower Circuit Today: Price, Data and Peers

Univest, 15 Oct

Qualitek Labs Ltd Key Financial Ratios – Valuation, Profitability & More

Value Research, 27 Aug

Qualitek Labs Issues Corrigendum to EGM Notice Regarding Preferential Allotment Details

Whalesbook, 12 Oct

Qualitek Labs issues EGM notice for ₹47 crore preferential issue

scanx.trade, 17 Sept

Ashish Kacholia's portfolio shines in FY26: 3 stocks turn multibaggers, 5 fresh Q2 picks

The Economic Times, 29 NovResults

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

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

MiddlingBusiness Quality · Financial Health · Growth · Profitability · Valuation

WeakRisk

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. 3 high-severity red flags sit above this conclusion and should be read first.

2 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive · see Key things to watch ↑