Quest Laboratories Limited

Sector n/a · NSE

₹137.50−₹2.05 (−1.47%)

DalalBaazaar Score

56 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Very 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 modest growth. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:02 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

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

How does it make money?

Turns over ₹112 Cr a year. Of every ₹100 of sales, about ₹13 reaches shareholders as profit, with ₹18 left at the operating level before interest, tax and depreciation.

EBITDA margin18.4%

Net margin13.3%

What is its competitive advantage?Some evidence

ROCE of 20.0% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE20.0%

ROE15.4%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +81% while net margin moved +63% 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+81%

Margin effect+63%

DalalBaazaar Score

56/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

61/ 100

Average

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

Valuation

60/ 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.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

No P/E available

P/E (Trailing)

—

P/B

—

EV/EBITDA

11.3x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 13.0% to 18.4% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention5

Debt is rising
Total debt is up 92% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 33.4% to 15.4% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 44.1% to 20.0% — often a sign of competition or overexpansion.
Inventory building faster than sales
Inventory is up 246% against revenue growth of 81% — stock may not be moving.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 92% over 3 years, from ₹4 Cr to ₹8 Cr.
🔴High leverageFinancial
Debt/Equity of 8.14x — earnings must service borrowings before shareholders see anything.
🔴Inventory building faster than salesFinancial
Inventory up 246% against revenue up 81% — stock may not be moving.
🟡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 20.0% 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 13.0% to 18.4%. 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?

Leverage amplifies any setback
Debt/Equity of 8.14x. Interest is payable whether or not the business has a good year.
Returns on shareholder capital are falling
ROE has dropped from 33.4% to 15.4%. 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.
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 16% a year✓ 22.0% CAGR
Latest reported year was 7.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 16%✓ 18.4%
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 17%✓ 20.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 9 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
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

2 good · 7 neutral · 2 weak

Market Cap

₹225 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not available

No data

Source didn't return this field

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

Not available

No data

Source didn't return this field

ROE

15.4%

Strong

Strong capital efficiency

ROCE

20.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

8.14x

High

High leverage

Revenue Growth (YoY)

7.6%

Modest

Modest growth

Profit Growth (YoY)

8.5%

Modest

Slow profit growth

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

CMP

₹137.5

Gross Margin

21.8%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

13.3%

Good

Strong bottom-line conversion

Current Ratio

6.83

Comfortable

Healthy short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

89.7 / 87.6

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

54.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹62 Cr	₹83 Cr	₹104 Cr	₹112 Cr	+22.0%
EBITDA	₹8 Cr	₹16 Cr	₹20 Cr	₹21 Cr	+36.8%
EBITDA Margin	13.0%	19.1%	19.4%	18.4%	—
PAT (Net Profit)	₹5 Cr	₹10 Cr	₹14 Cr	₹15 Cr	+43.4%
EPS	₹46.76	₹6.16	₹8.37	—	—
ROE	33.4%	35.2%	16.7%	15.4%	—
ROCE	44.1%	50.0%	23.2%	20.0%	—
Total Debt	₹4 Cr	₹5 Cr	₹30 Cr	₹8 Cr	+24.3%
Free Cash Flow	₹1 Cr	₹2 Cr	-₹23 Cr	-₹16 Cr	—

🟢 Revenue has grown at 22.0% a year over 3 years.

🟢 EBITDA has grown at 36.8% a year over 3 years.

🟢 EBITDA Margin has risen from 13.0% to 18.4% over 3 years (+5.3 pts).

🟢 PAT (Net Profit) has grown at 43.4% a year over 3 years.

🔴 ROE has fallen from 33.4% to 15.4% over 3 years (-18.0 pts).

🔴 ROCE has fallen from 44.1% to 20.0% over 3 years (-24.1 pts).

🔴 Total Debt has grown at 24.3% a year over 3 years.

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

Balance Sheet & Cash Flow — FY2026

Total Assets

₹112 Cr

Total Liabilities

₹15 Cr

Total Debt

₹8 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹11 Cr

Capex

-₹5 Cr

Recent News

2 mixed4 general

Quest Laboratories Share Price and valuation after rise

Univest, 24 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.

Quest Diagnostics Incorporated (DGX) stock price, news, quote and history

Yahoo Finance UK, 15 Oct

Quest Diagnostics Reports Second Quarter 2026 Financial Results; Raises Revenue and EPS Guidance for Full Year 2026

PR Newswire, 23 JulResults

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

Quest Laboratories Ltd. Upper Circuit Today: Price, Data and Peers

Univest, 24 Sept

Quest Diagnostics Inc Share Price - DGX, RNS News, Articles, Quotes, & Charts (NYSE:DGX)

Proactive financial news, 08 Oct

Quest Diagnostics Incorporated (DGX) Stock Price, News, Quote & History

Yahoo! Finance Canada, 15 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Sector/industry classification unavailable — verify manually for peer comparison.
3 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

🟡Business QualityAdequate11.8/20

🟡Financial HealthAdequate9.9/20

🟢GrowthStrong14.9/20

🟡ProfitabilityModerate9.5/15

🟡ValuationFair7.5/15

🔴RiskHigh2.4/10

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.

This thesis breaks if

✓Revenue growth stays above 16% a year22.0% CAGR
✓EBITDA margin holds above 16%18.4%
✗Free cash flow remains positive-₹16 Cr
✓Debt / EBITDA stays below 2x0.4x
✓ROCE stays above 17%20.0%