Recode Studios Limited

Consumer Defensive — Household & Personal Products · BSE

₹438.00₹0.00 (0.00%)

DalalBaazaar Score

69 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, with both sales and profits growing well. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:03 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

Company site ↗

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

What does this company do?

Recode Studios Limited engages in the designing, producing, managing, and sale of beauty and cosmetics products in India.

IndustryHousehold & Personal Products

SectorConsumer Defensive

Employees156

Annual revenue₹77 Cr

How does it make money?

Turns over ₹77 Cr a year. Of every ₹100 of sales, about ₹14 reaches shareholders as profit, with ₹21 left at the operating level before interest, tax and depreciation. Each of its 156 employees supports ₹49.7 lakh of revenue a year, the signature of a people-led business.

EBITDA margin21.5%

Net margin14.5%

Revenue / employee₹49.7 lakh

Who are its competitors?

The closest listed comparisons in its industry are HINDUSTAN UNILEVER LTD., DABUR INDIA LTD, ITC LTD, BRITANNIA INDUSTRIES LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

HINDUSTAN UNILEVER LTD.P/E 42.5x · ROE 21.5%

DABUR INDIA LTDP/E 34.7x · ROE 17.2%

ITC LTDP/E 16.6x · ROE 27.4%

BRITANNIA INDUSTRIES LTDP/E 44.1x · ROE 51.0%

What is its competitive advantage?Some evidence

ROCE of 73.1% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE73.1%

ROE78.2%

Peer median ROE27.4%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +293% while net margin moved +313% 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+293%

Margin effect+313%

DalalBaazaar Score

69/ 100

Good

Weighted across six categories. Every point is explained below.

✗ P/E of 41.5x is demanding — it needs sustained high growth to justify
✗ P/B of 17.83x is a steep premium to book

Quality vs. Valuation

Company Quality

85/ 100

Excellent

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

Valuation

48/ 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

41.5x

Sector Median

38.6x

median of 4 sector peers

🟡Against its sector it is priced broadly in line with the peer median of 38.6x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Fair

38.6x median of 4 peers · +8%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

41.5x

P/B

17.83x

EV/EBITDA

28.3x

PEG

0.27

Dividend Yield

0.06%

What's Good / What's Bad

🟢 What's Going Well6

Margins are improving
EBITDA margin is up from 7.2% to 21.5% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from 13.3% to 56.1%.
Return on capital is rising
ROCE has improved from 17.0% to 73.1%.
High return on capital employed
ROCE of 73.1% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Debt is rising
Total debt is up 63% over 3 years — worth checking what it funded.
Receivables growing faster than sales
Receivables are up 362% against revenue growth of 293% — customers are taking longer to pay.

Red Flags

2 items require attention · 2 high

🔴Debt has risen sharplyFinancial
Total debt is up 63% over 3 years, from ₹4 Cr to ₹6 Cr.
🔴Receivables growing faster than salesFinancial
Receivables up 362% against revenue up 293% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 73.1% 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 7.2% to 21.5%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹3 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
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?

Sales are being booked faster than collected
Receivables are up 362% against revenue up 293%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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
2 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 43% a year✓ 57.8% CAGR
Latest reported year was 65.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 19%✓ 21.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹3 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 70%✓ 73.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 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

7 good · 2 neutral · 2 weak

Market Cap

₹466 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

41.5x

Expensive

Expensive — verify against sector peers

P/B Ratio

17.83x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹10.55

Profitable

Profitable on a per-share basis

ROE

78.2%

Strong

Strong capital efficiency

ROCE

73.1%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.31x

Low

Conservative leverage

Revenue Growth (YoY)

65.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

260.7%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.06%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹0 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹438

ROA

33.4%

Good

Assets are working hard

Operating Margin

13.0%

Average

Average margins

Net Margin

14.0%

Good

Strong bottom-line conversion

Current Ratio

2.26

Comfortable

Healthy short-term liquidity

52W Range Position

87%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

425.6 / 355.6

Bullish alignment (short > long)

RSI (14)

51.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹20 Cr	₹34 Cr	₹47 Cr	₹77 Cr	+57.8%
EBITDA	₹1 Cr	₹2 Cr	₹6 Cr	₹17 Cr	+127.3%
EBITDA Margin	7.2%	5.1%	13.5%	21.5%	—
PAT (Net Profit)	₹1 Cr	₹0 Cr	₹3 Cr	₹11 Cr	+153.0%
EPS	₹0.65	₹0.26	₹2.92	—	—
ROE	13.3%	5.0%	35.7%	56.1%	—
ROCE	17.0%	14.2%	47.8%	73.1%	—
Total Debt	₹4 Cr	₹8 Cr	₹8 Cr	₹6 Cr	+17.8%
Free Cash Flow	-₹6 Cr	-₹3 Cr	₹2 Cr	₹3 Cr	—

🟢 Revenue has grown at 57.8% a year over 3 years.

🟢 EBITDA has grown at 127.3% a year over 3 years.

🟢 EBITDA Margin has risen from 7.2% to 21.5% over 3 years (+14.3 pts).

🟢 PAT (Net Profit) has grown at 153.0% a year over 3 years.

🟢 ROE has risen from 13.3% to 56.1% over 3 years (+42.8 pts).

🟢 ROCE has risen from 17.0% to 73.1% over 3 years (+56.2 pts).

🔴 Total Debt has grown at 17.8% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹6 Cr to ₹3 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹35 Cr

Total Liabilities

₹15 Cr

Total Debt

₹6 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹4 Cr

Capex

-₹2 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

75.4%

Corporate Actions

Dividend Rate

₹0.25

Ex-Dividend Date

23 Sept 2026

Peer Comparison

Company	P/E	ROE
HINDUSTAN UNILEVER LTD.	42.5x	21.5%
DABUR INDIA LTD	34.7x	17.2%
ITC LTD	16.6x	27.4%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%

Recent News

6 general

Recode Studios (BSE:544755) - Stock Analysis

Simply Wall Street, 05 Oct

RECODE Stock Price and Chart — BSE:RECODE

TradingView, 12 May

Recode Studios share price hits 5% upper circuit after bumper debut

Livemint, 12 May

RECODE STUDIOS LIMITED (RECODE) 52 Week High Streak: Second Straight Session Near Peak

Univest, 25 Sept

Rejected by Shark Tank, now Rs 350-crore cosmetics company: Recode Studios' journey from 'no deal' to...

Moneycontrol.com, 07 Sept

RECODE STUDIOS LIMITED Share Price - Live RECODE Stock Price & Chart

Upstox, 12 May

Watch Items

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

DalalBaazaar Thesis

🟢Business QualityStrong16.7/20

🟢Financial HealthStrong15.6/20

🟢GrowthStrong18.5/20

🟢ProfitabilityStrong12.9/15

🔴ValuationDemanding3.2/15

🔴RiskHigh2.3/10

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

This thesis breaks if

✓Revenue growth stays above 43% a year57.8% CAGR
✓EBITDA margin holds above 19%21.5%
✓Free cash flow remains positive₹3 Cr
✓Debt / EBITDA stays below 2x0.4x
✓ROCE stays above 70%73.1%