Sai Life Sciences Limited

Healthcare — Diagnostics & Research · NSE

₹1,388.90−₹5.80 (−0.42%)

DalalBaazaar Score

68 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

Driven by negative free cash flow, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, 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, 6:07 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

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

What does this company do?

Sai Life Sciences Limited operates as a contract research, development, and manufacturing organization (CRDMO) in India and internationally. It offers medicinal chemistry, pharmacokinetics, clinical and commercial manufacturing, and process development services.

IndustryDiagnostics & Research

SectorHealthcare

Employees5,224

Annual revenue₹2,137 Cr

How does it make money?

Turns over ₹2,137 Cr a year. Of every ₹100 of sales, about ₹16 reaches shareholders as profit, with ₹32 left at the operating level before interest, tax and depreciation. Each of its 5,224 employees supports ₹40.9 lakh of revenue a year, the signature of a people-led business.

EBITDA margin31.9%

Net margin16.3%

Revenue / employee₹40.9 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.

SUN PHARMACEUTICAL IND LP/E 34.9x · ROE 14.5%

CIPLA LTDP/E 31.8x · ROE 9.8%

DR. REDDY S LABORATORIESP/E 31.0x · ROE 8.8%

APOLLO HOSPITALS ENTER. LP/E 54.3x · ROE 22.0%

What is its competitive advantage?Some evidence

ROCE of 18.1% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE18.1%

ROE14.0%

Peer median ROE14.5%

What is the outlook?

4 analysts covering the stock expect revenue to grow about 20.8% and earnings to grow about 26.2% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+20.8%

Est. earnings growth+26.2%

Analysts4

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +79% while net margin moved +1857% 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+79%

Margin effect+1857%

DalalBaazaar Score

68/ 100

Good

Weighted across six categories. Every point is explained below.

✗ 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

77/ 100

Good

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

Valuation

49/ 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

82.0x

2Y Median

124.2x

24 monthly readings · mean 134.3x · range 84.5x–203.1x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 34% below its 2y median of 124.2x. 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 146% above the peer median of 33.3x.

vs. its own history

Cheap

124.2x median over 24 months · -34%

vs. sector peers

Expensive

33.3x median of 4 peers · +146%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

82.0x

P/B

11.82x

EV/EBITDA

43.6x

PEG

0.36

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well7

Margins are improving
EBITDA margin is up from 16.7% to 31.9% over 3 years.
Debt is being paid down
Total debt is down 69% over 3 years.
Return on equity is rising
ROE has improved from 1.1% to 14.0%.
Return on capital is rising
ROCE has improved from 6.5% to 18.1%.
Valuation below its historical average
At 82.0x the stock trades 34% below its own median of 124.2x.
Very low debt
Debt/Equity of 0.12x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Free cash flow is negative
The business is not currently covering its capital spending from operations.

Red Flags

1 item require attention · 1 watch

🟡Free cash flow is negativeFinancial
Free cash flow was -₹84 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 18.1% 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 16.7% to 31.9%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 69% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 34% 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.
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?

A premium to the sector to defend
It trades 146% above the peer median. That premium needs a reason that persists, or it closes.
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.

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

1Revenue growth stays above 16% a year✓ 21.3% CAGR
Latest reported year was 11.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 30%✓ 31.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹84 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 15%✓ 18.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 12 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
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 3 neutral · 3 weak

Market Cap

₹29,510 Cr

Mid Cap

Mid-sized — more growth headroom, but sharper swings than large caps

P/E (Trailing)

82.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

11.82x

Rich

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

EPS (TTM)

₹16.93

Profitable

Profitable on a per-share basis

ROE

14.0%

Moderate

Moderate capital efficiency

ROCE

18.1%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.12x

Low

Conservative leverage

Revenue Growth (YoY)

11.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

20.8%

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

-₹84 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹1,388.9

P/E (Forward)

55.5x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

18.4%

Good

Healthy core-business profitability

Net Margin

16.1%

Good

Strong bottom-line conversion

Current Ratio

1.69

Comfortable

Healthy short-term liquidity

52W Range Position

66%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1529.4 / 1511.3

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

19.9

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,197 Cr	₹1,456 Cr	₹1,660 Cr	₹2,137 Cr	+21.3%
EBITDA	₹200 Cr	₹328 Cr	₹446 Cr	₹681 Cr	+50.4%
EBITDA Margin	16.7%	22.5%	26.9%	31.9%	—
PAT (Net Profit)	₹10 Cr	₹83 Cr	₹170 Cr	₹349 Cr	+226.9%
EPS	₹0.48	₹3.98	₹8.61	₹16.43	+224.6%
ROE	1.1%	8.5%	8.0%	14.0%	—
ROCE	6.5%	12.7%	12.5%	18.1%	—
Total Debt	₹932 Cr	₹928 Cr	₹352 Cr	₹288 Cr	-32.4%
Free Cash Flow	₹106 Cr	₹81 Cr	-₹55 Cr	-₹84 Cr	—

🟢 Revenue has grown at 21.3% a year over 3 years.

🟢 EBITDA has grown at 50.4% a year over 3 years.

🟢 EBITDA Margin has risen from 16.7% to 31.9% over 3 years (+15.1 pts).

🟢 PAT (Net Profit) has grown at 226.9% a year over 3 years.

🟢 EPS has grown at 224.6% a year over 3 years.

🟢 ROE has risen from 1.1% to 14.0% over 3 years (+12.9 pts).

🟢 ROCE has risen from 6.5% to 18.1% over 3 years (+11.6 pts).

🟢 Total Debt has shrunk at 32.4% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹106 Cr to -₹84 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,626 Cr

Total Liabilities

₹1,142 Cr

Total Debt

₹288 Cr

Cash & Equivalents

₹82 Cr

Operating Cash Flow

₹509 Cr

Capex

-₹593 Cr

Shareholding (proxy)

Institutional Holding

43.6%

Insider Holding

36.3%

Analyst Consensus

Recommendations

6 Buy · 1 Hold · 0 Sell

Target Price (Mean)

₹1,552.67

+11.8% vs CMP

Target Range

₹1,450 – ₹1,610

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

1 positive2 mixed3 general

Sai Life Sciences Ltd Peer Comparison – Compare with Others

Value Research, 30 Aug

Sai Life Sciences (NSEI:SAILIFE) Stock Forecast & Analyst Predictions

Simply Wall Street, 11 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Jefferies lists 6 factors that will shape CRDMO winners; Divi’s Labs, Sai Life, Laurus, Anthem among stock

The Economic Times, 13 Oct

Sai Life Sciences Ltd up for third consecutive session

Business Standard, 12 Aug

Sai Life Sciences has a growing pipeline. Can earnings catch up?

The Indian Express, 24 SeptResults

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

Sai Life Sciences Share Price Tanks Over 6% Even As Q1 Profit Rises 21%; Revenue Rises To Rs 554 Crore

NDTV Profit, 07 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

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

🟢Business QualityStrong17.1/20

🟢Financial HealthStrong15/20

🟢GrowthStrong14.9/20

🟢ProfitabilityStrong10.7/15

🔴ValuationDemanding6.7/15

🔴RiskHigh3.9/10

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.

This thesis breaks if

✓Revenue growth stays above 16% a year21.3% CAGR
✓EBITDA margin holds above 30%31.9%
✗Free cash flow remains positive-₹84 Cr
✓Debt / EBITDA stays below 2x0.4x
✓ROCE stays above 15%18.1%