Sangal Papers Limited

Basic Materials — Paper & Paper Products · BSE

₹197.00+₹16.80 (+9.32%)

DalalBaazaar Score

42 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

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

In simple words: The business is earning a fairly low return on the money invested in it, 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, 8:27 pm

Understanding the Business

Company site ↗

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

What does this company do?

Sangal Papers Limited engages in the manufacturing of paper in India. It offers envelope, ribbed, packing and lamination, scrapbook/craft, MG color sheets and posters, writing and printing, stationery, and newsprint papers.

IndustryPaper & Paper Products

SectorBasic Materials

Employees213

Annual revenue₹179 Cr

How does it make money?

Turns over ₹179 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹5 left at the operating level before interest, tax and depreciation. Each of its 213 employees supports ₹83.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹83.9 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, ULTRATECH CEMENT LIMITED, ASIAN PAINTS 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 8.4% 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 ROE22.3%

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 -21% while net margin moved -12% 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-12%

DalalBaazaar Score

42/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 7.5% a year
✗ Profit has declined at 11.2% a year

Quality vs. Valuation

Company Quality

32/ 100

Weak

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

Valuation

88/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

6.7x

3Y Median

9.3x

40 monthly readings · mean 9.4x · range 6.0x–15.1x

Sector Median

28.7x

median of 4 sector peers

🟢Current valuation is approximately 28% below its 3y median of 9.3x. 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 77% below the peer median of 28.7x.

vs. its own history

Cheap

9.3x median over 40 months · -28%

vs. sector peers

Cheap

28.7x median of 4 peers · -77%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

6.8x

PEG

—

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 8.7% to 5.1% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 12.6% to 8.4% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 3 watch

🟡Debt is increasingFinancial
Total debt is up 26% over 3 years.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹1 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 30% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 28% 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.
Cheaper than its peers
It trades 77% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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?

The debt load needs earnings to hold up
Debt is 3.9x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Returns on shareholder capital are falling
ROE has dropped from 8.7% to 5.1%. 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.

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

1EBITDA margin holds above 3%✓ 4.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.9x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹1 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 2.5x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 8%✓ 8.4%
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

5 good · 4 neutral · 2 weak

Market Cap

₹26 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

6.7x

Cheap

Cheap against the generic band

P/B Ratio

0.55x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹29.57

Profitable

Profitable on a per-share basis

ROE

5.1%

Weak

Weak capital efficiency

ROCE

8.4%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.67x

Moderate

Moderate leverage

Revenue Growth (YoY)

17.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

233.3%

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

-₹1 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

7.7%

Average

Average margins

Net Margin

2.3%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.50

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.15

Defensive

Steadier than the market

52W Range Position

63%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

190.0 / 189.8

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

55.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹226 Cr	₹190 Cr	₹180 Cr	₹179 Cr	-7.5%
EBITDA	₹8 Cr	₹8 Cr	₹9 Cr	₹8 Cr	-1.4%
EBITDA Margin	3.7%	4.1%	4.9%	4.5%	—
PAT (Net Profit)	₹3 Cr	₹2 Cr	₹3 Cr	₹2 Cr	-11.2%
EPS	₹25.9	₹18.9	₹21.62	₹18.11	-11.2%
ROE	8.7%	5.9%	6.4%	5.1%	—
ROCE	12.6%	10.5%	11.0%	8.4%	—
Total Debt	₹25 Cr	₹26 Cr	₹27 Cr	₹31 Cr	+8.0%
Free Cash Flow	-₹4 Cr	₹1 Cr	₹1 Cr	-₹1 Cr	—

🔴 Revenue has shrunk at 7.5% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (-1.4% a year).

🟡 EBITDA Margin has held roughly flat at 4.5% over 3 years.

🔴 PAT (Net Profit) has shrunk at 11.2% a year over 3 years.

🔴 EPS has shrunk at 11.2% a year over 3 years.

🔴 ROE has fallen from 8.7% to 5.1% over 3 years (-3.6 pts).

🔴 ROCE has fallen from 12.6% to 8.4% over 3 years (-4.2 pts).

🔴 Total Debt has grown at 8.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹99 Cr

Total Liabilities

₹52 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

₹11 Cr

Capex

-₹12 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

49.1%

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
ULTRATECH CEMENT LIMITED	37.6x	11.1%
ASIAN PAINTS LIMITED	46.9x	22.3%

Recent News

1 positive1 mixed4 general

Sangal Papers Ltd. Financials – Balance Sheet, Profit & Loss, Cash Flow

Value Research, 30 Aug

Sangal Papers passes all AGM resolutions including director re-appointments

scanx.trade, 23 Sept

Sangal Papers FY26 profit rises 16.2% to ₹236.74 crore

scanx.trade, 29 MayResults

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

JK Paper, Emami Paper Mills & West Coast Paper Mills Share Price Jump Up To 17% | Stock Market Today

Samco, 25 AugPrice 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.

From JK Paper to West Coast Paper Mills... Paper stocks surge up to 17%. Here's why

Livemint, 25 Aug

Best Paper Stocks in India For 2025

Univest, 11 Jun

Watch Items

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

DalalBaazaar Thesis

StrongValuation

MiddlingFinancial Health · Risk

WeakBusiness Quality · Growth · Profitability

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low.

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