Shelter Pharma Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹45.82−₹2.36 (−4.90%)

DalalBaazaar Score

66 / 100

🟢 Good

Verdict

REASONABLE

Risk

High

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

In simple words: Strong business and financial position, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:47 pm

Understanding the Business

Company site ↗

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

What does this company do?

Shelter Pharma Limited manufactures and sells pharmaceutical products for human and veterinary healthcare businesses in India. The company offers tablets, liquids, ointments, syrups, capsules, and oil for human health care; and mineral mixture for veterinary health care.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees51

Annual revenue₹73 Cr

How does it make money?

Turns over ₹73 Cr a year. Of every ₹100 of sales, about ₹12 reaches shareholders as profit, with ₹18 left at the operating level before interest, tax and depreciation. Each of its 51 employees supports ₹1.43 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.43 Cr

Who are its competitors?

The closest listed comparisons in its industry are SUN PHARMACEUTICAL IND L, DR. REDDY S LABORATORIES, CIPLA LTD, DIVI S LABORATORIES LTD. 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?Some evidence

ROCE of 15.9% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

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 +102% while net margin moved -14% 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+102%

Margin effect-14%

DalalBaazaar Score

66/ 100

Good

Weighted across six categories. Every point is explained below.

• Beta of 0.92 — moves roughly with the market
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✓ Profits have been consistent from year to year
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

65/ 100

Good

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

Valuation

81/ 100

Cheap

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

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

8.9x

3Y Median

8.2x

40 monthly readings · mean 8.5x · range 4.3x–14.4x

Sector Median

33.3x

median of 4 sector peers

🟡Currently trading close to its 3y median of 8.2x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 73% below the peer median of 33.3x.

vs. its own history

Fair

8.2x median over 40 months · +8%

vs. sector peers

Cheap

33.3x median of 4 peers · -73%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

5.9x

PEG

0.44

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 55% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 35.8% to 11.8% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 46.0% to 15.9% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 3 high · 2 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.3 points, from 23.1% to 17.8%.
🔴Inventory building faster than salesFinancial
Inventory up 207% against revenue up 102% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹14 Cr in the latest year.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 44% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 55% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 73% 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?

Margins are being competed away
EBITDA margin has fallen from 23.1% to 17.8%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Returns on shareholder capital are falling
ROE has dropped from 35.8% to 11.8%. 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 20% a year✓ 26.5% CAGR
Latest reported year was 49.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 16%✓ 17.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹14 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 13%✓ 15.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 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

6 good · 3 neutral · 2 weak

Market Cap

₹77 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

8.9x

Cheap

Cheap against the generic band

P/B Ratio

0.99x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹5.16

Profitable

Profitable on a per-share basis

ROE

15.1%

Strong

Strong capital efficiency

ROCE

15.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.04x

Moderate

Moderate leverage

Revenue Growth (YoY)

49.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-11.1%

Falling

Profits are shrinking

Dividend Yield

0.76%

Modest

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

Free Cash Flow

-₹15 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

11.6%

Good

Assets are working hard

Operating Margin

15.7%

Good

Healthy core-business profitability

Net Margin

12.3%

Good

Strong bottom-line conversion

Current Ratio

7.86

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.92

Market-like

Moves roughly in line with the market

52W Range Position

69%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

40.8 / 34.4

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

63.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹36 Cr	₹40 Cr	₹51 Cr	₹73 Cr	+26.5%
EBITDA	₹8 Cr	₹9 Cr	₹10 Cr	₹13 Cr	+15.9%
EBITDA Margin	23.1%	22.6%	20.2%	17.8%	—
PAT (Net Profit)	₹5 Cr	₹6 Cr	₹7 Cr	₹9 Cr	+20.1%
EPS	₹4.49	₹5.36	₹6.26	—	—
ROE	35.8%	17.3%	16.9%	11.8%	—
ROCE	46.0%	23.3%	22.1%	15.9%	—
Total Debt	₹2 Cr	₹1 Cr	₹1 Cr	₹1 Cr	-23.4%
Free Cash Flow	-₹1 Cr	-₹3 Cr	₹3 Cr	-₹14 Cr	—

🟢 Revenue has grown at 26.5% a year over 3 years.

🟢 EBITDA has grown at 15.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 23.1% to 17.8% over 3 years (-5.3 pts).

🟢 PAT (Net Profit) has grown at 20.1% a year over 3 years.

🔴 ROE has fallen from 35.8% to 11.8% over 3 years (-24.0 pts).

🔴 ROCE has fallen from 46.0% to 15.9% over 3 years (-30.1 pts).

🟢 Total Debt has shrunk at 23.4% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹84 Cr

Total Liabilities

₹8 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

-₹12 Cr

Capex

-₹2 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

58.9%

Corporate Actions

Dividend Rate

₹0.35

Ex-Dividend Date

23 Sept 2025

Peer Comparison

Company	P/E	ROE
SUN PHARMACEUTICAL IND L	34.9x	14.5%
DR. REDDY S LABORATORIES	31.0x	8.8%
CIPLA LTD	31.8x	9.8%
DIVI S LABORATORIES LTD	83.0x	17.5%

Recent News

1 positive5 general

Top 14 Pharma Stocks To Buy In India October 2026

Samco, 17 Oct

Shelter Pharma Ltd Peer Comparison – Compare with Others

Value Research, 30 Aug

Shelter Pharma shareholders approve Vinita Gadhavi as independent director

scanx.trade, 29 Sept

Shelter Pharma Bags Export Order; Shares Hit Upper Circuit

HDFC Sky, 10 JulOrder win

🟢Potentially positiveAn order or contract win, which adds to future revenue. How much depends on its size against annual sales and on when it is executed.

Shelter Pharma Launches Folic Acid Supplement to Tap Into ₹12,000 Crore Nutrition Market

Sahi, 11 May

Shelter Pharma receives positive doctor reviews for healthcare products

scanx.trade, 22 Sept

Watch Items

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

DalalBaazaar Thesis

StrongGrowth · Valuation

MiddlingBusiness Quality · Financial Health · Profitability · Risk

Points for each in the Score ↑

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last. 3 high-severity red flags sit above this conclusion and should be read first.

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑