Smruthi Organics Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹147.00−₹1.95 (−1.31%)

DalalBaazaar Score

52 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Low

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

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. The direction of profits is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

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

What does this company do?

Smruthi Organics Limited manufactures and markets active pharmaceutical ingredient (API) products to India. The company operates through Bulk Drugs and Drugs Intermediates (API), and Formulation segments.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees261

Annual revenue₹101 Cr

How does it make money?

Turns over ₹101 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 261 employees supports ₹38.6 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹38.6 lakh

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?Little sign of one

Returns on capital of 7.1% 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 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 -28% while net margin moved +16% 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-28%

Margin effect+16%

DalalBaazaar Score

52/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 10.5% a year
✗ Profit has declined at 6.0% a year
✗ Profit fell 3.9% in the latest year

Quality vs. Valuation

Company Quality

47/ 100

Average

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

Valuation

75/ 100

Cheap

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

22.5x

3Y Median

42.8x

40 monthly readings · mean 42.5x · range 31.0x–53.7x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 47% below its 3y median of 42.8x. 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 32% below the peer median of 33.3x.

vs. its own history

Cheap

42.8x median over 40 months · -47%

vs. sector peers

Cheap

33.3x median of 4 peers · -32%

vs. generic bands

Fair

15x–35x

EV/EBITDA

14.3x

PEG

—

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 6.7% to 12.2% over 3 years.
Cash generation is improving
Free cash flow is up 423% over 3 years.
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 Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

1 item require attention · 1 high

🔴Debt has risen sharplyFinancial
Total debt is up 51% over 3 years, from ₹6 Cr to ₹9 Cr.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 6.7% to 12.2%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 47% 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 32% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹14 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?

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 10%✓ 12.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✓ ₹14 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.7x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 8%✗ 7.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Interest cover stays above 4x✓ 6.9x
How much operating profit can fall before interest stops being comfortably covered.

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

4 good · 4 neutral · 3 weak

Market Cap

₹168 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

22.5x

Fair

Fairly valued against the generic band

P/B Ratio

2.29x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹6.52

Profitable

Profitable on a per-share basis

ROE

4.7%

Weak

Weak capital efficiency

ROCE

7.1%

Weak

Low return on total capital employed

Debt/Equity

0.12x

Low

Conservative leverage

Revenue Growth (YoY)

54.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-3.9%

Falling

Profits are shrinking

Dividend Yield

1.02%

Modest

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

Free Cash Flow

₹14 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

14.4%

Average

Average margins

Net Margin

6.6%

Average

Average bottom-line conversion

Current Ratio

1.98

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.08

Defensive

Steadier than the market

52W Range Position

65%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

154.6 / 145.1

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

32.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹141 Cr	₹127 Cr	₹125 Cr	₹101 Cr	-10.5%
EBITDA	₹9 Cr	₹12 Cr	₹12 Cr	₹12 Cr	+9.1%
EBITDA Margin	6.7%	9.2%	9.5%	12.2%	—
PAT (Net Profit)	₹4 Cr	₹4 Cr	₹4 Cr	₹3 Cr	-6.0%
EPS	₹3.61	₹3.14	₹3.11	₹2.99	-6.1%
ROE	6.1%	5.2%	5.0%	4.7%	—
ROCE	6.9%	7.9%	7.9%	7.1%	—
Total Debt	₹6 Cr	₹12 Cr	₹17 Cr	₹9 Cr	+14.7%
Free Cash Flow	₹3 Cr	-₹4 Cr	-₹2 Cr	₹14 Cr	+73.5%

🔴 Revenue has shrunk at 10.5% a year over 3 years.

🟢 EBITDA has grown at 9.1% a year over 3 years.

🟢 EBITDA Margin has risen from 6.7% to 12.2% over 3 years (+5.4 pts).

🔴 PAT (Net Profit) has shrunk at 6.0% a year over 3 years.

🔴 EPS has shrunk at 6.1% a year over 3 years.

🔴 ROE has fallen from 6.1% to 4.7% over 3 years (-1.4 pts).

🟡 ROCE has held roughly flat at 7.1% over 3 years.

🔴 Total Debt has grown at 14.7% a year over 3 years.

🟢 Free Cash Flow has grown at 73.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹104 Cr

Total Liabilities

₹30 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

₹22 Cr

Capex

-₹8 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

66.9%

Corporate Actions

Dividend Rate

₹1.5

Ex-Dividend Date

31 Jul 2026

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

2 mixed4 general

Compare with

Equitymaster, 16 Oct

Smruthi Organics Share Price rises 8.72%: valuation view

Univest, 03 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.

Smruthi Organics Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

Smruthi Organics Receives CEP Certificate from EDQM for Amlodipine Besilate

scanx.trade, 04 Mar

Smruthi Organics Q1 FY27 Results: Revenue Rs 29 Cr, PAT Rs 2 Cr and Key Highlights

Univest, 11 AugResults

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

Smruthi Organics Limited Share Price

Upstox, 26 Mar

Watch Items

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

DalalBaazaar Thesis

StrongFinancial Health · Valuation

MiddlingBusiness Quality · Risk

WeakGrowth · Profitability

Points for each in the Score ↑

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. 1 high-severity red flag sits above this conclusion and should be read first.

1 of 5 tripwires tripped — ROCE stays above 8% · see Key things to watch ↑