Solara Active Pharma Sciences Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹710.00+₹61.20 (+9.43%)

DalalBaazaar Score

39 / 100

🔴 Weak

Verdict

CAUTION

Risk

High

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

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. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 8:28 pm

Understanding the Business

Company site ↗

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

What does this company do?

Solara Active Pharma Sciences Limited manufactures, produces, processes, formulates, sells, imports, exports, merchandises, distributes, trades in, and deals in active pharmaceutical ingredients (API) in India, Asia Pacific, Europe, North America, South America, and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees1,669

Annual revenue₹1,330 Cr

How does it make money?

Turns over ₹1,330 Cr a year. Of every ₹100 of sales, about ₹-1 reaches shareholders as profit, with ₹13 left at the operating level before interest, tax and depreciation. Each of its 1,669 employees supports ₹79.7 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹79.7 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 4.8% 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?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -4% while net margin moved -65% 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-4%

Margin effect-65%

DalalBaazaar Score

39/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 1.2% a year
✗ Profit fell 1472.2% in the latest year

Quality vs. Valuation

Company Quality

36/ 100

Weak

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.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

92.1x

1.3Y Median

4112.1x

16 monthly readings · mean 4094.4x · range 3039.6x–5181.4x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 98% below its 1.3y median of 4112.1x. 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 176% above the peer median of 33.3x.

vs. its own history

Cheap

4112.1x median over 16 months · -98%

vs. sector peers

Expensive

33.3x median of 4 peers · +176%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

23.4x

PEG

—

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 10.8% to 13.2% over 3 years.
Debt is being paid down
Total debt is down 32% over 3 years.
Cash generation is improving
Free cash flow is up 123% over 3 years.
Return on capital is rising
ROCE has improved from 2.1% to 4.8%.

🔴 What Needs Attention0

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

Red Flags

3 items require attention · 2 high · 1 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 0.9x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹7 Cr in the latest reported year.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 23% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 10.8% to 13.2%. 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 32% 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 98% 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.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹100 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 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.
A premium to the sector to defend
It trades 176% 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.
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

1EBITDA margin holds above 11%✓ 13.2%
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.
3Interest cover stays above 3x✗ 0.9x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹100 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ 4.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 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

3 good · 3 neutral · 5 weak

Market Cap

₹3,426 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

92.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

2.38x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹7.71

Profitable

Profitable on a per-share basis

ROE

2.7%

Weak

Weak capital efficiency

ROCE

4.8%

Weak

Low return on total capital employed

Debt/Equity

0.41x

Low

Conservative leverage

Revenue Growth (YoY)

33.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-1472.2%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹44 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

22.6x

Improving

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

ROA

3.4%

Average

Average asset productivity

Operating Margin

12.0%

Average

Average margins

Net Margin

2.4%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.32

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.92

Market-like

Moves roughly in line with the market

52W Range Position

82%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

700.2 / 649.0

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

40.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,379 Cr	₹1,238 Cr	₹1,241 Cr	₹1,330 Cr	-1.2%
EBITDA	₹149 Cr	-₹96 Cr	₹203 Cr	₹175 Cr	+5.5%
EBITDA Margin	10.8%	-7.7%	16.3%	13.2%	—
PAT (Net Profit)	-₹22 Cr	-₹567 Cr	₹1 Cr	-₹7 Cr	—
EPS	₹-5.68	₹-148.51	₹0.14	₹-1.68	—
ROE	-1.5%	-60.8%	0.0%	-0.6%	—
ROCE	2.1%	-35.1%	8.1%	4.8%	—
Total Debt	₹1,013 Cr	₹1,012 Cr	₹796 Cr	₹687 Cr	-12.2%
Free Cash Flow	₹45 Cr	₹68 Cr	₹173 Cr	₹100 Cr	+30.6%

🟡 Revenue has been broadly flat over 3 years (-1.2% a year).

🟢 EBITDA has grown at 5.5% a year over 3 years.

🟢 EBITDA Margin has risen from 10.8% to 13.2% over 3 years (+2.4 pts).

🟡 ROE has held roughly flat at -0.6% over 3 years.

🟢 ROCE has risen from 2.1% to 4.8% over 3 years (+2.7 pts).

🟢 Total Debt has shrunk at 12.2% a year over 3 years.

🟢 Free Cash Flow has grown at 30.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,333 Cr

Total Liabilities

₹1,077 Cr

Cash & Equivalents

₹4 Cr

Operating Cash Flow

₹153 Cr

Capex

-₹53 Cr

Shareholding (proxy)

Institutional Holding

16.6%

Insider Holding

52.2%

Corporate Actions

Ex-Dividend Date

18 Aug 2021

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

5 mixed1 general

Solara Active Pharma share price zooms 16% on Q2 turnaround; H1 net up 103x

Business Standard, 16 OctResults

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

Solara Active Pharma shares rally 16% after posting net profit of ₹28 crore in Q2 FY27; check all numbers

Upstox, 16 OctPrice 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.

Solara Active Pharma shares jump nearly 18% from day’s low after Q2 turnaround

CNBC TV18, 16 OctPrice 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.

Solara Active Pharma Sciences (NSEI:SOLARAPP1) - Stock Analysis

Simply Wall Street, 28 Jun

Solara Active Pharma Q2FY27 Results: EBITDA doubles 118% YoY to ₹76.9 crore

scanx.trade, 16 OctResults

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

Why Solara Active Pharma Sciences shares surged 18% today

Business Today, 15 MayPrice 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.

Watch Items

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

DalalBaazaar Thesis

MiddlingBusiness Quality · Financial Health · Valuation

WeakGrowth · Profitability · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 2 high-severity red flags sit above this conclusion and should be read first.

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑