Sotac Pharmaceuticals Limited

Sector n/a · NSE

₹154.05−₹8.10 (−5.00%)

DalalBaazaar Score

51 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

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

In simple words: Strong business and financial position, 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, 6:08 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

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

How does it make money?

Turns over ₹101 Cr a year. Of every ₹100 of sales, about ₹6 reaches shareholders as profit, with ₹18 left at the operating level before interest, tax and depreciation.

EBITDA margin17.8%

Net margin5.7%

What is its competitive advantage?Some evidence

ROCE of 16.9% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE16.9%

ROE9.8%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +31% while net margin moved +53% 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+31%

Margin effect+53%

DalalBaazaar Score

51/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal

Quality vs. Valuation

Company Quality

55/ 100

Average

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

Valuation

60/ 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.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

No P/E available

P/E (Trailing)

—

P/B

—

EV/EBITDA

11.5x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 9.7% to 17.8% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention5

Debt is rising
Total debt is up 71% over 3 years — worth checking what it funded.
Return on equity is falling
ROE has dropped from 14.8% to 9.8% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 20.9% to 16.9% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 124% against revenue growth of 31% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 98% against revenue growth of 31% — stock may not be moving.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 71% over 3 years, from ₹22 Cr to ₹38 Cr.
🔴Receivables growing faster than salesFinancial
Receivables up 124% against revenue up 31% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 98% against revenue up 31% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 6.0x to 3.2x.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 9.7% to 17.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
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?

Sales are being booked faster than collected
Receivables are up 124% against revenue up 31%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 14.8% to 9.8%. 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

1EBITDA margin holds above 16%✓ 17.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 2.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Interest cover stays above 3x✓ 3.2x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 7% a year✓ 9.3% CAGR
Latest reported year was 1.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹9 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

5 / 9 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
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

2 good · 8 neutral · 1 weak

Market Cap

₹170 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not available

No data

Source didn't return this field

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

Not available

No data

Source didn't return this field

ROE

9.8%

Moderate

Moderate capital efficiency

ROCE

16.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.64x

Moderate

Moderate leverage

Revenue Growth (YoY)

1.5%

Modest

Modest growth

Profit Growth (YoY)

-28.2%

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

₹9 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹154.05

Gross Margin

36.0%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

5.7%

Average

Average bottom-line conversion

Current Ratio

1.33

Comfortable

Healthy short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

90.1 / 90.4

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

100.0

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹77 Cr	₹104 Cr	₹100 Cr	₹101 Cr	+9.3%
EBITDA	₹8 Cr	₹9 Cr	₹17 Cr	₹18 Cr	+33.8%
EBITDA Margin	9.7%	8.3%	17.2%	17.8%	—
PAT (Net Profit)	₹3 Cr	₹4 Cr	₹8 Cr	₹6 Cr	+26.1%
EPS	₹2.61	₹3.9	₹7.26	—	—
ROE	14.8%	9.5%	15.1%	9.8%	—
ROCE	20.9%	9.0%	18.3%	16.9%	—
Total Debt	₹22 Cr	₹25 Cr	₹44 Cr	₹38 Cr	+19.5%
Free Cash Flow	-₹1 Cr	-₹34 Cr	-₹21 Cr	₹9 Cr	—

🟢 Revenue has grown at 9.3% a year over 3 years.

🟢 EBITDA has grown at 33.8% a year over 3 years.

🟢 EBITDA Margin has risen from 9.7% to 17.8% over 3 years (+8.1 pts).

🟢 PAT (Net Profit) has grown at 26.1% a year over 3 years.

🔴 ROE has fallen from 14.8% to 9.8% over 3 years (-5.0 pts).

🔴 ROCE has fallen from 20.9% to 16.9% over 3 years (-4.0 pts).

🔴 Total Debt has grown at 19.5% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹1 Cr to ₹9 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹133 Cr

Total Liabilities

₹69 Cr

Total Debt

₹38 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹17 Cr

Capex

-₹8 Cr

Recent News

6 general

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Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Sector/industry classification unavailable — verify manually for peer comparison.
3 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

🟡Business QualityAdequate10.3/20

🟡Financial HealthAdequate12.4/20

🟢GrowthStrong13.3/20

🔴ProfitabilityWeak5.8/15

🟡ValuationFair7.5/15

🔴RiskHigh1.8/10

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. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 16%17.8%
✗Debt / EBITDA stays below 2x2.1x
✓Interest cover stays above 3x3.2x
✓Revenue growth stays above 7% a year9.3% CAGR
✓Free cash flow remains positive₹9 Cr