Source Natural Foods and Herbal Supplements Limited

Consumer Defensive — Packaged Foods · BSE

₹112.00+₹1.00 (+0.90%)

DalalBaazaar Score

62 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

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

In simple words: Strong business and financial position, with modest growth. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 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

Company site ↗

The 60-second version of Source Natural Foods and Herbal Supplements Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Source Natural Foods and Herbal Supplements Limited manufactures and sells ayurveda, health and dietary supplements, and food products in India. It operates through Ayurveda, Energy, and Other segments.

IndustryPackaged Foods

SectorConsumer Defensive

Employees53

Annual revenue₹70 Cr

How does it make money?

Turns over ₹70 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation. Each of its 53 employees supports ₹1.33 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin8.4%

Net margin4.8%

Revenue / employee₹1.33 Cr

Who are its competitors?

The closest listed comparisons in its industry are NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD, TATA CONSUMER PRODUCT LTD, DABUR INDIA LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

NESTLE INDIA LIMITEDP/E 59.8x · ROE 79.9%

BRITANNIA INDUSTRIES LTDP/E 44.1x · ROE 51.0%

TATA CONSUMER PRODUCT LTDP/E 59.3x · ROE 7.5%

DABUR INDIA LTDP/E 34.7x · ROE 17.2%

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 21.0%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 13.2% against a peer median of 51.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE21.0%

ROE13.2%

Peer median ROE51.0%

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 +256% while net margin moved -55% 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+256%

Margin effect-55%

DalalBaazaar Score

62/ 100

Good

Weighted across six categories. Every point is explained below.

• ROE of 13.2% is moderate

Quality vs. Valuation

Company Quality

62/ 100

Average

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

Valuation

74/ 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

20.9x

3Y Median

29.9x

40 monthly readings · mean 40.9x · range 20.5x–91.7x

Sector Median

51.7x

median of 4 sector peers

🟢Current valuation is approximately 30% below its 3y median of 29.9x. 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 60% below the peer median of 51.7x.

vs. its own history

Cheap

29.9x median over 40 months · -30%

vs. sector peers

Cheap

51.7x median of 4 peers · -60%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

20.9x

P/B

2.80x

EV/EBITDA

13.1x

PEG

1.23

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well4

Return on capital is rising
ROCE has improved from 16.5% to 21.0%.
High return on capital employed
ROCE of 21.0% is the mark of a business that converts capital into profit efficiently.
Valuation below its historical average
At 20.9x the stock trades 30% below its own median of 29.9x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 18.1% to 8.4% over 3 years.
Debt is rising
Total debt is up 33039% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 33039% over 3 years, from ₹0 Cr to ₹8 Cr.
🔴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 9.7 points, from 18.1% to 8.4%.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹3 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 21.0% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Priced below its own history
The stock trades 30% 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 60% 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 18.1% to 8.4%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
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 40% a year✓ 52.7% CAGR
Latest reported year was 76.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 6%✓ 8.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹3 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 18%✓ 21.0%
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

4 good · 6 neutral · 1 weak

Market Cap

₹72 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

20.9x

Fair

Fairly valued against the generic band

P/B Ratio

2.80x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹5.36

Profitable

Profitable on a per-share basis

ROE

13.2%

Moderate

Moderate capital efficiency

ROCE

21.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.30x

Low

Conservative leverage

Revenue Growth (YoY)

76.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

8.2%

Modest

Slow profit growth

Dividend Yield

None

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

Free Cash Flow

-₹3 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹112

Operating Margin

4.8%

Weak

Thin margins leave little room for error

Net Margin

4.3%

Average

Average bottom-line conversion

Current Ratio

2.18

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.53

Defensive

Steadier than the market

52W Range Position

21%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

110.9 / 109.8

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

57.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹20 Cr	₹27 Cr	₹45 Cr	₹70 Cr	+52.7%
EBITDA	₹4 Cr	₹4 Cr	₹5 Cr	₹6 Cr	+18.2%
EBITDA Margin	18.1%	16.4%	11.4%	8.4%	—
PAT (Net Profit)	₹2 Cr	₹2 Cr	₹3 Cr	₹3 Cr	+17.0%
EPS	₹3.3	₹2.7	₹4.51	₹5.28	+17.0%
ROE	12.0%	8.9%	13.0%	13.2%	—
ROCE	16.5%	16.8%	17.9%	21.0%	—
Total Debt	₹0 Cr	₹1 Cr	₹7 Cr	₹8 Cr	+592.0%
Free Cash Flow	₹3 Cr	₹3 Cr	-₹0 Cr	-₹3 Cr	—

🟢 Revenue has grown at 52.7% a year over 3 years.

🟢 EBITDA has grown at 18.2% a year over 3 years.

🔴 EBITDA Margin has fallen from 18.1% to 8.4% over 3 years (-9.7 pts).

🟢 PAT (Net Profit) has grown at 17.0% a year over 3 years.

🟢 EPS has grown at 17.0% a year over 3 years.

🟢 ROE has risen from 12.0% to 13.2% over 3 years (+1.2 pts).

🟢 ROCE has risen from 16.5% to 21.0% over 3 years (+4.5 pts).

🔴 Total Debt has grown at 592.0% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹3 Cr to -₹3 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹41 Cr

Total Liabilities

₹15 Cr

Total Debt

₹8 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

-₹2 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

79.1%

Corporate Actions

Ex-Dividend Date

12 Sept 2019

Peer Comparison

Company	P/E	ROE
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%
TATA CONSUMER PRODUCT LTD	59.3x	7.5%
DABUR INDIA LTD	34.7x	17.2%

Recent News

1 positive5 general

Source Natural Foods and Herbal Supplements Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

Source Natural Foods schedules 31st AGM for September 30, 2026

scanx.trade, 10 Sept

Protein Supplements Market Size, Share & Growth [2026-2034]

Fortune Business Insights, 28 Sept

Source Natural Foods and Herbal Supplements Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Food as Medicine Market Size, Share, Growth, and Forecast - 2031

MarketsandMarkets, 30 Jun

Dhunseri Ventures consolidated net profit rises 144.58% in the June 2026 quarter

Business Standard, 10 AugResults

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

Watch Items

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

DalalBaazaar Thesis

🟡Business QualityAdequate12.4/20

🟢Financial HealthStrong13/20

🟢GrowthStrong14.7/20

🔴ProfitabilityWeak6.5/15

🟢ValuationAttractive10.7/15

🔴RiskHigh4.4/10

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

✓Revenue growth stays above 40% a year52.7% CAGR
✓EBITDA margin holds above 6%8.4%
✗Free cash flow remains positive-₹3 Cr
✓Debt / EBITDA stays below 2x1.3x
✓ROCE stays above 18%21.0%