Speciality Medicines Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹169.95₹0.00 (0.00%)

DalalBaazaar Score

65 / 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 both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:04 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 Speciality Medicines Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Speciality Medicines Limited engages in the manufacturing, marketing, and distribution of finished formulations of specialty pharmaceutical products in India and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees20

Annual revenue₹75 Cr

How does it make money?

Turns over ₹75 Cr a year. Of every ₹100 of sales, about ₹17 reaches shareholders as profit, with ₹19 left at the operating level before interest, tax and depreciation. Each of its 20 employees supports ₹3.76 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin18.5%

Net margin17.3%

Revenue / employee₹3.76 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.

SUN PHARMACEUTICAL IND LP/E 34.9x · ROE 14.5%

DR. REDDY S LABORATORIESP/E 31.0x · ROE 8.8%

CIPLA LTDP/E 31.8x · ROE 9.8%

DIVI S LABORATORIES LTDP/E 83.0x · ROE 17.5%

What is its competitive advantage?Some evidence

ROCE of 18.0% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE18.0%

ROE25.6%

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 +225% while net margin moved +137% 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+225%

Margin effect+137%

DalalBaazaar Score

65/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

68/ 100

Good

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

Valuation

79/ 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

11.4x

Sector Median

33.3x

median of 4 sector peers

🟢Against its sector it trades 66% below the peer median of 33.3x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

33.3x median of 4 peers · -66%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

11.4x

P/B

2.10x

EV/EBITDA

9.4x

PEG

0.12

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 15.5% to 18.5% over 3 years.
Very low debt
Debt/Equity of 0.13x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention6

Debt is rising
Total debt is up 82% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 28.6% to 18.3% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 46.5% to 18.0% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 381% against revenue growth of 225% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 516% against revenue growth of 225% — stock may not be moving.

Red Flags

4 items require attention · 4 high

🔴Debt has risen sharplyFinancial
Total debt is up 82% over 3 years, from ₹4 Cr to ₹7 Cr.
🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Receivables growing faster than salesFinancial
Receivables up 381% against revenue up 225% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 516% against revenue up 225% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 18.0% 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.
Margin expansion has further to run
EBITDA margin has risen from 15.5% to 18.5%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 66% 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?

Sales are being booked faster than collected
Receivables are up 381% against revenue up 225%. 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 28.6% to 18.3%. 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.
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
4 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 36% a year✓ 48.1% CAGR
Latest reported year was 29.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 17%✓ 18.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹1 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 15%✓ 18.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

10 / 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

7 good · 3 neutral · 1 weak

Market Cap

₹149 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

11.4x

Cheap

Cheap against the generic band

P/B Ratio

2.10x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹14.9

Profitable

Profitable on a per-share basis

ROE

25.6%

Strong

Strong capital efficiency

ROCE

18.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.13x

Low

Conservative leverage

Revenue Growth (YoY)

29.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

81.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

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

Free Cash Flow

-₹8 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹169.95

ROA

12.5%

Good

Assets are working hard

Operating Margin

27.1%

Good

Healthy core-business profitability

Net Margin

17.3%

Good

Strong bottom-line conversion

Current Ratio

4.71

Comfortable

Healthy short-term liquidity

52W Range Position

19%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

162.8 / 159.0

Bullish alignment (short > long)

RSI (14)

54.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹23 Cr	₹28 Cr	₹58 Cr	₹75 Cr	+48.1%
EBITDA	₹4 Cr	₹5 Cr	₹9 Cr	₹14 Cr	+57.0%
EBITDA Margin	15.5%	19.6%	15.9%	18.5%	—
PAT (Net Profit)	₹2 Cr	₹3 Cr	₹7 Cr	₹13 Cr	+97.3%
EPS	₹1.93	₹3.34	₹8.19	—	—
ROE	28.6%	19.5%	23.5%	18.3%	—
ROCE	46.5%	32.3%	27.1%	18.0%	—
Total Debt	₹4 Cr	₹3 Cr	₹5 Cr	₹7 Cr	+22.2%
Free Cash Flow	-₹4 Cr	-₹5 Cr	-₹7 Cr	-₹1 Cr	—

🟢 Revenue has grown at 48.1% a year over 3 years.

🟢 EBITDA has grown at 57.0% a year over 3 years.

🟢 EBITDA Margin has risen from 15.5% to 18.5% over 3 years (+3.0 pts).

🟢 PAT (Net Profit) has grown at 97.3% a year over 3 years.

🔴 ROE has fallen from 28.6% to 18.3% over 3 years (-10.3 pts).

🔴 ROCE has fallen from 46.5% to 18.0% over 3 years (-28.5 pts).

🔴 Total Debt has grown at 22.2% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹95 Cr

Total Liabilities

₹24 Cr

Total Debt

₹7 Cr

Cash & Equivalents

₹25 Cr

Operating Cash Flow

-₹1 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

67.8%

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 FRONTLINE BUSINESS

Equitymaster, 15 Oct

SPECIALITY MEDICINES LIMITED Share Price

Upstox, 05 May

Speciality Medicines IPO Date, Price, GMP, Review, Details

IndiaIPO, 08 Jan

Speciality Medicines closes trading window ahead of Q2FY27 results

scanx.trade, 28 SeptResults

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

Speciality Medicines shares list at IPO price on BSE SME, gain 4% post stock market debut

Livemint, 30 MarPrice 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.

Speciality Medicines IPO: SME stock to list today. Check price band, other details

The Economic Times, 30 Mar

Watch Items

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

DalalBaazaar Thesis

🟢Business QualityStrong13/20

🟢Financial HealthStrong13/20

🟢GrowthStrong14.9/20

🟢ProfitabilityStrong10.4/15

🟢ValuationAttractive11/15

🔴RiskHigh2.5/10

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

This thesis breaks if

✓Revenue growth stays above 36% a year48.1% CAGR
✓EBITDA margin holds above 17%18.5%
✗Free cash flow remains positive-₹1 Cr
✓Debt / EBITDA stays below 2x0.5x
✓ROCE stays above 15%18.0%