Sudarshan Pharma Industries Limited

Basic Materials — Chemicals · BSE

₹36.25₹0.00 (0.00%)

DalalBaazaar Score

58 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, 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. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Sudarshan Pharma Industries Limited manufactures and sells specialty chemicals and intermediates for pharma, paints, food, adhesives, and various other industries in India and United States.

IndustryChemicals

SectorBasic Materials

Employees64

Annual revenue₹703 Cr

How does it make money?

Turns over ₹703 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation. Each of its 64 employees supports ₹10.99 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹10.99 Cr

Who are its competitors?

The closest listed comparisons in its industry are PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. 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?Some evidence

ROCE of 28.8% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

Peer median ROE15.4%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +52% while net margin moved +117% 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+52%

Margin effect+117%

DalalBaazaar Score

58/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Debt/Equity of 1.82x is high — earnings must service borrowings before shareholders see anything
• Current ratio of 1.07 covers short-term liabilities, without much slack
✗ Free cash flow is negative — growth is being funded by borrowing or fresh equity
✗ Interest cover of only 2.3x — little room if profits dip
✗ Debt has grown 102.9% a year — worth checking what it bought

Quality vs. Valuation

Company Quality

62/ 100

Average

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

Valuation

65/ 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.

Historical Valuation

Current P/E

34.9x

3Y Median

62.6x

40 monthly readings · mean 116.7x · range 3.2x–877.3x

Sector Median

33.8x

median of 3 sector peers

🟢Current valuation is approximately 44% below its 3y median of 62.6x. 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 is priced broadly in line with the peer median of 33.8x.

vs. its own history

Cheap

62.6x median over 40 months · -44%

vs. sector peers

Fair

33.8x median of 3 peers · +3%

vs. generic bands

Fair

15x–35x

EV/EBITDA

21.7x

PEG

0.71

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 3.3% to 7.9% over 3 years.
Return on equity is rising
ROE has improved from 7.0% to 15.0%.
Return on capital is rising
ROCE has improved from 12.4% to 28.8%.
High return on capital employed
ROCE of 28.8% is the mark of a business that converts capital into profit efficiently.
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

5 items require attention · 4 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 736% over 3 years, from ₹34 Cr to ₹285 Cr.
🔴High leverageFinancial
Debt/Equity of 1.82x — earnings must service borrowings before shareholders see anything.
🔴Receivables growing faster than salesFinancial
Receivables up 186% against revenue up 52% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 193% against revenue up 52% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹71 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 28.8% 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 3.3% to 7.9%. 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 44% 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.
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?

The debt load needs earnings to hold up
Debt is 5.1x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 186% against revenue up 52%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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 11% a year✓ 15.1% CAGR
Latest reported year was 20.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 6%✓ 7.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 5.1x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹71 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 2.3x
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

5 good · 3 neutral · 3 weak

Market Cap

₹922 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

34.9x

Fair

Fairly valued against the generic band

P/B Ratio

5.22x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹1.04

Profitable

Profitable on a per-share basis

ROE

15.0%

Strong

Strong capital efficiency

ROCE

28.8%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.82x

High

High leverage

Revenue Growth (YoY)

20.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

43.8%

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

-₹71 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

8.3%

Average

Average margins

Net Margin

3.4%

Average

Average bottom-line conversion

Current Ratio

1.07

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.85

Market-like

Moves roughly in line with the market

52W Range Position

73%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

37.9 / 38.0

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

42.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹461 Cr	₹464 Cr	₹505 Cr	₹703 Cr	+15.1%
EBITDA	₹15 Cr	₹24 Cr	₹40 Cr	₹56 Cr	+54.1%
EBITDA Margin	3.3%	5.3%	7.8%	7.9%	—
PAT (Net Profit)	₹7 Cr	₹11 Cr	₹15 Cr	₹23 Cr	+49.1%
EPS	₹0.55	₹0.47	₹6.2	₹9.7	+160.6%
ROE	7.0%	10.1%	11.3%	15.0%	—
ROCE	12.4%	18.4%	23.4%	28.8%	—
Total Debt	₹34 Cr	₹107 Cr	₹175 Cr	₹285 Cr	+102.9%
Free Cash Flow	-₹43 Cr	₹4 Cr	-₹54 Cr	-₹71 Cr	—

🟢 Revenue has grown at 15.1% a year over 3 years.

🟢 EBITDA has grown at 54.1% a year over 3 years.

🟢 EBITDA Margin has risen from 3.3% to 7.9% over 3 years (+4.6 pts).

🟢 PAT (Net Profit) has grown at 49.1% a year over 3 years.

🟢 EPS has grown at 160.6% a year over 3 years.

🟢 ROE has risen from 7.0% to 15.0% over 3 years (+8.1 pts).

🟢 ROCE has risen from 12.4% to 28.8% over 3 years (+16.4 pts).

🔴 Total Debt has grown at 102.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹642 Cr

Total Liabilities

₹485 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

-₹2 Cr

Capex

-₹69 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

77.8%

Corporate Actions

Ex-Dividend Date

25 Aug 2023

Peer Comparison

Company	P/E	ROE
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

2 mixed4 general

Sudarshan Pharma Industries (SUDARSHAN) Share Price rises 8.11% today

Univest, 09 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.

Small-cap pharma stock hits 52-week high after fundraising move. Details here

Livemint, 16 Jun

Sudarshan Pharma Share Price Hits 10% Upper Circuit Amid Weak Stock Market Today

Samco, 05 Feb

Sudarshan Pharma slips 3% after GST department conducts search and seizure

Business Standard, 23 Feb

Sudarshan Pharma terminates proposal to acquire stake in US biotech firm

scanx.trade, 07 OctM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Sudarshan Pharma Industries Lower Circuit Today: Price, Data and Peers

Univest, 08 Oct

Watch Items

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

DalalBaazaar Thesis

StrongGrowth · Profitability

MiddlingBusiness Quality · Valuation

WeakFinancial Health · Risk

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

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive; Interest cover stays above 3x · see Key things to watch ↑