Supha Pharmachem Limited

Healthcare — Drug Manufacturers - Specialty & Generic · BSE

₹0.25+₹0.01 (+4.17%)

DalalBaazaar Score

49 / 100

🟡 Moderate

Verdict

NEUTRAL

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, 7:46 pm

Understanding the Business

Company site ↗

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

What does this company do?

Supha Pharmachem Limited, a pharmaceutical company, trades and sells active pharmaceutical ingredients (API) and intermediates in India and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees7

Annual revenue₹405 Cr

How does it make money?

Turns over ₹405 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹3 left at the operating level before interest, tax and depreciation. Each of its 7 employees supports ₹57.89 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹57.89 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.

Compared side by side in Peers ↓

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

ROCE has stayed above 15% in every year available and stands at 27.3%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 16.2% against a peer median of 14.5% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

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 -20% while net margin moved +146% 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-20%

Margin effect+146%

DalalBaazaar Score

49/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Beta of 1.30 — amplifies market moves in both directions
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ High leverage magnifies any downturn in earnings
✗ 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

44/ 100

Weak

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

Valuation

88/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

1.9x

4Y Median

42.1x

52 monthly readings · mean 3474.6x · range 1.7x–43797.6x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 95% below its 4y median of 42.1x. 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 94% below the peer median of 33.3x.

vs. its own history

Cheap

42.1x median over 52 months · -95%

vs. sector peers

Cheap

33.3x median of 4 peers · -94%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

5.5x

PEG

0.08

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 0.3% to 3.0% over 3 years.
High return on capital employed
ROCE of 27.3% 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 Attention2

Return on equity is falling
ROE has dropped from 21.8% to 4.9% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 34.5% to 27.3% — often a sign of competition or overexpansion.

Red Flags

6 items require attention · 4 high · 2 watch

🔴High leverageFinancial
Debt/Equity of 10.34x — earnings must service borrowings before shareholders see anything.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.6x — little room if earnings dip.
🔴Receivables growing faster than salesFinancial
Receivables up 1106% against revenue up -20% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 221% against revenue up -20% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 13.5x to 1.6x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹1,144 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 27.3% 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 0.3% to 3.0%. 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 95% 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 94% 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?

The debt load needs earnings to hold up
Debt is 3.7x 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 1106% against revenue up -20%. 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 21.8% to 4.9%. 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.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 1%✓ 3.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.7x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹1,144 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.6x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 24%✓ 27.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

7 good · 2 neutral · 2 weak

Market Cap

₹22 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

1.9x

Cheap

Cheap against the generic band

P/B Ratio

0.21x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.13

Profitable

Profitable on a per-share basis

ROE

16.2%

Strong

Strong capital efficiency

ROCE

27.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

10.34x

High

High leverage

Revenue Growth (YoY)

342.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

143.7%

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

-₹966 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

ROA

0.2%

Weak

Assets generate little profit

Operating Margin

6.6%

Average

Average margins

Net Margin

2.3%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.06

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

1.30

Market-like

Moves roughly in line with the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

0.3 / 0.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

45.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY22	FY23	FY24	FY25	3Y CAGR
Revenue	₹505 Cr	₹510 Cr	₹4,042 Cr	₹405 Cr	-7.1%
EBITDA	₹2 Cr	₹9 Cr	₹55 Cr	₹12 Cr	+89.6%
EBITDA Margin	0.3%	1.8%	1.3%	3.0%	—
PAT (Net Profit)	₹1 Cr	₹5 Cr	₹33 Cr	₹2 Cr	+25.5%
EPS	₹0.02	₹0.09	₹0.57	₹0.03	+23.3%
ROE	21.8%	52.4%	76.2%	4.9%	—
ROCE	34.5%	72.1%	126.8%	27.3%	—
Total Debt	—	—	₹58 Cr	₹45 Cr	—
Free Cash Flow	₹11 Cr	₹20 Cr	-₹74 Cr	-₹1,144 Cr	—

🔴 Revenue has shrunk at 7.1% a year over 3 years.

🟢 EBITDA has grown at 89.6% a year over 3 years.

🟢 EBITDA Margin has risen from 0.3% to 3.0% over 3 years (+2.6 pts).

🟢 PAT (Net Profit) has grown at 25.5% a year over 3 years.

🟢 EPS has grown at 23.3% a year over 3 years.

🔴 ROE has fallen from 21.8% to 4.9% over 3 years (-17.0 pts).

🔴 ROCE has fallen from 34.5% to 27.3% over 3 years (-7.1 pts).

🔴 Free Cash Flow has turned negative, from ₹11 Cr to -₹1,144 Cr.

Balance Sheet & Cash Flow — FY2025

Total Assets

₹1,720 Cr

Total Liabilities

₹1,676 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹1,144 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

20.1%

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

6 general

SUPHA PHARMACHEM LIMITED Share Price

Upstox, 06 May

Supha Pharmachem (BSE:539561) - Stock Analysis

Simply Wall Street, 16 Dec

Supha Pharmachem - 14 penny stocks crash up to 75% in just 3 months. Did you invest in any?

The Economic Times, 05 Apr

Supha Pharmachem Ltd. - RE Share Price Live Today

CNBC TV18, 14 Apr

Supha Pharmachem Limited Discloses Committee of Creditors Meeting Outcomes

scanx.trade, 17 Apr

Supha Pharmachem Issues Public Announcement Following NCLT Insolvency Order

scanx.trade, 19 Mar

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongValuation

MiddlingBusiness Quality · Growth · Profitability

WeakFinancial Health · Risk

Points for each in the Score ↑

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 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 ↑