The Ugar Sugar Works Limited

Consumer Defensive — Confectioners · NSE

₹56.00−₹0.73 (−1.29%)

DalalBaazaar Score

37 / 100

🔴 Weak

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, 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, 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

Company site ↗

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

What does this company do?

The Ugar Sugar Works Limited manufactures and sells sugar, and industrial and potable alcohol in India. The company operates through Sugar, Industrial Alcohol, Potable Alcohol, Co-Generation, and Petroleum Products Sales segments.

IndustryConfectioners

SectorConsumer Defensive

Employees826

Annual revenue₹1,484 Cr

How does it make money?

Turns over ₹1,484 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹7 left at the operating level before interest, tax and depreciation. Each of its 826 employees supports ₹1.80 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin7.3%

Net margin0.9%

Revenue / employee₹1.80 Cr

Who are its competitors?

The closest listed comparisons in its industry are HINDUSTAN UNILEVER LTD., ITC LTD, NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

HINDUSTAN UNILEVER LTD.P/E 42.5x · ROE 21.5%

ITC LTDP/E 16.6x · ROE 27.4%

NESTLE INDIA LIMITEDP/E 59.8x · ROE 79.9%

BRITANNIA INDUSTRIES LTDP/E 44.1x · ROE 51.0%

What is its competitive advantage?Some evidence

ROCE of 24.2% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE24.2%

ROE5.8%

Peer median ROE51.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -17% while net margin moved -84% 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-17%

Margin effect-84%

DalalBaazaar Score

37/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 6.1% a year
✗ Profit has declined at 49.1% a year

Quality vs. Valuation

Company Quality

32/ 100

Weak

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

Valuation

67/ 100

Fair

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

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

21.9x

3Y Median

22.7x

40 monthly readings · mean 23.6x · range 7.2x–47.3x

Sector Median

43.3x

median of 4 sector peers

🟡Currently trading close to its 3y median of 22.7x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 49% below the peer median of 43.3x.

vs. its own history

Fair

22.7x median over 40 months · -3%

vs. sector peers

Cheap

43.3x median of 4 peers · -49%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

21.9x

P/B

2.70x

EV/EBITDA

12.6x

PEG

—

Dividend Yield

0.18%

What's Good / What's Bad

🟢 What's Going Well1

High return on capital employed
ROCE of 24.2% is the mark of a business that converts capital into profit efficiently.

🔴 What Needs Attention6

Margins are compressing
EBITDA margin has slipped from 11.7% to 7.3% over 3 years.
Debt is rising
Total debt is up 81% over 3 years — worth checking what it funded.
Return on equity is falling
ROE has dropped from 46.7% to 5.8% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 51.3% to 24.2% — often a sign of competition or overexpansion.
Inventory building faster than sales
Inventory is up 92% against revenue growth of -17% — stock may not be moving.
Short-term liquidity is tight
Current ratio of 0.91 — near-term obligations exceed near-term assets.

Red Flags

7 items require attention · 4 high · 3 watch

🔴Debt has risen sharplyFinancial
Total debt is up 81% over 3 years, from ₹400 Cr to ₹726 Cr.
🔴High leverageFinancial
Debt/Equity of 3.11x — earnings must service borrowings before shareholders see anything.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.3x — little room if earnings dip.
🔴Inventory building faster than salesFinancial
Inventory up 92% against revenue up -17% — stock may not be moving.
🟡Profit is decliningFinancial
Net profit is down 87% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 4.4 points over 3 years.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.91 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 24.2% 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.
Cheaper than its peers
It trades 49% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 11.7% to 7.3%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 6.7x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Returns on shareholder capital are falling
ROE has dropped from 46.7% to 5.8%. 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.
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 5%✓ 7.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 6.7x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Interest cover stays above 3x✗ 1.3x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹20 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 21%✓ 24.2%
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

5 good · 4 neutral · 2 weak

Market Cap

₹630 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

21.9x

Fair

Fairly valued against the generic band

P/B Ratio

2.70x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹2.56

Profitable

Profitable on a per-share basis

ROE

5.8%

Weak

Weak capital efficiency

ROCE

24.2%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

3.11x

High

High leverage

Revenue Growth (YoY)

34.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

183.8%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.18%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹20 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹56

Operating Margin

3.7%

Weak

Thin margins leave little room for error

Net Margin

1.8%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.91

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.09

Defensive

Steadier than the market

52W Range Position

67%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

57.6 / 54.2

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

32.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,794 Cr	₹1,151 Cr	₹1,329 Cr	₹1,484 Cr	-6.1%
EBITDA	₹210 Cr	₹100 Cr	₹48 Cr	₹108 Cr	-19.9%
EBITDA Margin	11.7%	8.7%	3.6%	7.3%	—
PAT (Net Profit)	₹103 Cr	₹21 Cr	-₹16 Cr	₹14 Cr	-49.1%
EPS	₹9.16	₹1.88	₹-1.44	₹1.21	-49.1%
ROE	46.7%	9.0%	-7.5%	5.8%	—
ROCE	51.3%	21.3%	7.0%	24.2%	—
Total Debt	₹400 Cr	₹566 Cr	₹671 Cr	₹726 Cr	+22.0%
Free Cash Flow	₹335 Cr	-₹140 Cr	-₹56 Cr	₹20 Cr	-61.1%

🔴 Revenue has shrunk at 6.1% a year over 3 years.

🔴 EBITDA has shrunk at 19.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 11.7% to 7.3% over 3 years (-4.4 pts).

🔴 PAT (Net Profit) has shrunk at 49.1% a year over 3 years.

🔴 EPS has shrunk at 49.1% a year over 3 years.

🔴 ROE has fallen from 46.7% to 5.8% over 3 years (-40.8 pts).

🔴 ROCE has fallen from 51.3% to 24.2% over 3 years (-27.1 pts).

🔴 Total Debt has grown at 22.0% a year over 3 years.

🔴 Free Cash Flow has shrunk at 61.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,320 Cr

Total Liabilities

₹1,087 Cr

Total Debt

₹726 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

₹44 Cr

Capex

-₹24 Cr

Shareholding (proxy)

Institutional Holding

0.1%

Insider Holding

50.2%

Corporate Actions

Dividend Rate

₹0.1

Ex-Dividend Date

29 Jul 2026

Peer Comparison

Company	P/E	ROE
HINDUSTAN UNILEVER LTD.	42.5x	21.5%
ITC LTD	16.6x	27.4%
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%

Recent News

1 positive1 mixed4 general

Ugar Sugar Works vs Nifty 50: 1Y Return +38.59% vs -9.64%

Univest, 14 Oct

Ugar Sugar Works (NSEI:UGARSUGAR) - Stock Analysis

Simply Wall Street, 10 Oct

The Ugar Sugar Works Ltd. Peer Comparison – Compare with Others

Value Research, 31 Aug

Ugar Sugar Works returns to profit in FY26, revenue rises

scanx.trade, 13 JulResults

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

Ugar Sugar Works Plant Operational Despite KSPCB Order; Shares Rise

HDFC Sky, 17 SeptPrice 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.

Ugar Sugar Works: HC Sets Aside KSPCB's Closure Order After Disclosure Delay

Sahi, 17 Sept

Watch Items

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

DalalBaazaar Thesis

🟡Business QualityAdequate9.6/20

🔴Financial HealthStretched7.1/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak4.6/15

🟡ValuationFair9.3/15

🔴RiskHigh3.9/10

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 4 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 5%7.3%
✗Debt / EBITDA falls below 3x6.7x
✗Interest cover stays above 3x1.3x
✓Free cash flow remains positive₹20 Cr
✓ROCE stays above 21%24.2%