Unichem Laboratories Limited

Healthcare — Drug Manufacturers - Specialty & Generic · NSE

₹511.15−₹10.05 (−1.93%)

DalalBaazaar Score

70 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

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

In simple words: Reasonable but unspectacular business quality, 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, 6:57 pm

Understanding the Business

Company site ↗

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

What does this company do?

Unichem Laboratories Limited, a pharmaceutical company, manufactures and sells pharmaceutical products in Asia, Europe, Africa, CIS, the United States, and internationally.

IndustryDrug Manufacturers - Specialty & Generic

SectorHealthcare

Employees2,780

Annual revenue₹2,159 Cr

How does it make money?

Turns over ₹2,159 Cr a year. Of every ₹100 of sales, about ₹12 reaches shareholders as profit, with ₹11 left at the operating level before interest, tax and depreciation. Each of its 2,780 employees supports ₹77.7 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹77.7 lakh

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?Little sign of one

Returns on capital of 11.4% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

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 +66% while net margin moved -175% 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+66%

Margin effect-175%

DalalBaazaar Score

70/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of -0.03 — historically steadier than the index
✗ 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

70/ 100

Good

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

Valuation

78/ 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

11.6x

1.3Y Median

20.0x

16 monthly readings · mean 20.0x · range 14.2x–26.4x

Sector Median

33.3x

median of 4 sector peers

🟢Current valuation is approximately 42% below its 1.3y median of 20.0x. 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 65% below the peer median of 33.3x.

vs. its own history

Cheap

20.0x median over 16 months · -42%

vs. sector peers

Cheap

33.3x median of 4 peers · -65%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

15.8x

PEG

—

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from -1.2% to 11.2% over 3 years.
Return on equity is rising
ROE has improved from -8.3% to 9.3%.
Return on capital is rising
ROCE has improved from -6.3% to 11.4%.
Very low debt
Debt/Equity of 0.18x leaves the balance sheet with plenty of headroom.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

2 items require attention · 2 high

🔴Debt has risen sharplyFinancial
Total debt is up 59% over 3 years, from ₹314 Cr to ₹500 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.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -1.2% to 11.2%. 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 42% 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 65% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

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
2 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 14% a year✓ 18.4% 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 9%✓ 11.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA stays below 2x✗ 2.1x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4Free cash flow remains positive✗ -₹119 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✓ 11.4%
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

6 good · 4 neutral · 1 weak

Market Cap

₹3,599 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

11.6x

Cheap

Cheap against the generic band

P/B Ratio

1.32x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹44.12

Profitable

Profitable on a per-share basis

ROE

9.3%

Moderate

Moderate capital efficiency

ROCE

11.4%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.18x

Low

Conservative leverage

Revenue Growth (YoY)

20.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

83.9%

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

-₹119 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

6.3%

Average

Average margins

Net Margin

13.2%

Good

Strong bottom-line conversion

Current Ratio

2.48

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.03

Defensive

Steadier than the market

52W Range Position

57%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

539.1 / 537.4

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

36.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹1,302 Cr	₹1,738 Cr	₹2,064 Cr	₹2,159 Cr	+18.4%
EBITDA	-₹15 Cr	₹110 Cr	₹290 Cr	₹241 Cr	—
EBITDA Margin	-1.2%	6.3%	14.0%	11.2%	—
PAT (Net Profit)	-₹202 Cr	-₹94 Cr	₹138 Cr	₹253 Cr	—
EPS	₹-28.72	₹-13.32	₹19.47	₹35.85	—
ROE	-8.3%	-3.8%	5.6%	9.3%	—
ROCE	-6.3%	-2.5%	6.8%	11.4%	—
Total Debt	₹314 Cr	₹248 Cr	₹460 Cr	₹500 Cr	+16.8%
Free Cash Flow	-₹129 Cr	-₹9 Cr	-₹144 Cr	-₹119 Cr	—

🟢 Revenue has grown at 18.4% a year over 3 years.

🟢 EBITDA has turned positive, from -₹15 Cr to ₹241 Cr.

🟢 EBITDA Margin has risen from -1.2% to 11.2% over 3 years (+12.3 pts).

🟢 PAT (Net Profit) has turned positive, from -₹202 Cr to ₹253 Cr.

🟢 EPS has turned positive, from ₹-28.72 to ₹35.85.

🟢 ROE has risen from -8.3% to 9.3% over 3 years (+17.6 pts).

🟢 ROCE has risen from -6.3% to 11.4% over 3 years (+17.6 pts).

🔴 Total Debt has grown at 16.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,737 Cr

Total Liabilities

₹1,020 Cr

Cash & Equivalents

₹289 Cr

Operating Cash Flow

₹4 Cr

Capex

-₹123 Cr

Shareholding (proxy)

Institutional Holding

10.2%

Insider Holding

71.3%

Corporate Actions

Ex-Dividend Date

01 Aug 2022

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

1 positive5 general

Unichem Laboratories vs Nifty 50: 1Y Return +10.71% vs -11.35%

Univest, 13 Oct

Unichem Labs Share Price Jumps 18% After Pharma Company Swings To Profit In Q1, Revenue Surges

NDTV Profit, 11 AugResults

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

Unichem Laboratories (UNICHEMLAB.NS) Slips Over 1% to ₹529.30 as Stock Tests Mid-Range Support - Head and Shoulders

siam.in, 04 Oct

Polunin Capital Partners picks up nearly 1% stake in Unichem Labs; Fidelity buys additional shares in...

Moneycontrol.com, 09 Jul

Volume buzzers: Unichem, Aegis Logistics soar up to 17%; ICICI Bank adds 3%

Business Standard, 11 Jun

Investors in Unichem Laboratories (NSE:UNICHEMLAB) from a year ago are still down 43%, even after 12% gain this past week

Simply Wall Street, 04 Feb

Watch Items

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

DalalBaazaar Thesis

StrongFinancial Health · Growth · Valuation

MiddlingBusiness Quality · Profitability

WeakRisk

Points for each in the Score ↑

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

2 of 5 tripwires tripped — Debt / EBITDA stays below 2x; Free cash flow remains positive · see Key things to watch ↑