Vadivarhe Speciality Chemicals Limited

Sector n/a · NSE

₹52.20₹0.00 (0.00%)

DalalBaazaar Score

21 / 100

🔴 Weak

Verdict

HIGH RISK

Risk

Very High

Driven by negative shareholders' equity — the company owes more than it owns, short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

In simple words: The company owes more than it owns — years of losses have wiped out its net worth, with both sales and profits growing well. Solvency — whether it can keep funding itself at all — is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 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

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

How does it make money?

Turns over ₹46 Cr a year. Of every ₹100 of sales, about ₹-4 reaches shareholders as profit, with ₹3 left at the operating level before interest, tax and depreciation.

EBITDA margin2.9%

Net margin-3.6%

What is its competitive advantage?Little sign of one

Returns on capital of -2.0% 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.

ROCE-2.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +5% while net margin moved -236% 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+5%

Margin effect-236%

DalalBaazaar Score

21/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Shareholders' equity is negative — accumulated losses exceed the capital in the business

Quality vs. Valuation

Company Quality

21/ 100

Weak

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

Valuation

30/ 100

Expensive

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

Weak on business quality and not cheap enough to compensate.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

N/A

Multiples unreliable — equity base is negative

P/E (Trailing)

—

P/B

—

EV/EBITDA

74.6x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well1

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.

🔴 What Needs Attention4

Margins are compressing
EBITDA margin has slipped from 8.7% to 2.9% over 3 years.
Receivables growing faster than sales
Receivables are up 41% against revenue growth of 5% — customers are taking longer to pay.
Negative shareholders' equity
Liabilities exceed assets — this is a solvency question that sits above every other consideration here.
Short-term liquidity is tight
Current ratio of 0.70 — near-term obligations exceed near-term assets.

Red Flags

6 items require attention · 4 high · 2 watch

🔴Negative shareholders' equityFinancial
Liabilities exceed assets — accumulated losses have wiped out the company's net worth.
🔴Thin interest coverageFinancial
Operating profit covers interest only -0.2x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹2 Cr in the latest reported year.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 5.8 points, from 8.7% to 2.9%.
🟡Receivables growing faster than salesFinancial
Receivables up 41% against revenue up 5% — sales are being booked faster than they are collected.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.70 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

No clear supporting case emerges from the available numbers.

🔴 Bear CaseWhat could go wrong?

Solvency comes before everything else
Liabilities exceed assets. Until net worth is rebuilt, the equity is a claim on a business that owes more than it owns, and further losses or a funding squeeze can leave shareholders with nothing.
Margins are being competed away
EBITDA margin has fallen from 8.7% to 2.9%. 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 24.2x 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 41% against revenue up 5%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Growth barely outpaces inflation
Revenue compounding at 1.6% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.

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

1EBITDA margin holds above 1%✓ 2.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 24.2x
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✗ -0.2x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✗ 1.6% CAGR
Latest reported year was 20.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹6 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

3 / 8 checks passed

✗ Shareholders' equity is positive (assets exceed liabilities)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 6 neutral · 2 weak

Market Cap

₹67 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not available

No data

Source didn't return this field

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

Not available

No data

Source didn't return this field

ROE

Not meaningful

Negative equity

Return on equity can't be read when equity itself is negative

ROCE

-2.0%

Distorted

Distorted by the negative net worth — read this alongside the solvency flag, not on its own

Debt/Equity

Not meaningful

Negative equity

Shareholders' equity is negative, so this ratio can't be read

Revenue Growth (YoY)

20.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

82.3%

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

₹6 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹52.2

Gross Margin

21.5%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

-3.6%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.70

Tight

Tight short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

20.3 / 21.4

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

72.2

Overbought zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹44 Cr	₹40 Cr	₹38 Cr	₹46 Cr	+1.6%
EBITDA	₹4 Cr	₹5 Cr	-₹6 Cr	₹1 Cr	-29.9%
EBITDA Margin	8.7%	11.5%	-15.8%	2.9%	—
PAT (Net Profit)	₹1 Cr	₹0 Cr	-₹9 Cr	-₹2 Cr	—
EPS	₹0.9	₹0.05	₹-7.25	—	—
ROE	17.8%	0.9%	—	—	—
ROCE	11.4%	11.0%	-38.5%	-2.0%	—
Total Debt	₹27 Cr	₹26 Cr	₹36 Cr	₹32 Cr	+5.7%
Free Cash Flow	-₹1 Cr	₹1 Cr	-₹9 Cr	₹6 Cr	—

🟡 Revenue has been broadly flat over 3 years (1.6% a year).

🔴 EBITDA has shrunk at 29.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 8.7% to 2.9% over 3 years (-5.8 pts).

🔴 PAT (Net Profit) has turned negative, from ₹1 Cr to -₹2 Cr.

🔴 ROCE has fallen from 11.4% to -2.0% over 3 years (-13.3 pts).

🔴 Total Debt has grown at 5.7% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹1 Cr to ₹6 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹39 Cr

Total Liabilities

₹43 Cr

Total Debt

₹32 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹6 Cr

Capex

-₹1 Cr

Recent News

6 general

HESTER BIOSCIENCES Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 17 Oct

Vadivarhe Speciality Chemicals (NSE: VSCL) Business Overview

Kalkine India, 15 Sept

Vadivarhe Speciality Chemicals Limited (VSCL) Company Information

Simply Wall Street, 14 Nov

MERCURY LAB. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 08 Oct

Ramesh Damani's Investment Portfolio - Top Picks Revealed

Alice Blue, 19 Jan

HIMALAYA NUTRAVEDICS INDIA LTD. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 29 Sept

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Sector/industry classification unavailable — verify manually for peer comparison.
3 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.
RSI is in overbought territory — momentum entries here carry more short-term pullback risk.

DalalBaazaar Thesis

🔴Business QualityWeak6/20

🔴Financial HealthStretched1/20

🔴GrowthWeak7.6/20

🔴ProfitabilityWeak1.5/15

🔴ValuationDemanding4.5/15

🔴RiskHigh0.5/10

Avoid until solvency is resolved

Vadivarhe Speciality Chemicals Limited owes more than it owns. Whatever the operating numbers show, the equity is a residual claim on a business with negative net worth, and that question has to be settled before any of the rest is worth weighing. 4 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 1%2.9%
✗Debt / EBITDA falls below 3x24.2x
✗Interest cover stays above 3x-0.2x
✗Revenue growth stays above 4% a year1.6% CAGR
✓Free cash flow remains positive₹6 Cr