Zota Health Care Limited

Healthcare — Biotechnology · NSE

₹1,396.00+₹27.70 (+2.02%)

DalalBaazaar Score

42 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by negative free cash flow, the company is currently loss-making, micro-cap size, which brings thin liquidity.

In simple words: The company is currently losing money, though profits are falling even as sales grow. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

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

What does this company do?

Zota Health Care Limited develops, manufactures, and markets pharmaceutical products in India and internationally. The company offers pharmaceutical, nutraceutical, ayurvedic, and over-the-counter products.

IndustryBiotechnology

SectorHealthcare

Employees635

Annual revenue₹539 Cr

How does it make money?

Turns over ₹539 Cr a year. Of every ₹100 of sales, about ₹-14 reaches shareholders as profit, with ₹4 left at the operating level before interest, tax and depreciation. Each of its 635 employees supports ₹84.8 lakh of revenue a year, the signature of a people-led business.

EBITDA margin4.2%

Net margin-13.7%

Revenue / employee₹84.8 lakh

Who are its competitors?

The closest listed comparisons in its industry are TATA CONSULTANCY SERV LT, INFOSYS LIMITED, HCL TECHNOLOGIES LTD, WIPRO LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

TATA CONSULTANCY SERV LTP/E 17.3x · ROE 45.6%

INFOSYS LIMITEDP/E 15.8x · ROE 32.0%

HCL TECHNOLOGIES LTDP/E 20.4x · ROE 24.6%

WIPRO LTDP/E 14.5x · ROE 15.9%

What is its competitive advantage?Little sign of one

Returns on capital of -7.3% 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-7.3%

ROE-10.7%

Peer median ROE32.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +285% while net margin moved +233% 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+285%

Margin effect+233%

DalalBaazaar Score

42/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Return on equity is negative
✗ ROE has fallen by 3.5 points over the period

Quality vs. Valuation

Company Quality

48/ 100

Average

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

Valuation

20/ 100

Expensive

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.

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

No P/E — the company is lossmaking

P/E (Trailing)

Not meaningful

P/B

6.97x

EV/EBITDA

223.1x

PEG

—

Dividend Yield

0.07%

What's Good / What's Bad

🟢 What's Going Well0

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

🔴 What Needs Attention6

Margins are compressing
EBITDA margin has slipped from 6.6% to 4.2% over 3 years.
Debt is rising
Total debt is up 499% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from -7.2% to -10.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from -1.9% to -7.3% — often a sign of competition or overexpansion.
Inventory building faster than sales
Inventory is up 361% against revenue growth of 285% — stock may not be moving.

Red Flags

9 items require attention · 5 high · 4 watch

🔴Debt has risen sharplyFinancial
Total debt is up 499% over 3 years, from ₹45 Cr to ₹270 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only -4.5x — little room if earnings dip.
🔴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.
🔴The company is lossmakingFinancial
Net profit of -₹74 Cr in the latest reported year.
🔴Inventory building faster than salesFinancial
Inventory up 361% against revenue up 285% — stock may not be moving.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from -5.4x to -4.5x.
🟡Margins are compressingFinancial
EBITDA margin is down 2.3 points over 3 years.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 38% over 3 years — each existing share owns a smaller slice of the company.
🟡Low reported insider holdingOwnership
Reported insider holding is 0.0%. For Indian companies this field is an unreliable proxy — check the official promoter shareholding in the exchange filing.

Investment Thesis

🟢 Bull CaseWhat could make this work?

No clear supporting case emerges from the available numbers.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 6.6% to 4.2%. 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 11.8x 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 -7.2% to -10.7%. 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

1Revenue growth stays above 43% a year✓ 56.7% CAGR
Latest reported year was 67.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 2%✓ 4.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 11.8x
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✗ -₹197 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ -4.5x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

6 / 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

2 good · 2 neutral · 7 weak

Market Cap

₹4,835 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not meaningful

Loss-making

Earnings are negative, so a P/E multiple can't be read here

P/B Ratio

6.97x

Rich

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

EPS (TTM)

₹-31.41

Loss-making

Negative earnings per share — the business is losing money

ROE

-10.7%

Weak

Weak capital efficiency

ROCE

-7.3%

Weak

Low return on total capital employed

Debt/Equity

0.39x

Low

Conservative leverage

Revenue Growth (YoY)

67.6%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-31.1%

Falling

Profits are shrinking

Dividend Yield

0.07%

Modest

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

Free Cash Flow

-₹197 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹1,396

Operating Margin

-22.7%

Weak

Thin margins leave little room for error

Net Margin

-17.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.93

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.37

Defensive

Steadier than the market

52W Range Position

52%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1319.7 / 1204.0

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

57.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹140 Cr	₹180 Cr	₹293 Cr	₹539 Cr	+56.7%
EBITDA	₹9 Cr	₹8 Cr	-₹5 Cr	₹23 Cr	+35.3%
EBITDA Margin	6.6%	4.5%	-1.6%	4.2%	—
PAT (Net Profit)	-₹6 Cr	-₹14 Cr	-₹56 Cr	-₹74 Cr	—
EPS	₹-2.29	₹-5.59	₹-20.68	₹-22.46	—
ROE	-7.2%	-15.9%	-25.2%	-10.7%	—
ROCE	-1.9%	-7.7%	-14.4%	-7.3%	—
Total Debt	₹45 Cr	₹95 Cr	₹140 Cr	₹270 Cr	+81.6%
Free Cash Flow	-₹15 Cr	-₹23 Cr	-₹96 Cr	-₹197 Cr	—

🟢 Revenue has grown at 56.7% a year over 3 years.

🟢 EBITDA has grown at 35.3% a year over 3 years.

🔴 EBITDA Margin has fallen from 6.6% to 4.2% over 3 years (-2.3 pts).

🔴 ROE has fallen from -7.2% to -10.7% over 3 years (-3.5 pts).

🔴 ROCE has fallen from -1.9% to -7.3% over 3 years (-5.4 pts).

🔴 Total Debt has grown at 81.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹1,131 Cr

Total Liabilities

₹435 Cr

Total Debt

₹270 Cr

Cash & Equivalents

₹8 Cr

Operating Cash Flow

-₹84 Cr

Capex

-₹113 Cr

Shareholding (proxy)

Institutional Holding

1.4%

Insider Holding

0.0%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

21 Sept 2026

Peer Comparison

Company	P/E	ROE
TATA CONSULTANCY SERV LT	17.3x	45.6%
INFOSYS LIMITED	15.8x	32.0%
HCL TECHNOLOGIES LTD	20.4x	24.6%
WIPRO LTD	14.5x	15.9%

Recent News

1 mixed5 general

Compare with

Equitymaster, 15 Oct

Why We're Not Concerned About Zota Health Care Limited's (NSE:ZOTA) Share Price

Simply Wall Street, 10 Feb

Zota Health Care vs Nifty 50: 1Y Return -11.84% vs -11.35%

Univest, 13 Oct

Zota Health Care Shares May Rally 41% says Nirmal Bang — Check New Target Price

NDTV Profit, 19 JunPrice 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.

Zota Health Care Ltd. Peer Comparison – Compare with Others

Value Research, 31 Aug

Zota Health Care acquires shares in KMHP Ventures for ₹2 Cr

scanx.trade, 22 Jun

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Reported insider holding is low — cross-check the official promoter shareholding % in the company's exchange filing.

DalalBaazaar Thesis

🔴Business QualityWeak4.7/20

🟡Financial HealthAdequate10.1/20

🟢GrowthStrong18.4/20

🔴ProfitabilityWeak2.5/15

🔴ValuationDemanding2.6/15

🔴RiskHigh4/10

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

This thesis breaks if

✓Revenue growth stays above 43% a year56.7% CAGR
✓EBITDA margin holds above 2%4.2%
✗Debt / EBITDA falls below 3x11.8x
✗Free cash flow remains positive-₹197 Cr
✗Interest cover stays above 3x-4.5x