Zuari Agro Chemicals Limited

Basic Materials — Agricultural Inputs · NSE

₹206.60+₹0.21 (+0.10%)

DalalBaazaar Score

74 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, but sales are shrinking. Short-term liquidity is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

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

What does this company do?

Zuari Agro Chemicals Limited engages in manufacturing, trading, and marketing of chemical fertilizers and fertilizer products in India. It offers urea, DAP, MOP, and complex fertilizers; water soluble fertilizers; seeds; and pesticides.

IndustryAgricultural Inputs

SectorBasic Materials

Employees9

Annual revenue₹3,199 Cr

How does it make money?

Turns over ₹3,199 Cr a year. Of every ₹100 of sales, about ₹29 reaches shareholders as profit, with ₹68 left at the operating level before interest, tax and depreciation. Each of its 9 employees supports ₹355.50 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹355.50 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, ULTRATECH CEMENT LIMITED, ASIAN PAINTS LIMITED. 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 54.9%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 44.0% against a peer median of 22.3% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

Peer median ROE22.3%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -30% while net margin moved +174% 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-30%

Margin effect+174%

DalalBaazaar Score

74/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of -0.07 — 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

Quality vs. Valuation

Company Quality

75/ 100

Good

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.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

0.9x

3Y Median

6.0x

40 monthly readings · mean 5.3x · range 0.9x–14.1x

Sector Median

28.7x

median of 4 sector peers

🟢Current valuation is approximately 85% below its 3y median of 6.0x. 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 97% below the peer median of 28.7x.

vs. its own history

Cheap

6.0x median over 40 months · -85%

vs. sector peers

Cheap

28.7x median of 4 peers · -97%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

0.7x

PEG

0.04

What's Good / What's Bad

🟢 What's Going Well7

Margins are improving
EBITDA margin is up from 29.2% to 67.8% over 3 years.
Debt is being paid down
Total debt is down 70% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from 30.1% to 44.0%.
Return on capital is rising
ROCE has improved from 30.1% to 54.9%.
High return on capital employed
ROCE of 54.9% 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 Attention0

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

Red Flags

2 items require attention · 1 high · 1 watch

🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.52 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 54.9% 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 29.2% to 67.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 70% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 85% 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 97% 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.

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

1EBITDA margin holds above 66%✓ 67.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✓ ₹44 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 52%✓ 54.9%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Valuation vs its own median of 6.0x✓ 0.9x today
A re-rating above its own history needs a reason; without one it is just a higher price.

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

8 good · 2 neutral · 1 weak

Market Cap

₹869 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

0.9x

Cheap

Cheap against the generic band

P/B Ratio

0.42x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹223.29

Profitable

Profitable on a per-share basis

ROE

44.0%

Strong

Strong capital efficiency

ROCE

54.9%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.31x

Low

Conservative leverage

Revenue Growth (YoY)

-50.6%

Shrinking

Sales are contracting

Profit Growth (YoY)

19.7%

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

₹44 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

P/E (Forward)

48.0x

Flat

At or above the trailing multiple — no earnings uplift is being priced in

Operating Margin

8.8%

Average

Average margins

Net Margin

36.6%

Good

Strong bottom-line conversion

Current Ratio

0.52

Tight

Tight short-term liquidity

Beta (vs Nifty)

-0.07

Defensive

Steadier than the market

52W Range Position

18%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

215.0 / 221.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

32.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹4,550 Cr	₹4,592 Cr	₹4,430 Cr	₹3,199 Cr	-11.1%
EBITDA	₹1,329 Cr	₹430 Cr	₹544 Cr	₹2,170 Cr	+17.7%
EBITDA Margin	29.2%	9.4%	12.3%	67.8%	—
PAT (Net Profit)	₹477 Cr	₹100 Cr	₹165 Cr	₹920 Cr	+24.5%
EPS	₹113.33	₹23.74	₹39.18	₹218.7	+24.5%
ROE	30.1%	5.9%	8.9%	44.0%	—
ROCE	30.1%	15.1%	16.8%	54.9%	—
Total Debt	₹2,108 Cr	₹1,783 Cr	₹717 Cr	₹642 Cr	-32.7%
Free Cash Flow	-₹222 Cr	₹329 Cr	₹407 Cr	₹44 Cr	—

🔴 Revenue has shrunk at 11.1% a year over 3 years.

🟢 EBITDA has grown at 17.7% a year over 3 years.

🟢 EBITDA Margin has risen from 29.2% to 67.8% over 3 years (+38.6 pts).

🟢 PAT (Net Profit) has grown at 24.5% a year over 3 years.

🟢 EPS has grown at 24.5% a year over 3 years.

🟢 ROE has risen from 30.1% to 44.0% over 3 years (+13.9 pts).

🟢 ROCE has risen from 30.1% to 54.9% over 3 years (+24.8 pts).

🟢 Total Debt has shrunk at 32.7% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹222 Cr to ₹44 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,251 Cr

Total Liabilities

₹1,161 Cr

Cash & Equivalents

₹33 Cr

Operating Cash Flow

₹203 Cr

Capex

-₹160 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

66.8%

Corporate Actions

Ex-Dividend Date

13 Jul 2017

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
ULTRATECH CEMENT LIMITED	37.6x	11.1%
ASIAN PAINTS LIMITED	46.9x	22.3%

Recent News

1 positive5 general

Zuari Agro Chemicals trails the market over one year, but longer-term numbers tell a different story

ET Chemicals, 14 Oct

Zuari Agro Chemicals Limited (ZUARI) Share Price NSE

TechGraph, 08 Oct

Zuari Agro FY26 Net Profit at INR 954.78 Cr on Exceptional Gains

scanx.trade, 14 Oct

Zuari Agro Chemicals vs Nifty 50: 1Y Return -19.83% vs -11.35%

Univest, 13 Oct

Is Zuari Agro Chemicals (NSE:ZUARI) A Risky Investment?

Simply Wall Street, 07 Feb

Zuari Agro Chemicals consolidated net profit rises 19.70% in the June 2026 quarter

Business Standard, 31 JulResults

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

Watch Items

Revenue growth is negative (-50.6%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongBusiness Quality · Financial Health · Profitability · Valuation

MiddlingGrowth

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. 1 high-severity red flag sits above this conclusion and should be read first.

All 5 tripwires holding · see Key things to watch ↑