Natural Capsules Ltd – Q1 FY26 | India’s Vegetarian Capsule King with Steroidal Side Hustle… but EPS Needs a Protein Shake
1. At a Glance
Natural Capsules Ltd (NCL) — market-cap ₹268 crore, share price ₹259 (down 4.7 % on 03 Oct 2025), is that tiny biotech cousin who shows up at family functions wearing a WHO-GMP badge and pretending to be Pfizer. Over the last 3 months the stock jumped 18.5 %, but long-term investors still nurse a 19 % 1-year hangover. ROE? 0.28 %. ROCE? 2.67 %. Interest coverage? 0.45 — aka “our banker’s patience quotient.”
Revenue for Q1 FY26 came at ₹45.2 crore (+15 % YoY), but PAT plunged to –₹5.6 crore (–1030 % YoY). EPS? –₹5.4 — meaning the only thing growing fast is investor anxiety.
Still, this is India’s first maker of vegetarian capsules and the second-largest gelatin-capsule producer. On paper, they can make 18.75 billion capsules a year — that’s enough to medicate every Indian 13 times or fund a Netflix documentary called “Capsule Cartel – Made in Bengaluru.”
2. Introduction
Back in 1993, when Harshad Mehta was still shouting “risk hai toh ishq hai,” a quiet Bengaluru firm began rolling out hard gelatin capsules. Three decades later, Natural Capsules wants to look less like a boring capsule peddler and more like a steroidal-API innovator.
They proudly shout “WHO-GMP!” and “ISO-14001!” as if these are Hogwarts houses. The factories hum in Bengaluru and Pondicherry, churning out shiny, sweet, fast-release capsules while their new API arm — Natural Biogenex — brews steroids so potent even gym bros take notes.
The catch? The capsule business is cash-rich but low-margin; the API business is high-margin but cash-hungry. The result — financials look like a bodybuilder’s leg day – all upper show, weak lower support.
3. Business Model – WTF Do They Even Do?
Natural Capsules operates in two worlds:
A. Capsules Division: They make two-piece hard gelatin and cellulose capsules for pharma and dietary supplement industries. Gelatin is for the traditionalists; cellulose (HPMC – plant-based) keeps the vegans and FDA equally happy. Sizes 00 to 4 — basically, from “antibiotic horse pill” to “vitamin micro-missile.”
Special variants include shiny, sweet, fast-release, preservative-free, SLS-free, TSE-free — basically everything except “free profits.”
B. Steroidal API Division: Through Natural Biogenex, they make Prednisolone, Betamethasone, Dexamethasone, and Hydrocortisone – the who’s-who of anti-inflammatory steroids. With capacities of 10–15 MT each, NCL is among India’s few legitimate producers rather than importers from China.
Clients? Abbott, Pfizer, Aurobindo, Macleods, Ajanta, Hetero — basically, everyone except the chemist who sells you fake “protein” powder.
4. Financials Overview
Source table
Metric
Latest Qtr (Jun 25)
YoY Qtr (Jun 24)
Prev Qtr (Mar 25)
YoY %
QoQ %
Revenue
45.2
39.2
45.0
+15.4 %
+0.4 %
EBITDA
0.3
4.4
4.4
–92.7 %
–92.7 %
PAT
–5.6
0.6
0.5
–1030 %
–1200 %
EPS (₹)
–5.4
0.6
0.5
NA
NA
Annualised EPS = –₹21.6 → P/E not meaningful (also painful).
Commentary: This quarter’s P&L looks like a capsule half full of air. Revenue grew, but costs grew faster; depreciation doubled (new machinery → new EMIs), interest rose 40 %, and profit took an early retirement. The EBITDA margin 0.7 % is so thin it could be used as a capsule film.
5. Valuation Discussion – Fair Value Range Only
Let’s educate, not recommend.
A. P/E Method: Since EPS is negative, P/E is “not meaningful.” But assuming FY24 EPS ≈ ₹6 (after normalisation), and industry P/E ≈ 30–35×, Fair Value ≈ ₹180 – ₹210.
B. EV/EBITDA Method: EV = ₹368 cr; TTM EBITDA = ₹13 cr; EV/EBITDA = 28×. Sector average ≈ 20× → fair EV ≈ ₹260 cr → Fair Value ≈ ₹185 /share.
