1. At a Glance – Blink and You’ll Miss the Plot Twist
Sudarshan Pharma Industries Ltd (SPIL) is currently trading at ₹18.5, which conveniently is also its 52-week low. Market cap sits at ₹446 Cr, down sharply after a brutal -55% 1-year return. Meanwhile, the business itself is doing the exact opposite — Q3 FY26 sales grew 45% YoY, PAT jumped 51%, and TTM profits are up 57%.
So what’s the problem? Debt. And working capital. And margins that behave like Mumbai weather — unpredictable.
Key highlights:
- TTM Sales: ₹644 Cr
- TTM PAT: ₹19 Cr
- ROCE: 15.5%
- Debt: ₹219 Cr (Debt/Equity = 1.56 🤨)
- EV/EBITDA: 12.6
- P/E: ~21
The company is expanding like it just discovered cheap credit, winning court cases in Dubai, acquiring companies, launching APIs under the PLI scheme, and simultaneously burning cash in working capital like it’s Diwali every quarter.
Is this a classic small-cap pharma compounding story in the making, or a leverage-fuelled chemistry experiment that could go boom? Let’s find out.
2. Introduction – From Jobwork Uncle to API Aspirant
Sudarshan Pharma started life in 2008 as a jobwork-heavy pharma and chemicals player. Translation: other pharma companies brought raw materials, SPIL did the grinding, mixing, heating, praying, and invoiced them modest margins.
Fast forward to FY25–FY26, and management has decided:
“Enough of being the labour contractor. We want to own molecules.”
Now SPIL wants to:
- Manufacture critical APIs imported from China
- Build branded formulations
- Milk the PLI scheme
- Expand into Africa + Middle East
- Acquire healthcare assets
- Launch mouth-dissolving strips and cardiac kits
- Raise up to ₹1,500 Cr (because why not?)
That’s a lot of ambition for a company whose cash conversion cycle is 156 days and whose interest coverage is barely 2.17.
The stock market, being the brutally honest relative at Indian weddings, has responded by cutting the stock price in half.
But markets can be wrong — sometimes
spectacularly so.
So let’s break it down molecule by molecule.
3. Business Model – WTF Do They Even Do?
Think of Sudarshan Pharma as a three-headed chemical beast:
1️⃣ Jobwork Manufacturing (The Cash Cow… Kinda)
SPIL manufactures pharma products on behalf of large clients like:
- Intas
- SRF
- DuPont
- Bayer
- Akzo Nobel
Margins here are thin but stable, volumes are decent, and receivables are… let’s just say “patient”.
2️⃣ Trading in Chemicals & Solvents (The Volume Game)
Products like:
- Acetonitrile
- THF
- DMF / DMSO
- Diethyl Ether
This segment pumps up revenue but does nothing sexy for margins. Think of it as running a kirana store with pharma-grade chemicals.
3️⃣ APIs, Formulations & Brands (The Dream Segment)
Here’s where SPIL wants to level up:
- Vitamin B1 & B6 APIs (PLI approved)
- Branded generics (56 products under “R” trademark)
- Cardiac kits, thyroid meds, lozenges, strips
This segment can transform margins — IF executed well.
Big IF.
So here’s the core question:
👉 Can a jobwork + trading company morph into a branded API powerhouse without blowing up the balance sheet?
4. Financials Overview – Numbers Don’t Lie, They Just Raise Eyebrows
Quarterly Performance (Q3 FY26 – Dec 2025)
| Metric | Latest Qtr | YoY Qtr | Prev Qtr | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 168.01 | 115.66 | 168.87 | 45.3% | -0.5% |
| EBITDA (₹ Cr) | 10.87 | 7.97 | 9.21 | 36.4% | 18.0% |
| PAT (₹ Cr) | 4.15 | 2.88 | 3.87 | 51.4% | 7.2% |
| EPS (₹) | 0.18 | 0.12 | 0.17 | 50% | 5.9% |
Q3 EPS average × 4 =
