📈 At a Glance
Sotac Pharmaceuticals Ltd is a small-cap pharma manufacturer doing ₹97 Cr in annual sales and ₹8 Cr profit. Its FY25 OPM shot up to 14%, ROE hit 16%, and profit jumped 121%. But with debtor days rising to 128 and cash flows turning negative, this SME pharma play is not as clean as its antibiotics suggest.
🚨 1. Introduction with Hook
“Small cap pharma stock with 7x EPS growth” sounds like the beginning of a multibagger story… until you open the balance sheet.
Sotac Pharma has the numbers — profit up 121%, margins doubled, ROE/ROCE rising. But like every good SME plot twist, the cash is missing, and the working capital cycle looks like a tangle of IV drips.
💉 2. WTF Do They Even Do?
Sotac makes and sells pharma formulations across 15+ therapeutic areas:
🩺 Portfolio includes:
- Anti-diabetics
- Antibiotics (β-lactams + non-β-lactams)
- Antihypertensives & cardiac drugs
- Dermatology, antacids, analgesics
- Antifungal, antiviral, iron supplements
- Cephalosporins, anti-allergics
- And vitamins/minerals for desi immunity boosts
Essentially, they don’t sell your cure — they make it for the big guys.
🧾 3. Financials Overview – FY25
| Metric | FY25 | YoY Growth |
|---|---|---|
| Revenue | ₹96.99 Cr | ↓ -6.5% |
| EBITDA | ₹13.63 Cr | ↑ 59% |
| EBITDA Margin | 14.05% | ↑ 590 bps |
| Net Profit | ₹8.03 Cr | ↑ 121% |
| EPS | ₹7.27 | ↑ from ₹3.87 |
| ROE | 16.3% | ↑ from 11% |
| ROCE | 15.5% | ↑ from 10% |
🎯 Margins doubled, profit more than doubled — despite revenue drop. Clearly some serious cost control or high-margin contract manufacturing shift.
📊 4. Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹137 |
| EPS (FY25) | ₹7.27 |
| P/E | 18.8x |
| Book Value | ₹48.2 |
| P/B | 2.83x |
| Market Cap | ₹151 Cr |
👨⚖️ Fair Value Range = ₹100 – ₹120
Decent growth and margins, but negative cash flow and rising debt keep it below par.
🔍 5. What’s Cooking – News, Triggers, Drama
- 🧾 FY25 audit was clean with unmodified opinion
- 🎁 Declared ₹0.10/share dividend (first time)
- 🧑⚕️ Expansion into new client segments and P2P APIs possible
- 📉 Stock down ~5% YoY despite solid FY25 — market nervous about liquidity?
No major red flags, but market clearly watching working capital closely.
🧮 6. Balance Sheet – How Much Debt, How Many Dreams?
| FY25 Balance Sheet Highlights | ₹ Cr |
|---|---|
| Reserves & Surplus | ₹42.2 |
| Total Liabilities | ₹124.3 |
| Borrowings | ₹43.7 |
| Net Worth | ₹53.25 |
| Fixed Assets + CWIP | ₹48.9 |
| Investments | ₹3.78 |
➡️ Debt-to-Equity = ~0.82
➡️ Assets are growing, but so is leverage — not alarming yet, but worth tracking.
🪙 7. Cash Flow – Sab Number Game Hai
| Year | CFO | FCF |
|---|---|---|
| FY23 | ₹8.14 Cr | Positive |
| FY24 | ₹-16.1 Cr | 🚨 Negative |
| FY25 | ₹-4.33 Cr | 🚨 Still Negative |
- Capex-heavy phase likely explains the cash crunch
- Despite strong profit, no free cash = 😬
This isn’t “fraud panic” bad — but it’s “wait and verify” territory.
🧪 8. Ratios – Sexy or Stressy?
| Metric | FY24 | FY25 |
|---|---|---|
| ROE | 11.4% | 16.3% ✅ |
| ROCE | 10% | 15.5% ✅ |
| OPM | 8.2% | 14.0% ✅ |
| Net Profit Margin | 3.4% | 8.3% ✅ |
| Debtor Days | 92 | 128 ❌ |
| Working Capital Days | 92 | 174 ❌ |
⛔ Red flag: Debtors rising = cash stuck = potential credit sales issue
📈 9. P&L Breakdown – Show Me the Money
| FY25 | ₹ Cr |
|---|---|
| Revenue | ₹96.99 |
| Raw Material | ₹51.8 |
| Employee Cost | ₹10.5 |
| Other Expenses | ₹21.1 |
| EBITDA | ₹13.63 |
| Depreciation | ₹3.84 |
| Interest | ₹2.58 |
| Other Income | ₹3.9 |
| PBT | ₹11.11 |
| Tax | ₹3.08 |
| Net Profit | ₹8.03 |
➡️ Other income of ₹3.9 Cr helped a lot — watch if it’s recurring or one-off.
⚔️ 10. Peer Comparison – Who Else in the Game?
| Company | P/E | OPM | ROE | Market Cap |
|---|---|---|---|---|
| Sun Pharma | 35x | 29% | 16.9% | ₹4.02 L Cr |
| Divi’s Lab | 83x | 31.7% | 15.3% | ₹1.82 L Cr |
| Zydus | 21.5x | 30.4% | 21.3% | ₹1 L Cr |
| Sotac | 18.8x | 14% | 16.3% | ₹151 Cr |
Not comparable in scale, but Sotac’s ROE is on par with giants — interesting for its size.
🧾 11. Miscellaneous – Shareholding, Promoters, Bonus Trivia
| Category | Mar 2025 |
|---|---|
| Promoters | 72.85% ✅ Stable |
| FIIs | 15.12% ✅ Doubled in a year |
| Public | 11.35% 🔻 Declining |
| No. of Shareholders | 243 only 😳 (tight float!) |
🧠 Low float + SME tag = occasional crazy moves incoming.
🎤 12. EduInvesting Verdict™
Sotac is a pharma SME with clean labs and dirty receivables.
- FY25 was fantastic on paper: margins doubled, profits 2x, ROE hit 16%
- But rising debtors + negative CFO = “kaagaz pe profit, cash me tension”
- And that 18x P/E looks fine only if FY26 sustains margins without more debt
EduScore™: 58/100
🚨 Worth tracking quarterly, not chasing blindly.
✍️ Written by Prashant | 📅 July 4, 2025
Tags:
Sotac Pharma, SME pharma stock, contract manufacturing India, pharma SME FY25, pharma stocks India 2025, Sotac Pharmaceuticals financials, pharma stock analysis, working capital issues, small cap pharma, Indian API companies, healthcare manufacturing SME
