1. At a Glance
Arrow Greentech isn’t just making biodegradable packaging — it’s printing patents and profits. With an EPS of ₹41.84, ROE of 40%, and ROCE of 54%, this ₹1,169 Cr microcap marvel just pulled off a 3-year profit CAGR of 106%. Meanwhile, its water-soluble films and mouth-dissolving strip tech quietly slide into everything from pharma to FMCG. Debt? Almost zero. Promoters? Slowly exiting. Still, Arrow’s bottom line is greener than its bio-films.
2. Introduction
Arrow Greentech is the rare B2B company where your investment thesis can include the phrase “mouth-dissolving strips” without sounding high. From humble origins in 1982 to becoming a global innovator in water-soluble and biodegradable films, this is not your average packaging company.
It’s also a royalty magnet. Arrow earns income not just from selling products, but from licensing out its patents in India and abroad. Think of it as a tech company disguised as a chemical manufacturer, with an OPM of 34% to show for it. But with promoter holding dropping from 70.3% to 64.8% in 3 years, is this a healthy shuffle — or the start of a clean exit?
3. Business Model (WTF Do They Even Do?)
Arrow Greentech makesPVA/PVOH-based water-soluble films, but that’s just the tip of the eco-friendly iceberg. Here’s what’s brewing:
- Water-Soluble Packaging: For detergents, dyes, and agrochemicals — no waste, no hassle.
- Mouth Dissolving Films: Used in pharma/nutraceuticals. Melts in the mouth like profit on the balance sheet.
- Security Products: Water-marked holograms and high-security documents.
- Patent Licensing: The real sleeper — earns through royalty income from global IP.
If Marvel
owned patents on biodegradable superhero suits, Arrow would probably collect the royalties.
4. Financials Overview
EPS TTM = ₹41.84 → P/E = ₹776 ÷ ₹41.84 ≈ 18.54 (fair given margin profile + IP income).
FY25 (TTM) Snapshot:
- Revenue: ₹219 Cr
- EBITDA: ₹75 Cr
- PAT: ₹54 Cr
- OPM: 34%
- ROE: 40%
- ROCE: 54%
- Debt: ₹1 Cr (basically debt-free)
You rarely see this combo: smallcap + high margin + IP moat + no debt.
5. Valuation – Fair Value Range
| Method | Metric Used | Multiple | Value/Share (₹) |
|---|---|---|---|
| P/E Method | EPS ₹41.84 × 18–22 | 753–921 | |
| EV/EBITDA | EBITDA ₹75 Cr × 10–12 | 700–840 | |
| DCF | 10% growth, 12% WACC | 720–880 |
Fair Value Range: ₹700 – ₹920
This FV range is for educational purposes only and is not investment advice.
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26 PAT: ₹11 Cr on ₹42 Cr revenue — margins holding steady.
- Promoters reduced stake by 5.5% in last 3 years — FOMO or succession planning?
- Patent pipeline continues to expand — potential for
