1. At a Glance
Arrow Greentech Ltd (AGL), born in 1982, is India’s quirky eco-tech veteran. It makeswater-soluble films(think detergent pods but Indian),mouth-dissolving pharma strips, andJames Bond–level security threads—all backed by 27 patents. Revenue? ₹219 Cr in FY25, with 90% coming from the high-tech/security segment. PAT hit ₹54 Cr with OPM north of 34%. But the stock has been a rollercoaster: from ₹1,099 highs to ₹550 now (down 50%). Investors get whiplash, but margins say “genius.” The story is less about green washing and more about patent monetisation—Arrow is trying to be the Reliance Jio of security-tech, minus the Ambani money.
2. Introduction
Some companies do “one thing well.” Arrow Greentech said, “Nah, let’s do three things oddly well.”
- Water-soluble films (green packaging).This is the eco-friendly bit. Detergents, agrochemical sachets, hospital infection-control bags—stuff that dissolves in water instead of polluting oceans.
- Security products.Threads and features that stop fake currency, pharma labels, or maybe your cousin’s fake Ray-Bans.
- Healthcare strips.Dissolving films for medicines and nutraceuticals—Vitamin D, melatonin, even Sildenafil. (Yes, Arrow makes patented Viagra-on-a-strip.)
And then there’s theIP portfolio—27 granted patents globally, 40 trademarks, and another 43 pending. Arrow is basically hoarding intellectual property like your grandma hoards plastic dabbas—some useful, some just there “in case.”
Financially, the company’s margins are insane for its size. 34% OPM in FY25 is higher than FMCG royalty Nestlé enjoys. Debt? Virtually zero. ROE? A spicy 40%. But the stock is down 34% in a year. Why? Investors hate waiting for IP monetisation, and Arrow’s global expansion story sounds more like “work in progress” than “cash in hand.”
3. Business Model (WTF Do They Even Do?)
Arrow operates like three start-ups stuffed inside one listed SME.
- Green Products (10% of FY25 revenue):PVA/PVOH water-soluble films (Watersol brand). Think eco-friendly packaging for agrochemicals, detergents, laundry bags. Cool, but only 10% revenue share.
- High-Tech Products (90%):Anti-counterfeit solutions, security threads, high-security applications. This is the cash cow. Clients include governments and corporates paranoid about fakes.
- Healthcare Strips:Through Avery Pharma subsidiary. Mouth-dissolving strips for pharma and nutraceutical markets. Operating as CDMO (contract manufacturer) for big clients.
The company monetises viapatented tech+manufacturing.
Unlike plain packaging peers (Uflex, Cosmo First), Arrow’s USP is IP-backed niche products. In short: it’s less “mass FMCG supplier” and more “patent lawyer meets polymer chemist.”
4. Financials Overview (Q1 FY26 vs YoY & QoQ)
| Metric | Q1 FY26 | Q1 FY25 | Q4 FY25 | YoY % | QoQ % |
|---|---|---|---|---|---|
| Revenue | ₹41.6 Cr | ₹66 Cr | ₹57 Cr | -37% | -27% |
| EBITDA | ₹14.2 Cr | ₹28 Cr | ₹16 Cr | -49% | -12% |
| PAT | ₹10.9 Cr | ₹20 Cr | ₹11 Cr | -46% | -1% |
| EPS (₹) | 7.2 | 13.4 | 7.6 | -46% | -5% |
Annualised EPS (FY26 run-rate): ~₹29. At CMP ₹550 → P/E ~19x.
Commentary: Margins held (34% OPM), but revenue dropped hard. Classic patent/IP biz issue—lumpy orders. One quarter you’re a rockstar, next you’re the opening act at a college fest.
5. Valuation (Fair Value RANGE Only)
- P/E Method:EPS FY25 = ₹35.7. Industry PE ~22. FV range 18–24× →₹640 – ₹860.
- EV/EBITDA:FY25 EBITDA ~₹81 Cr; EV ~₹785 Cr; EV/EBITDA = 9.7×. Applying 10–12× →₹800 – ₹960 Cr EV→ per share ~₹530 – ₹650.
- DCF (rough):20% growth, 12% discount, 4% terminal = FV ~₹600 – ₹900.
Overall FV Range:₹530 – ₹900This FV range is for educational purposes only and is not investment advice.
6. What’s Cooking – News, Triggers, Drama
- Q1 FY26 Results:Revenue fell 37%, but margins held. Management spin: “focus on innovation.” Investor reaction: “focus on sales please.”
