At a Glance
Sunil Healthcare, India’s second-largest empty capsule shell maker, popped out its Q1 FY26 numbers, and they’re about as exciting as a placebo pill. Revenue was ₹22.6 Cr, net profit ₹0.91 Cr (yes, less than a Mumbai flat), and OPM a modest 14.4%. Despite this, the stock trades at a sky-high P/E of 483, making it the “Tesla” of capsules—but without Elon’s tweets. With high debtor days (182) and stagnant growth, investors may need a strong vitamin D supplement to hold on.
Introduction
Empty capsules—Sunil Healthcare’s bread, butter, and everything in between. The company manufactures empty hard gelatin capsules (EHGCs) and vegan HPMC shells, which pharma giants use to deliver drugs. It’s a critical niche, but margins are thinner than a wafer biscuit.
Despite being the No. 2 capsule maker, the company has been struggling: sales growth over the last five years is just 3.6% and ROE is negative (-2%). The Q1 FY26 profit looks like a rounding error, yet the stock trades at ₹84.8 because—well, hope is a strategy, right?
Business Model (WTF Do They Even Do?)
Sunil Healthcare makes empty capsules—the outer shell that holds medicines. It offers multiple variants:
- Double/Triple Lock Capsules (because you don’t want drugs leaking),
- Printed Capsules (for branding), and
- Vegan HPMC Capsules (for the plant-based crowd).
Revenue is driven by pharma demand, but the company faces intense competition from global giants and domestic players like ACG. High working capital and slow collections (182-day debtors!) make cash flows wobbly.
Financials Overview
- Q1 FY26: Revenue ₹22.6 Cr, Net Profit ₹0.91 Cr, OPM 14.4%.
- FY25: Revenue ₹83.4 Cr, Net Loss ₹1.4 Cr.
- Margins: OPM improved from 4.7% in FY24 to 13.4% in FY25, but still low compared to peers.
- Debt: ₹68.6 Cr, not catastrophic but high for this size.
The P/E of 483 is pure insanity, given profits are microscopic.
Valuation – The Crystal Ball Section
- P/E Method: EPS (TTM) ₹0.17 × Industry P/E 25 = ₹4.25
- EV/EBITDA: EBITDA ₹11.3 Cr × 7 = ₹79 Cr EV → Per share ≈ ₹40
- DCF: Growth 5%, discount 12% → ₹35
🎯 Fair Value Range: ₹35–₹40 (Current ₹84.8: 2× overvalued)
What’s Cooking – News, Triggers, Drama
- Capsule Demand: Growing with pharma, but Sunil’s market share is stagnant.
- Vegan Trend: HPMC capsules could be a game-changer—if they scale.
- Debt: Needs reduction; interest eats profits.
- AGM on Sept 29, 2025: Expect routine resolutions, nothing spicy.
Balance Sheet
| Particulars (₹ Cr.) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Assets | 120.8 | 158.5 | 161.9 |
| Liabilities | 120.8 | 158.5 | 161.9 |
| Borrowings | 36.8 | 66.2 | 68.6 |
| Net Worth | 56.0 | 57.9 | 56.8 |
Auditor’s Roast: Borrowings ballooned 2× in two years; reserves barely moved. Financial health? Meh.
Cash Flow – Sab Number Game Hai
| (₹ Cr.) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating Cash Flow | 7.5 | -15.4 | 11.5 |
| Investing Cash Flow | -3.4 | -10.1 | -7.7 |
| Financing Cash Flow | -3.8 | 25.0 | -3.9 |
Commentary: CFO is positive again in FY25, but volatility shows inconsistent operations.
Ratios – Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROE | 2% | -3% | -2% |
| ROCE | 15% | 3% | 4% |
| PAT Margin | 6% | -2% | 0.2% |
| D/E | 0.6 | 1.1 | 1.2 |
Verdict: Ratios scream stress, not sexy.
P&L Breakdown – Show Me the Money
| (₹ Cr.) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 110.5 | 90.2 | 83.4 |
| EBITDA | 16.2 | 4.3 | 10.3 |
| PAT | 6.7 | -1.8 | -1.4 |
Commentary: Revenue falling, profits missing—classic decline mode.
Peer Comparison
| Company | Revenue (₹ Cr.) | PAT (₹ Cr.) | P/E |
|---|---|---|---|
| Sun Pharma | 52,578 | 11,454 | 36 |
| Divi’s Lab | 9,360 | 2,190 | 81 |
| Torrent Pharma | 11,835 | 2,019 | 63 |
| Sunil Healthcare | 84 | 0.18 | 483 |
Comment: Peer P/Es look premium, but Sunil’s P/E is a cosmic joke.
Miscellaneous – Shareholding, Promoters
- Promoters: 73.5%—steady, but no signs of increasing stake.
- Public: 26.4%—retail still holding.
- Institutions: None worth mentioning.
Promoter Commentary: At least they’re not pledging. Small mercy.
EduInvesting Verdict™
Sunil Healthcare is a niche capsule maker with a decent product line but weak financial health. Falling revenues, high debtor days, and huge leverage keep risks high. Despite this, the market prices it like a high-growth stock, which it is not (yet).
SWOT Analysis
- Strengths: Established player, second-largest in India, steady promoter holding.
- Weaknesses: Low ROE, stagnant growth, high working capital.
- Opportunities: Vegan capsule demand, export potential.
- Threats: Debt pressure, competition, pricing power erosion.
Final Word: Sunil Healthcare’s stock is trading on hope rather than fundamentals. Until growth kicks in, investors may want to swallow this capsule with caution.
Written by EduInvesting Team | 30 July 2025SEO Tags: Sunil Healthcare, Empty Gelatin Capsules, Pharma Supplies
