🧵 At a Glance
Transchem Ltd is a classic example of a mid-cap stock that decided it’s more fun playing the stock market than running a factory. Originally in the mushroom export business (yes, really), the company has shut down operations for years, monetized its plant, and now earns via “short-term treasury operations”. Because who needs products when you have passive income?
1. 🪝 Hook: How to Become a Pharma Peer Without Making Medicine
Imagine chilling on a ₹70 Cr war chest, doing zero manufacturing, and still making ₹5 Cr profit annually. While big boys like Sun Pharma and Cipla are sweating with R&D, Transchem is just parking money and cashing interest cheques.
This isn’t a business. It’s a masterclass in financial jugaad.
2. 🧪 WTF Do They Even Do?
Once upon a time, Transchem had a mushroom cultivation unit in Pune—100% export oriented, thriving in the early days.
🚫 But now?
- Mushroom unit shut.
- Land + assets monetized.
- No active production.
- Revenues mostly from interest income on investments.
TL;DR: They’re a public company running a glorified FD.
3. 💰 Financials Overview – Profit, Margins, ROE, Growth
| Metric | Value |
|---|---|
| 5Y Profit CAGR | 68% 🚀 |
| FY25 Net Profit | ₹5.23 Cr |
| FY25 Sales | ₹2.63 Cr |
| ROE (FY25) | 6.75% |
| ROCE (FY25) | 9.11% |
| OPM | Negative (because there’s no real ops) |
🔍 Majority of “profit” = other income (₹8.5 Cr in FY25)
They’re literally doing nothing, and still beating many small-cap “real” businesses.
4. 📊 Valuation – Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹41.3 |
| Book Value | ₹64.8 |
| P/B Ratio | 0.65x ✅ |
| P/E Ratio | 9.65x |
🧠 At 0.65x book, the stock looks cheap on surface. But remember:
- The “E” is mostly interest income.
- There’s no revenue growth engine.
- No clear business roadmap.
🎯 Fair Value Range: ₹35–₹50
Assuming 6–8% yield on ₹70 Cr assets and no business revival. Optionality premium caps upside.
5. 🍲 What’s Cooking – Any Drama, News, Triggers?
👨💼 Latest Updates:
- Re-appointed Mr. Mahesh Rananavre as WTD for 5 more years
- Auditor resigned → New one (Mathur & Co.) appointed till 2030
- Promoter holding up by 4.77% in March 2025 💪
🧨 But wait:
- No new business announcement
- No restart of manufacturing
- Just… vibes
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Item | Value |
|---|---|
| Total Assets | ₹79.7 Cr |
| Equity Capital | ₹12.24 Cr |
| Reserves | ₹67.08 Cr |
| Borrowings | ₹0 Cr ✅ |
| Fixed Assets | ₹0.05 Cr (yep, that’s it) |
| Investments + Cash | ~₹70 Cr combined |
A clean balance sheet. But it’s more of a closed vault than a growth engine.
7. 🧮 Cash Flow – Sab Number Game Hai
| Year | CFO | CFI | Net Flow |
|---|---|---|---|
| FY24 | ₹-39.3 Cr | ₹5.12 Cr | ₹-34.18 Cr |
| FY25 | ₹36 Cr | ₹6 Cr | ₹+42 Cr 🔥 |
Clearly, they’re rotating investments or encashing FDs. Not operational, but financially agile.
8. 🧮 Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROCE | 9.11% |
| ROE | 6.75% |
| OPM | -55% (obviously) |
| Debtor Days | 376 (lol what are they selling?) |
| Inventory Days | 0 |
This is a one-line summary: “They earn more from not doing business than many do from doing business.”
9. 🧾 P&L Breakdown – Show Me the Money
| FY25 | ₹ Cr |
|---|---|
| Sales | ₹2.63 |
| Operating Loss | ₹-1.46 |
| Other Income | ₹8.53 ✅ |
| Net Profit | ₹5.23 |
98% of earnings = interest & investment income.
Their P&L is basically an FD maturity slip.
10. 🥊 Peer Comparison – Who Else in the Game?
Honestly? No real peers.
But just for fun, Screener puts them next to:
- Sun Pharma (₹4.04 lakh Cr)
- Divi’s Labs
- Dr. Reddy’s
- Cipla
That’s like comparing a YouTube creator with Ambani’s JioCinema.
📉 Closest peer in reality?
Probably an NBFC or investment holding company, not a pharma stock.
11. 👨👩👧 Shareholding, Promoters, KMP
| Shareholder Type | Mar 2025 |
|---|---|
| Promoters | 56.45% ✅ |
| Public | 43.51% |
| FIIs/DIIs | <0.05% |
🧠 Promoter Increased Stake from 51.7% → 56.5%
Could signal something brewing… or just treasury satisfaction.
👔 KMP Watch:
- Mr. Mahesh Rananavre – Re-appointed Whole-Time Director
- No major board overhaul or bigwig entry
12. 🧠 EduInvesting Verdict™
Transchem Ltd = Mushroom Ghost Town turned Fixed Deposit Ltd.
It’s the kind of company that sells a dream, buys a treasury bill, and delivers a dividend-less profit every year.
✔️ No debt
✔️ Clean books
✔️ Promoter increasing stake
✔️ Low valuation
But also…
❌ No operating business
❌ No clear growth plan
❌ 100% dependent on treasury income
❌ No dividend
So unless they actually re-enter a core business, this is a bet on capital allocation, not operations.
🧮 Final Fair Value Range: ₹35–₹50
Based on ~₹5 Cr steady profit, 6–10x PE, and optionality of revival
✍️ Written by Prashant | 📅 July 3, 2025
Tags: Transchem Ltd, mushroom company, fixed deposit stock, investment income, net profit from other income, capital allocation stock, non-operational company, penny stock analysis, value investing India, debt-free stock, EduInvesting
