At a Glance
Zenotech Laboratories, the Sun Pharma-backed oncology injectable maker, reported Q1 FY26 net profit of just ₹0.99 crore, down 23% YoY, with operating margins shrinking to 25%. Revenue dipped to ₹9.64 crore, making this quarter look more like a cost-cutting exercise than a growth story. The stock sits at ₹60 (down 13% YoY) with an eye-watering P/E of 89, because apparently, investors believe in miracles.
Introduction
If biotech is supposed to be sexy, Zenotech is the awkward nerd still trying to fit in. It makes oncology injectables—a niche with potential—but remains a small-cap sidekick in the Sun Pharma universe. The last few years were a roller coaster: negative profits, sudden spikes, and now a slow bleed. The company is debt-free, which is great, but its growth is crawling, margins are slipping, and the stock is priced like it’s the next Divi’s Lab. Spoiler: it’s not.
Business Model (WTF Do They Even Do?)
Zenotech manufactures:
- Oncology Injectables – niche, high-tech, but low scale.
- Biotech Products – fancy words, small volumes.
- General Injectables – bread and butter for survival.
They’re a contract manufacturer for Sun Pharma, which is both a blessing (steady orders) and a curse (limited independence).
Financials Overview
Q1 FY26 numbers scream caution:
- Revenue: ₹9.64 Cr (↓2.7% YoY)
- Operating Profit: ₹2.46 Cr (↓45% YoY)
- OPM: 25.5% (vs 36.8% last year – big drop)
- Net Profit: ₹0.99 Cr (↓23% YoY)
- EPS: ₹0.16 (TTM ₹0.86)
For FY25, revenue was ₹43.05 Cr with PAT ₹5.61 Cr. Growth? Meh.
Valuation
- P/E: 88.6 – absurd for a ₹5 Cr profit company.
- P/B: 3.8 – not cheap.
- Fair Value Range: ₹40–₹50.
Market at ₹60 assumes margin recovery, which is not yet visible.
What’s Cooking – News, Triggers, Drama
- AGM on Sept 26, 2025 – expect the usual routine, no blockbuster.
- New auditors appointed – maybe fresh eyes on books?
- Margins dropping – rising costs, pricing pressure in oncology injectables.
- No dividends – investors get only hope.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 111 |
| Liabilities | 111 |
| Net Worth | 96 |
| Borrowings | 0 |
Debt-free, with healthy reserves, but asset turnover is painfully low.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating | 20.7 | 11.8 | 9.5 |
| Investing | -5.8 | -21.1 | 15.3 |
| Financing | -6.1 | 0.0 | 0.0 |
Cash flow positive but declining – not a great sign.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 4.8% |
| ROCE | 9.4% |
| P/E | 88.6 |
| PAT Margin | 10.2% |
| D/E | 0 |
Commentary: ROE is anaemic, margins are falling, and valuation is stretched.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 42.4 | 40.8 | 43.1 |
| EBITDA | 20.7 | 17.3 | 14.2 |
| PAT | 11.6 | 8.3 | 5.6 |
Revenue stagnant, profits sliding.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Sun Pharma | 52,578 | 11,454 | 35.7 |
| Divi’s Labs | 9,360 | 2,190 | 79.8 |
| Dr. Reddy’s | 33,520 | 5,657 | 19.0 |
| Zenotech | 43 | 5.6 | 88.6 |
Commentary: Peers are giants; Zenotech is overvalued micro fry.
Miscellaneous – Shareholding, Promoters
- Promoters: 68.84% (Sun Pharma holds the fort).
- Public: 30% – retail hoping for a Sun Pharma magic trick.
- Institutions: negligible.
- Buzz: None beyond AGM and minor corporate actions.
EduInvesting Verdict™
Zenotech is a Sun Pharma-backed minnow with falling margins and negligible growth. The stock trades at fantasy multiples despite declining profits. Unless Sun Pharma decides to inject big capital and strategy, this remains a weak play.
Final Line: A biotech label doesn’t make it a biotech multibagger – watch from a safe distance.
Written by EduInvesting Team | 28 July 2025
SEO Tags: Zenotech Laboratories, Q1 FY26, oncology injectables, biotech stock, Sun Pharma subsidiary
