Established in June 1992 and converted into a public limited company in 1995, Daikaffil Chemicals operates in the specialty chemicals space with manufacturing facilities in Tarapur, Maharashtra. The company has over 3,000 shareholders, including foreign collaborators, but has failed to generate meaningful institutional interest, with zero holdings from foreign institutional investors, mutual funds, or insurance companies. The promoter group, led by Mikusu India Private Limited, holds a stable 52.65% stake with no pledging.
The most recent annual financial data available from March 2018 reveals a company grappling with declining revenues and profitability challenges. Net sales for FY2018 stood at ₹22.00 crores, marking a 15.40% year-on-year decline from ₹26.00 crores in FY2017. Net profit remained stagnant at ₹2.00 crores, unchanged from the previous year, whilst operating margins compressed to 13.60% from 15.40%.
Financial Performance: Revenue Erosion and Profitability Concerns
An examination of quarterly performance through March 2018 highlights the volatility and challenges facing Daikaffil Chemicals. In Q4 FY2018 (March quarter), the company reported net sales of ₹5.85 crores, down 3.47% quarter-on-quarter and 7.73% year-on-year. Operating profit excluding other income stood at ₹0.90 crores with a margin of 15.34%, showing some recovery from the preceding quarter but still below the 21.03% margin achieved in September 2016.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | PAT Margin |
|---|---|---|---|---|---|
| Mar'18 | 5.85 | -3.47% | 0.89 | +11.25% | 15.19% |
| Dec'17 | 6.06 | +30.04% | 0.78 | +700.00% | 12.95% |
| Sep'17 | 4.66 | -25.32% | 0.10 | -82.46% | 2.15% |
| Jun'17 | 6.24 | -1.58% | 0.57 | +21.28% | 9.13% |
| Mar'17 | 6.34 | -17.98% | 0.47 | -21.67% | 7.43% |
| Dec'16 | 7.73 | -3.50% | 0.60 | -36.17% | 7.80% |
| Sep'16 | 8.01 | — | 0.94 | — | 11.79% |
The quarterly trend reveals significant volatility, with sales swinging from ₹8.01 crores in September 2016 to as low as ₹4.66 crores in September 2017, before recovering modestly. Net profit margins have been equally erratic, ranging from a dismal 2.15% in Q2 FY2018 to a relatively healthier 15.19% in Q4 FY2018. This inconsistency raises concerns about the sustainability of operations and the company's ability to maintain pricing power in a competitive specialty chemicals market.
On an annual basis, the five-year sales growth rate stands at just 6.93%, whilst EBIT growth has contracted at an alarming rate of -190.59%, indicating severe deterioration in operational efficiency and profitability. The company's tax ratio of 30.40% appears reasonable, but the absence of dividend payments (0.0% payout ratio) suggests management is either conserving cash or lacks confidence in sustainable profit generation.
⚠️ Critical Profitability Concerns
Daikaffil Chemicals faces fundamental profitability challenges with negative returns on both equity and capital employed. The latest ROE of -18.42% and average ROCE of -34.93% indicate the company is destroying shareholder value rather than creating it. With operating losses persisting, the long-term fundamental strength remains weak, limiting any prospects for near-term recovery.
Balance Sheet Quality: Debt-Free but Struggling
Despite operational challenges, Daikaffil Chemicals maintains a debt-free balance sheet, which represents one of the few positive aspects of its financial profile. As of March 2018, the company had zero long-term debt and shareholder funds of ₹25.54 crores, comprising share capital of ₹6.00 crores and reserves of ₹19.54 crores. The book value per share stands at ₹28.51, whilst the stock trades at ₹50.00, implying a price-to-book ratio of 3.39x.
Current assets of ₹13.29 crores and fixed assets of ₹14.69 crores provide some asset backing, though the company's ability to generate adequate returns from these assets remains questionable. The average net debt to equity ratio of -0.13 indicates Daikaffil is actually a net cash company, with cash reserves exceeding any debt obligations. However, this financial cushion has not translated into operational success or shareholder returns.
Working capital management appears stable, with current liabilities of ₹3.65 crores well covered by current assets. Trade payables stood at ₹2.97 crores as of March 2018, up from ₹1.44 crores in the prior year, suggesting the company may be extending payment terms with suppliers. Cash flow from operations generated ₹2.64 crores in FY2018, down from ₹5.04 crores in FY2017, reflecting the deteriorating operational performance.
Valuation Analysis: Overvalued Despite Losses
Daikaffil Chemicals' valuation metrics paint a troubling picture for potential investors. The company is currently loss-making on a trailing twelve-month basis, rendering the P/E ratio meaningless (displayed as "NA (Loss Making)"). The price-to-book ratio of 3.39x appears elevated, particularly when compared to the specialty chemicals peer group average of approximately 1.0x.
| Valuation Metric | Daikaffil Chemicals | Assessment |
|---|---|---|
| P/E Ratio (TTM) | NA (Loss Making) | Not Applicable |
| Price to Book Value | 3.39x | Premium to Peers |
| EV/EBITDA | -23.88x | Negative (Loss Making) |
| EV/Sales | 1.66x | Elevated |
| Dividend Yield | NA | No Dividends |
The enterprise value to EBITDA multiple of -23.88x and EV to EBIT of -18.88x are negative due to operating losses, making traditional valuation comparisons difficult. The EV to sales ratio of 1.66x appears reasonable in isolation but loses meaning when the company cannot convert sales into profits. The overall valuation grade of "Risky" assigned by proprietary analysis reflects these fundamental concerns.
With the stock trading at ₹50.00 and book value at ₹28.51, investors are paying a 75% premium to book value for a company with negative returns and declining revenues. This valuation appears unjustified given the operational challenges and lack of clear turnaround catalysts. The absence of dividend payments further diminishes the investment case, as shareholders receive no income whilst waiting for a potential recovery that may never materialise.
Peer Comparison: Underperformance Across Metrics
When compared to specialty chemicals peers, Daikaffil Chemicals lags significantly across key performance indicators. The company's ROE of 0.0% (effectively negative when considering the latest -18.42% figure) compares unfavourably to peer averages around 2-3%. The price-to-book ratio of 3.39x stands well above peers such as Hardcastle & Waud (1.04x), Eiko Lifescience (1.23x), and Alkali Metals (1.73x).
| Company | P/E (TTM) | P/BV | ROE | Div Yield | Debt/Equity |
|---|---|---|---|---|---|
| Daikaffil Chemicals | NA (Loss Making) | 3.39x | 0.0% | NA | -0.13 |
| Alkali Metals | NA (Loss Making) | 1.73x | 2.49% | 0.70% | 0.42 |
| Eiko Lifescience | 22.99x | 1.23x | 2.71% | NA | 0.00 |
| Hardcastle & Waud | 16.66x | 1.04x | 3.63% | NA | -0.04 |
| Dynamic Industries | 18.88x | 0.72x | 2.49% | 0.86% | 0.31 |
Amongst the peer group, Daikaffil ranks last by market capitalisation at ₹30.00 crores and demonstrates the weakest operational performance. Whilst the company shares the distinction of being debt-free with Eiko Lifescience and Hardcastle & Waud, it fails to leverage this advantage into positive returns. The absence of institutional holdings (0.0% from FIIs, mutual funds, and insurance companies) contrasts with better-performing peers that typically attract some institutional interest.
Shareholding Pattern: Stable Promoter Base, Zero Institutional Interest
The shareholding structure of Daikaffil Chemicals has remained largely stable over recent quarters, with promoter holding steady at 52.65% since June 2025. Prior to that, promoters increased their stake from 51.25% in December 2024 to 52.65% in March 2025, demonstrating some confidence in the company's prospects. The promoter group is led by Mikusu India Private Limited (48.48%), Sams Industries Private Limited (3.83%), and individual promoters holding minor stakes.
| Quarter | Promoter | FII | Mutual Funds | Insurance | Public |
|---|---|---|---|---|---|
| Dec'25 | 52.65% | 0.00% | 0.00% | 0.00% | 47.35% |
| Sep'25 | 52.65% | 0.00% | 0.00% | 0.00% | 47.35% |
| Jun'25 | 52.65% | 0.00% | 0.00% | 0.00% | 47.35% |
| Mar'25 | 52.65% | 0.00% | 0.00% | 0.00% | 47.35% |
| Dec'24 | 51.25% | 0.00% | 0.00% | 0.00% | 48.75% |
Positively, there is no promoter pledging, eliminating concerns about forced selling or financial distress at the promoter level. However, the complete absence of institutional investors raises red flags about the company's investment appeal. With zero holdings from foreign institutional investors, mutual funds, and insurance companies, Daikaffil has failed to attract sophisticated investors who typically conduct thorough due diligence before committing capital.
The non-institutional shareholding of 47.35% consists primarily of retail investors and high-net-worth individuals amongst the company's 3,000-plus shareholder base. This lack of institutional participation suggests professional fund managers view the risk-reward profile as unattractive, likely due to the company's small size, limited liquidity, operational challenges, and uncertain growth prospects.
Stock Performance: Devastating Losses Across All Timeframes
The stock price performance of Daikaffil Chemicals has been catastrophic for investors across most timeframes. Trading at ₹50.00 as of February 11, 2026, the stock has declined 73.32% over the past year, vastly underperforming the Sensex which gained 10.47% during the same period. This translates to negative alpha of -83.79%, representing one of the worst relative performances in the specialty chemicals sector.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -1.96% | +0.55% | -2.51% |
| 1 Month | -28.57% | +0.84% | -29.41% |
| 3 Months | -52.54% | +0.49% | -53.03% |
| 6 Months | -61.54% | +4.56% | -66.10% |
| Year-to-Date | -33.40% | -1.10% | -32.30% |
| 1 Year | -73.32% | +10.47% | -83.79% |
| 2 Years | -52.72% | +17.72% | -70.44% |
| 3 Years | +74.52% | +38.89% | +35.63% |
The acceleration of losses is particularly concerning, with the stock down 28.57% in just the past month and 52.54% over three months. The 52-week range of ₹48.65 to ₹213.50 illustrates the dramatic collapse, with the current price sitting just 2.77% above the 52-week low and a staggering 76.58% below the 52-week high. This suggests the stock remains in a severe downtrend with no signs of stabilisation.
Technical indicators uniformly point to continued weakness. The stock trades below all key moving averages—5-day (₹50.28), 20-day (₹56.25), 50-day (₹68.78), 100-day (₹92.64), and 200-day (₹122.42)—indicating strong bearish momentum. The overall technical trend is classified as "Bearish" with MACD, RSI, Bollinger Bands, and KST all flashing negative signals on both weekly and monthly timeframes.
Risk-adjusted returns paint an equally grim picture. With volatility of 52.04% and a negative Sharpe ratio, the stock falls into the "High Risk Low Return" category—the worst possible combination for investors. The adjusted beta of 1.50 indicates the stock is 50% more volatile than the broader market, amplifying losses during market downturns without providing commensurate gains during rallies.
Quality Assessment: Below Average Fundamentals
The proprietary quality grade for Daikaffil Chemicals stands at "Below Average," reflecting weak long-term financial performance across multiple parameters. This assessment, which has been in place since November 2025, represents a slight improvement from the "Does Not Qualify" rating the company held prior to February 2025, though this upgrade appears more technical than fundamental.
Key quality metrics reveal structural weaknesses. The five-year sales growth of 6.93% is anaemic for a specialty chemicals company, whilst the five-year EBIT growth of -190.59% indicates severe profit erosion. Average EBIT to interest coverage of -2.52x is deeply concerning, though the company's minimal debt load (average debt to EBITDA of 0.11) provides some cushion. The average sales to capital employed ratio of just 0.39x suggests poor asset utilisation and efficiency.
Most critically, the average ROCE of -34.93% and average ROE of 0.0% demonstrate the company's inability to generate adequate returns on invested capital. These metrics indicate systematic value destruction, with shareholders and creditors alike failing to earn acceptable returns on their investments. The latest ROCE of -26.85% and ROE of -18.42% show no signs of improvement, suggesting these are structural rather than cyclical issues.
Investment Thesis: Multiple Red Flags, Limited Positives
The investment case for Daikaffil Chemicals is severely compromised by fundamental operational challenges, negative returns, and deteriorating financial trends. The company's proprietary Mojo score of just 17 out of 100 places it firmly in "Strong Sell" territory, with the rating having been downgraded from "Sell" to "Strong Sell" in April 2025 when the stock traded at ₹179.15—a price level now 72% above current levels.
✓ KEY STRENGTHS
- Debt-free balance sheet with zero long-term borrowings
- Net cash position (net debt to equity of -0.13)
- No promoter pledging, eliminating distress sale risks
- Stable promoter holding at 52.65% with recent stake increase
- Established presence since 1992 in specialty chemicals
- Positive financial trend designation (short-term)
⚠ KEY CONCERNS
- Negative ROE of -18.42% and ROCE of -26.85% indicating value destruction
- Revenues declining 15.40% YoY to ₹22.00 crores
- Operating losses with EBIT growth of -190.59% over five years
- Zero institutional holdings—no FII, MF, or insurance participation
- Stock down 73.32% over past year with continued bearish trend
- High volatility (52.04%) with negative risk-adjusted returns
- Micro-cap with limited liquidity (₹30 crore market cap)
- P/BV of 3.39x despite losses—unjustified valuation premium
- No dividend payments, providing no income to shareholders
The Mojo 4 Dots analysis reveals a mixed picture with predominantly negative indicators. Whilst the quarterly financial trend is classified as "Positive" based on recent six-month sales growth of 114.57%, this appears to be a low-base effect rather than sustainable momentum. Technical indicators remain firmly bearish, quality is below average, and valuation is risky—creating an overall assessment of "Mixed" that leans heavily negative.
Outlook: What to Watch Going Forward
For investors monitoring Daikaffil Chemicals, several key factors will determine whether the company can stage a turnaround or continues its downward trajectory. The following catalysts and red flags merit close attention:
POSITIVE CATALYSTS
- Sustained revenue growth above 15% QoQ for multiple quarters
- Return to positive ROE and ROCE on a consistent basis
- Operating margins expanding beyond 20% sustainably
- Entry of institutional investors (FIIs or mutual funds)
- Resumption of dividend payments indicating profit confidence
RED FLAGS
- Further revenue declines or margin compression
- Continued negative returns on equity and capital
- Promoter stake reduction or emergence of pledging
- Stock breaking below ₹48.65 (52-week low)
- Depletion of cash reserves without operational improvement
- Continued absence of institutional participation
The specialty chemicals sector in India has shown resilience with reasonable growth prospects, but Daikaffil has failed to capitalise on industry tailwinds. The sector returned -2.95% over the past year, significantly outperforming Daikaffil's -73.32% decline by 70.37 percentage points. This massive underperformance suggests company-specific issues rather than sector-wide challenges.
Given the micro-cap nature of the stock, limited liquidity, and absence of institutional coverage, information flow is likely to remain sparse. Investors should demand concrete evidence of operational turnaround—sustained profit growth, margin expansion, and positive returns—before considering any position. The current technical setup remains bearish with the stock trading below all moving averages and showing no signs of trend reversal.
The Verdict: Exit Recommended
Score: 17/100
For Fresh Investors: Avoid completely. The combination of negative returns, declining revenues, operational losses, and bearish technicals presents unacceptable risk. No institutional participation and micro-cap liquidity constraints compound the challenges. Wait for concrete evidence of sustained turnaround before considering entry.
For Existing Holders: Consider exiting on any relief rally. The stock has declined 73.32% over the past year and shows no signs of stabilisation. With negative ROE of -18.42%, deteriorating fundamentals, and continued bearish technical trend, the risk-reward remains heavily skewed to the downside. Cut losses and redeploy capital to higher-quality opportunities.
Fair Value Estimate: Given persistent losses and negative returns, fair value is estimated at ₹35-40 per share (30-20% downside from current ₹50.00), based on book value discount appropriate for a loss-making micro-cap with structural challenges.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results, and all investments carry risk of loss.
