Stock Performance and Market Context
On 5 January 2026, Unichem Laboratories Ltd (Stock ID: 270205) opened with a gap down of 5.7%, touching an intraday low of Rs.418, its lowest level in the past year. This represents a day change of -1.36%, underperforming its sector by 1.33%. The stock is trading below its 5-day, 20-day, 50-day, 100-day, and 200-day moving averages, signalling sustained downward momentum.
In contrast, the broader market showed relative resilience. The Sensex opened lower at 85,640.05, down 121.96 points (-0.14%), and was trading marginally down at 85,710.08 (-0.06%) during the day. The Sensex remains close to its 52-week high of 86,159.02, just 0.52% away, supported by bullish moving averages with the 50 DMA above the 200 DMA. Small-cap stocks led gains with the BSE Small Cap index rising 0.14%, highlighting a divergence from Unichem’s performance.
Long-Term and Recent Returns
Unichem Laboratories Ltd has experienced a challenging 12 months, with a total return of -39.53%, significantly lagging the Sensex’s positive 8.19% return over the same period. The stock’s 52-week high was Rs.785.85, underscoring the steep decline to the current low. Over the last three years, the stock has consistently underperformed the BSE500 index, reflecting persistent headwinds.
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Financial Metrics and Credit Profile
One of the key concerns weighing on Unichem Laboratories Ltd is its credit profile. The company’s Debt to EBITDA ratio stands at 4.87 times, indicating a relatively high leverage level that may constrain financial flexibility. The debt-equity ratio at half-year ended September 2025 was 0.21 times, the highest recorded recently, signalling increased reliance on debt financing.
Interest expenses have also risen, with quarterly interest costs at Rs.8.24 crores, growing by 25.99% year-on-year. Non-operating income constitutes 44.20% of profit before tax (PBT), highlighting a significant contribution from sources outside core operations.
Profitability and Growth Trends
Profitability metrics remain subdued. The company’s average Return on Equity (ROE) is 1.44%, reflecting limited profitability generated per unit of shareholders’ funds. Return on Capital Employed (ROCE) is modest at 4.9%, although valuation metrics such as the Enterprise Value to Capital Employed ratio of 1.3 suggest the stock is trading at a discount relative to peers.
Net sales have grown at an annualised rate of 12.60% over the past five years, indicating moderate top-line expansion. Operating profit has shown healthier growth, rising at an annual rate of 37.55%, which points to some operational efficiency improvements despite the overall price decline.
Recent Quarterly Results
The company reported flat results in the quarter ended September 2025, with no significant improvement in core earnings. The combination of rising interest costs and a high proportion of non-operating income in profits suggests earnings quality remains an area of focus.
Shareholding and Market Sentiment
Promoters remain the majority shareholders, maintaining control over the company’s strategic direction. The Mojo Score for Unichem Laboratories Ltd is 42.0, with a Mojo Grade of Sell as of 22 July 2025, downgraded from Hold. The market capitalisation grade is 3, reflecting mid-cap status with moderate liquidity and size considerations.
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Valuation and Relative Positioning
Despite the recent price decline, Unichem Laboratories Ltd’s valuation metrics indicate the stock is trading at a discount compared to its peers’ historical averages. The company’s Price/Earnings to Growth (PEG) ratio stands at 0.1, reflecting low price relative to earnings growth, driven by a 419.9% increase in profits over the past year. This divergence between profit growth and share price performance highlights the market’s cautious stance.
While the stock’s recent performance has been below par, the company’s operating profit growth and valuation metrics provide context to the current price levels. The stock’s underperformance relative to the BSE500 index over one year, three years, and three months underscores persistent challenges in regaining investor confidence.
Summary of Key Metrics
To summarise, Unichem Laboratories Ltd’s stock has declined to Rs.418, its 52-week low, reflecting a combination of elevated leverage, modest profitability, and subdued sales growth. The stock’s Mojo Grade of Sell and a Mojo Score of 42.0 further illustrate the cautious market sentiment. Meanwhile, the broader market and sector indices have shown relative strength, highlighting the stock’s divergence from general market trends.
Investors and analysts will continue to monitor the company’s financial health and market positioning as it navigates these challenges.
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