Detailed Analysis on PAR DRUGS and CHEMICALS Ltd.


Market Cap : 265 Cr

Current Price (29-03-2024) : 215

Sector : Pharmaceuticals

About :

The company was founded in 1982 by Mr. V. J. Savani and now he has handed over to second generation Mr. Falgun V. Savani, Mr. Jignesh V. Savani and Mr. Ghanshyam B. Savani. presently engaged in the development and manufacture of Active Pharma Ingredients ("APIs") and fine chemicals for the domestic market as well as for exports to international markets. APIs, also known as "bulk drugs" or "bulk actives" are the principal ingredient used in making finished dosages in the form of capsules, tablets, liquid, or other forms of dosage, with the addition of other APIs or inactive ingredients. they currently produce various range of Antacid Molecules which are available in the market and are in great demand.

Financial Metrics :

(source : screener.in)

  • Current Price : 215
  • Market Cap : 265 Cr
  • Book Value : 63.90
  • EPS : 11.60
  • Promoter Holding : 74.20 %
  • Pledged Percentage : 0.00 %
  • P/E Ratio : 18.60 (Industry PE : 33.60)
  • PEG Ratio : 0.38
  • Return on capital employed (ROCE) : 23.00 %
  • ROCE 5Yr : 19.60 %
  • Return on equity (ROE) : 17.10 %
  • ROE 5Yr : 16.80 %
  • Return on assets (ROA) : 13.40 %
  • ROA 5Yr : 10.70 %
  • Sales Growth 5Yr : 17.70 %
  • Profit Growth 5Yr : 49.60 %
  • Dividend Last Year : 0.00
  • Dividend Yield : 0.00 %
  • Debt : 0.000 Cr
  • Debt to Equity : 0.00
  • Current Assets : 54.00 Cr
  • Current Liabilities : 13.30 Cr
  • Free Cash Flow : 5.95 Cr
  • Net Cash Flow : 6.04 Cr

Please refer to this article for detailed explanation on above mentioned financial metrics

Quarterly Earnings :

(source : screener.in)


The company is maintaining good consistency in QOQ sales, operating profit and net profit.

Yearly Earnings :

(source : screener.in)


The company is consistently increasing its YOY sales, operating profit & net profit.

Manufacturing Facility :





Company has a manufacturing facilities at Bhavnagar in Gujarat.it is certified by food & drugs control administration. currently have four Manufacturing Blocks at this Facility for different products. During the year 2011,two manufacturing blocks are added at Bhavnagar facility. One is a dedicated facility for Main API and another one is for Fine Chemicals. In June, 2021 started a set of new production line-up i.e. one new manufacturing block, which increases production capacity within the existing product portfolio. More precisely, There are four Manufacturing Blocks at Bhavnagar which are for different products having a capacity of approx. 9,700 MTPA. Block 1 – APIs, Block 2 - Magnesium Hydroxide, Block 3 - Fine Chemicals and Block 4 – APIs/ Fine Chemicals.

Manufacturing facility is equipped with requisite infrastructure including machinery, other handling equipment to facilitate smooth manufacturing process. they also have an in-house testing laboratory to test raw materials and finished products to match the quality standards and as specified and required by the customers.

Research Facility :



Laboratory at Bhavnagar, is equipped with modern equipment, including electronic balances, KF apparatus, ovens, stability chambers, computers, HPLC with IR Detector, Particle Size Analyzer, Surface Area Analyzer. 

They also have a dedicated microbiological laboratory equipped with Modern equipment's like Laminar Air Flow, Colony Counter, Incubator, Autoclave, Refrigerator, Cyclomixer, BOD Incubator, Binocular Microscope, Digital Weighing Balance etc. to perform microbiological tests.

Products :

The company manufactures the entire range of products in the Antacid Molecules segment. The product portfolio presently comprises 18 APIs and 10 Fine Chemicals which are marketed domestically and also exported.
  1. Magnesium Hydroxide : Widely used as an Antacid in many Formulation. Also used as intermediate for obtaining magnesium metal, residual fuel additive, sulfite pulp, uranium processing, dentifrices, in food as alkali, drying agent, color retention agent, frozen desserts. Also widely used in Effluent Treatment Plant especially where the Effluents is very much alkaline in nature.
  2. Magnesium Trisilicate : It is a common antacid drug that is used for the treatment of gastro esophageal reflux. It is also used as antioxidant, decolorizing agent and industrial odor absorbent.
  3. Light Magnesium Carbonate : Magnesite and dolomite minerals are used to produce magnesium metal and basic refractory bricks. Magnesium Carbonate is also used in flooring, fire proofing, fire extinguishing compositions, cosmetics, dusting powder and toothpaste. Other applications are as filler material, smoke suppressant in plastics, a reinforcing agent in neoprene rubber, a drying agent and color retention in foods. In addition, high purity magnesium carbonate is used as antacid and as an additive in table salt to keep it free flowing.
  4. Light Magnesium Oxide : it can be used as filling and reinforcing agent for light-colored plastic and rubber products, polishing agent, binding agent, accelerator and activator for fluorine and chloroprene rubber. Magnesium Oxide Light can be used for making ceramic, enamel, advanced refractory materials. It can be used for making magnesium chloride cement by mixing with magnesium chloride solution. Light magnesium oxide is widely used in glass, dyes, phenolic plastic and other fields.
  5. Magnesium Oxide Heavy : it is widely used as high-temperature resistant materials. It is perfect raw materials for ceramic crucibles, substrate and so on with good light permeability in translucent field. Magnesium Oxide Heavy can be used as filling for magnetic device and variety of carriers in electronic materials and electric field. When used as ceramic crucibles, the thermal conductivity of Magnesium Oxide Heavy is twice higher than aluminum oxide, and the loss of electrolyte is only 1/10 of aluminum oxide. Magnesium Oxide Heavy also can be used as filling for heat resistant coating.
  6. Magnesium Oxide USP : It uses include relief of heartburn and sore stomach, as an antacid, magnesium supplement, and as a short-term laxative.
  7. Dried Aluminum Hydroxide Gel : Mainly used as an Active medicament in an Antacid Formulations, also used in manufacturing of Lake colors, Inks, catalysts carrier etc. Aluminum hydroxide is used to treat symptoms of increased stomach acid, such as heartburn, upset stomach, sour stomach, or acid indigestion. Aluminum hydroxide is also used to reduce phosphate levels in people with certain kidney conditions.
  8. Magaldrate : Magaldrate is a common antacid drug that is used for the treatment of duodenal and gastric ulcers, esophagitis from gastroesophageal reflux
  9. Magnesium Aluminum Silicate Hydrate : Used as an Antacid Raw material in a specific antacid formulations, Ceramics, Suspending Agent, Thickening agent etc.
  10. Alma Gate : Used as an Antacid Raw material in a specific antacid formulations
  11. Hydrotalcite : Used as an API in Antacid Formulation.
  12. Aluminum Magnesium Silicate : Used as an Antacid Raw material in a specific antacid formulations, Ceramics, Suspending Agent, Thickening agent etc.
  13. Sodium Aluminum Silicate : It is used in Paper, paint & coating application.
  14. Precipitated Silica : Used in Pesticides & Detergents, Special Low Moisture Grade, Free Flow Salt & Anti-caking Agent, for Cosmetics, Pharmaceuticals.
  15. Amorphous : Mainly used as an Active medicament in an Antacid Formulations, also used in manufacturing of Lake colors, Inks, catalysts carrier etc. Amorphous Aluminum hydroxide is used to treat symptoms of increased stomach acid, such as heartburn, upset stomach, sour stomach, or acid indigestion. Amorphous Aluminum hydroxide is also used to reduce phosphate levels in people with certain kidney conditions.
  16.  Collodial Silicon Dioxide : In the pharmaceutical industry, colloidal silicon dioxide has many uses in tablet-making: some include as an anti-caking agent, adsorbent, disintegrate, or glidant to allow powder to flow freely when tablets are processed.
  17. Sucralfate USP : Sucralfate is a medication primarily taken to treat active duodenal ulcers. Sucralfate is also used for the treatment of gastroesophageal reflux disease and stress ulcers. 

The company is largest manufacturer of Magnesium Hydroxide, Sucralfate and Magnesium Trisilate in India.

The company currently produces the entire range of Antacid Molecules available in the market.

Company’s key customers include Essential Drugs Company Ltd., Pfizer Ltd., United Phosphorus Ltd., Cipla Ltd., etc. 

Exports its products to approximately 16 countries, including Germany, United Kingdom, Bangladesh, Iran, and U.A.E etc. Catering to more than 200 customers through dealers / agents worldwide.

Industry Insights :

API Industry :

(source : icra.in)

Active Pharma Ingredients (APIs) are the chemical-based compounds that have produced mainly in the countries the USA, Europe, China, and India. APIs have pharmacological activity mainly used with combination of other ingredients to diagnose, cure, mitigate, and treat the disease.

The Indian active pharmaceutical ingredients (APls) market stood at USD 11.807 Bn FY2021 and is expected to grow at a compound annual growth rate of 12.24 % during the forecasted period 2021 to 2027.

China has accounted for 65-70% of total API imports of India. as a result of the substantial lockdown in China, scarcity of active pharmaceutical ingredients is experienced globally, by the pharmaceutical manufacturing companies. The deficit in the supply has generated a shortage of many medicines all over the world. However, with increasing focus of the Indian Government with initiatives like the production-linked incentive (PLI) scheme and bulk drug parks scheme, the dependence is expected to reduce over the medium to long term.

Indian API industry has been impacted by a confluence of headwinds including rising input costs (raw material, freight, and energy) and supply chain disruptions, resulting in a decline of operating profit margin (OPM) in FY2023 over FY2021. However, with the moderation in energy and freight costs as well as softening of raw material costs, margins are expected to improve over the near to medium term.

Growth drivers over the medium to long term include Government support through the PLI scheme for APIs with expected incentives of ~Rs. 70 billion and the bulk drug parks scheme offering incentives of around Rs. 30 billion.

The propelling factors for the growth of the antacids market include the growing geriatric population suffering from GERD, poor lifestyle choices leading to higher incidences of acidity, and side effects of drugs like non-steroidal, anti-inflammatory drugs.

Fine Chemicals :

Fine chemicals are pure, single chemicals produced in customized batches. The production of fine chemicals is a complex, multistep process that must meet rigorous specifications and produce batches with ultrahigh purity levels. Examples of fine chemicals include active pharmaceutical ingredients (API), peptides and proteins, steroids, alkaloids, and biocides. Fine chemicals are used to produce specialty chemicals that have specific characteristics needed for their target end use. A few examples of industries that rely upon fine chemicals include pharmaceuticals, agrochemicals, electronics, automotive, cosmetics, and construction

The global Fine Chemicals market size is projected to reach USD 2,78,510 Mn by 2027, from USD 1,72,510 Mn in 2020, at a CAGR of 7.1% during 2021-2027.

On the basis of end-users, the fine chemicals market is segmented into pharmaceuticals, agro chemicals, polymer additives, food and feed, electronics, dyes and pigments, perfumes and fragrances, and others.
Fine chemicals are used in many industries like agrochemicals and perfumes & fragrances are also the major end-user segments, which are occupying prominent share among all other applications after pharmaceuticals.

The market is expected to grow significantly in the coming years, owing to the rising population in the country, rapid ongoing industrialization, increasing chemical demand, and flourishing end-use industries in regions such as Europe, Asia Pacific, and North America.

PROS :
  1. Company with no debit.
  2. Company with high promoter holding and zero promoter pledge.
  3. Generating good ROCE, ROE, ROA.
  4. Positive free cash flow and net cash flow.
  5. Last 5 years profit growth at 49.60 %
  6. Stock PE is less than industry PE 
CONS :
  1. Company is not paying dividend
  2. Margins are highly dependent on raw material prices
This is not a buy/sell advice I am not SEBI registered, just providing basic details regarding this company from various sources available online, please do your own research or consult a SEBI registered investment advisor before taking any investment decision.

Thank You for reading this article if you liked this one please visit next week again for analysis on another new stock.

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