COHANCE - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:15 pm

Fundamental Rating: 3.5

📊 Core Financials:

- Quarterly PAT at 94.3 Cr. vs 58.6 Cr. shows growth sequentially, but YoY profit variation is negative (-32.2%).

- EPS of 12.0 ₹ reflects modest profitability.

- ROCE (16.0%) and ROE (12.5%) are average, indicating moderate efficiency.

- Debt-to-equity ratio of 0.05 highlights negligible leverage.

- Cash flows remain stable, supported by low debt but impacted by earnings volatility.

💹 Valuation Indicators:

- Current P/E of 55.4 is significantly above industry average (30.6), suggesting overvaluation.

- P/B ratio ~ 4.7 (537 ₹ / 115 ₹), indicating stretched valuation relative to book value.

- PEG ratio of -2.68 highlights weak growth alignment with valuation.

- Intrinsic value appears lower than current price, limiting margin of safety.

🏭 Business Model & Competitive Advantage:

Cohance Lifesciences operates in specialty chemicals and pharma intermediates, focusing on contract manufacturing and niche formulations. Its competitive advantage lies in diversified product offerings, global client base, and strong institutional support. However, profitability remains volatile and valuations are stretched.

🎯 Entry Zone & Long-Term Guidance:

- Entry zone: 500–520 ₹ (near support levels and undervaluation zone).

- Long-term holding: Suitable for investors seeking exposure to specialty chemicals, but accumulation should be cautious due to high valuations and earnings pressure.

Positive

• Low debt-to-equity ratio (0.05)
• Strong institutional support with DII holdings up (+9.41%)
• Sequential PAT growth (58.6 Cr. → 94.3 Cr.)
• Global client base and diversified product portfolio

Limitation

• High P/E (55.4) and P/B (~4.7) indicate overvaluation
• PEG ratio (-2.68) signals poor growth alignment
• Quarterly profit variation (-32.2%) shows earnings pressure
• Weak technical momentum (RSI 26.7, MACD negative)

Company Negative News

• FII holdings decreased (-0.72%)
• Profit variation negative despite sequential improvement

Company Positive News

• DII holdings increased significantly (+9.41%)
• Sequential PAT growth from 58.6 Cr. to 94.3 Cr.
• Debt-free status ensures financial stability

Industry

• Industry P/E at 30.6 indicates sector is moderately valued
• Specialty chemicals sector benefits from global demand and pharma outsourcing
• Competition from domestic and global specialty chemical manufacturers

Conclusion

⚖️ Cohance Lifesciences shows moderate fundamentals with low debt and institutional support, but valuations are stretched and earnings remain volatile. Best accumulated near 500–520 ₹ for cautious long-term exposure to specialty chemicals and pharma intermediates.