Square Pharmaceuticals valuation report: fair value BDT 218–397 (Oct 2026)

Thesis: fair value BDT 218–397, base 316; the price sits at the bear value because the market discounts BDT 112 a share of cash and investments

We value Square Pharmaceuticals at BDT 218–397 a share, base BDT 316, against a price of BDT 218.5 on 29-Oct-2026 [7]. The price sits at the bear value: it assumes nothing changes. Two facts drive the range. Earnings compound at about 10% a year in our model, from BDT 27.04 in FY2025 to BDT 35.58 in FY2028F [11]. Cash, fixed deposits (FDR), listed shares and associates came to BDT 112 a share at 31-Mar-2026 [2 p.2]. Even after our 25% base haircut on those assets, the price leaves 5.6x FY2027F core earnings for the operating business [11].

The price has gone nowhere for five years: BDT 215.5 at June 2021 and BDT 208.9 at June 2025 [1 p.14], while consolidated EPS rose from BDT 17.99 to BDT 27.04 [1 p.14]. Trailing P/E fell from 12.0x to 7.7x over the same years [11]. Over the last two years the stock moved -2.5% against 3.0% for the DSEX index [7].

Our reverse DCF says the price is consistent with a discount rate of about 23%, against our 15.3% cost of equity [11]. Our bear case (BDT 218) assumes the discount persists: today's multiples on FY2026 earnings, a 40% haircut on cash and investments, a higher beta, 7% revenue growth, a 46% gross margin and Square Fashions at book. It comes out at BDT 218.0, within a taka of the price, so today's price is consistent with nothing changing. The base case needs the discount to narrow partly: the five-year median multiples and a 25% group discount.

97% of revenue is domestic, and Square Lifesciences now makes 23% of it

Square is Bangladesh's largest drug maker, with a 17.41% market share and the #1 rank it has held since 1985 [1 p.5]. Consolidated net revenue was BDT 76.29bn in FY2025 (US$621.75m) [1 p.5], from three entities: the listed parent, Square Lifesciences and a Kenyan plant (Square Pharmaceuticals Kenya EPZ) [s1 p.98–99]. Sponsors and directors owned 43.59% at Jun-2025, foreign investors 15.14%, institutions 14.05% and the general public 27.22% [1 p.141]. Sponsors bought: their stake rose from 35.46% a year earlier [1 p.141]; two directors alone bought 3 million shares for Tk 64.58 crore in March-April 2025, as reported by The Daily Star [14].

Growth has moved from the parent to Square Lifesciences. The parent's consolidated net revenue was flat at BDT 59.10bn in FY2025, while Lifesciences rose 52% to BDT 16.50bn [s1 p.98–99]. Management attributes the parent's 5.5% profit decline to 'strategic product transfers' to Lifesciences [1 p.22]. In 9M FY2026 the parent grew again, +9.0% to BDT 49.25bn, and Lifesciences +25.9% to BDT 15.28bn [2 p.9]. Consolidated figures are the ones that matter for shareholders; standalone results now understate the business.

The Kenyan subsidiary is small: BDT 690m of revenue in FY2025 and BDT 554m in 9M FY2026 [2 p.9]. Square also books its share of profit from associates, including Square Textiles and Square Fashions [2 p.7]; they added BDT 3.19bn in FY2025, 13% of profit for the year [1 p.83]. We do not have the associates' own accounts in the corpus, which is a gap for valuing them above book.

Governance follows the usual Bangladesh pattern of a family-led group. The chairman, vice-chairman and managing director sign the accounts [2 p.2], and the associates are other Square group companies [2 p.7]. Five sponsor and director shareholders sit alongside about 63,150 shareholders in total, down from 85,677 in FY2023 [1 p.14]. Employees rose to 15,937 in FY2025 from 12,453, mostly factory workers [1 p.14], which fits the capacity build.

Square Lifesciences made 26% of FY2025 profit; associates value at BDT 23bn on their own earnings, above their BDT 21.9bn book

Three group companies matter on their own: Square Lifesciences (a subsidiary), Square Fashions and Square Textiles (associates). Square Lifesciences made a profit after tax of BDT 6.24bn in FY2025 on net revenue of BDT 16.61bn, up from BDT 3.22bn on BDT 10.92bn [1 p.159]. That is about 26% of group profit for the year (BDT 23.97bn) [1 p.83]. Its gross margin was 62.8% and its income tax only 5.5% of pre-tax profit [1 p.159], and the deferred-tax rate it uses rose from 5.50% to 8.25% in 9M FY2026 [2 p.9], a sign the low rate is stepping up.

The parent's flat standalone result in FY2025 was a transfer, not a loss of business: products moved to Lifesciences [1 p.22]. Because Lifesciences is consolidated and makes medicines like the parent, we value it inside the operating DCF rather than as a separate part. Its tax rate is the risk to watch: if it moved to the parent's ~19%, group tax on its FY2025 profit would rise by roughly BDT 0.9bn, about 4% of group profit (model inputs, not a forecast).

Square Textiles' share of profit fell to BDT 131m in 9M FY2026 from BDT 424m, and Square Fashions' to BDT 1.48bn from BDT 1.74bn [2 p.7][6 p.7]. We value each stake on its own: Square Textiles at its market value (46.36% of BDT 9.8bn [8]), Square Fashions at 10.3x Square's share of its last-twelve-month profit (BDT 2.03bn), the median trailing P/E of three listed garment and denim exporters (ENVOYTEX 8.6x, AIL 10.3x, TAMIJTEX 15.5x) [8], less a 20% discount for an unlisted minority stake whose own accounts we see only as the annual-report summary; Square's share of its profit fell 15% in 9M FY2026. In the bear case it is at book (BDT 13.8bn). Square Hospitals is at book. Before any discount that gives BDT 23.1bn, against a book value of BDT 21.9bn [2 p.2] [11].

Square Textiles' own interim statements are in our corpus but their pages are images we could not read; we use the parent's equity-accounted share instead. Square Fashions and Square Hospitals publish no accounts we can reach beyond the summary in Square's annual report, which is a labelled gap.

Revenue grew 11% a year since FY2021; 9M FY2026 growth of 12.5% matched the market

Consolidated revenue grew 10.8% a year from FY2021 to FY2025, to BDT 76.29bn [1 p.83][5 p.8]. IQVIA put the domestic market at US$3.37bn, up 12.4% y/y in Apr–Jun 2025 [1 p.21]. Square's FY2025 growth of 8.8% was below that, while 9M FY2026 growth of 12.5% (BDT 65.08bn) matched it [2 p.3]. We have no IQVIA series for the same periods, so growth versus market is an approximate comparison, not a share calculation.

We forecast 12.0% growth for FY2026F, 11.0% for FY2027F and 10.5% for FY2028F [11]. That takes net revenue to BDT 104.8bn by FY2028F, a 11.2% CAGR, close to the five-year record. The FY2026F figure needs only BDT 20.36bn in the fourth quarter, 10.4% above the BDT 18.44bn of 4Q FY2025 [11][6 p.3].

Exports are not a growth driver yet. The parent exported US$20.97m in FY2025, down from US$21.63m [1 p.98], and US$14.72m in 9M FY2026, 13% below US$16.86m a year earlier [2 p.9]. Exports were 3.3% of consolidated revenue in FY2025. The FY2025 manufacturing overhead includes BDT 141m of US FDA user fees [1 p.99], so regulated-market work continues, but we model no export step-up.

The company does not publish a price, volume and new-product split, the share of sales under DGDA price control, or medical-representative headcount. These are labelled gaps: our growth driver is a single revenue line per scenario, not a built-up volume model.

Square Lifesciences is where the growth sits. Its local gross revenue rose to BDT 20.55bn in FY2025 from BDT 13.52bn, and to BDT 19.01bn in 9M FY2026 from BDT 15.11bn [1 p.99][2 p.10]. The parent's local net revenue rose 10.0% in 9M FY2026 to BDT 47.44bn [2 p.9], after a flat FY2025. VAT takes about 13% of the parent's local gross sales and trade discounts a further 4% [2 p.9]; both have been stable, so we forecast net revenue directly.

Gross margin recovered 1.9pp to 49.1% in 9M FY2026; materials are 65% of COGS

Gross margin fell 4.3pp from FY2022 to FY2024, to 47.2%, and recovered to 49.1% in 9M FY2026 [1 p.83][2 p.3]. The slide coincided with the period the directors describe as rising production costs from inflation and currency depreciation [1 p.21]. We have no Bangladesh Bank exchange-rate series in the data we can reach, so we cannot chart margin against BDT/USD; the FX link in our model is a sensitivity, not a fitted relationship.

Materials are the exposed cost. Raw materials were BDT 16.83bn (42.3% of COGS) and packing BDT 8.86bn (22.3%) in FY2025 [1 p.99]. The directors say the sector imports nearly 90% of its APIs and raw materials [1 p.21]; Square does not disclose its own import share. We treat raw materials as the imported share and assume half of any cost shock is passed through within the year.

Marketing and distribution (S&D) costs are the other lever. They rose from 16.1% of revenue in FY2023 to 18.5% in FY2025 [3 p.87][1 p.83]; marketing expenses alone went from BDT 0.44bn to BDT 1.19bn in FY2025 [1 p.100]. 9M FY2026 ran at 17.9%, but the fourth quarter carries more cost, so we model 18.8% for FY2026F and 18.2% after [11]. EBIT margin settles at 28.2% in FY2027F, below the 32.1% of FY2021 [11].

Capacity is being added. Capital work in progress reached BDT 11.23bn at Mar-2026, from BDT 5.64bn at Jun-2025 [2 p.7][1 p.95], and the company has a BDT 6.5bn BMRE (balancing, modernisation, rehabilitation and expansion) plan [1 p.22]. Capex was BDT 6.85bn in 9M FY2026 [2 p.5]. With the FY2026 results the board approved a further Tk 725 crore (BDT 7.25bn) for BMRE, capital machinery and land, as reported by The Business Standard [12]; our capex path (BDT 7.0bn in FY2027F, 6.0bn in FY2028F) [11] is close to it. The corpus pages we read give no capacity or utilisation by dosage form, so we cannot test whether the plants are near full.

The quarterly pattern matters for reading results. Gross margin was 52.1% in 1Q FY2026, 47.3% in 2Q and 47.8% in 3Q [6 p.3][2 p.3]; first quarters have run higher in both of the last two years. Fourth quarters carry the year-end WPPF and tax true-ups and heavier marketing, so 4Q profit has been the weakest quarter: 22% of the year's net profit on average in FY2024–FY2025 (4Q = full year less 9M) [1 p.83][6 p.3]. Our quarterly split uses those shares.

Earnings quality: core operations are 76% of PBT; cash covers 0.95x profit after interest

Core operations made 76% of FY2025 pre-tax profit; income from investments made 24% [1 p.83]. Income from investments rose from BDT 3.35bn in FY2021 to BDT 6.21bn in FY2025 [5 p.8][1 p.83] as the cash pile and deposit rates grew. Associates add a further layer after tax: BDT 3.19bn in FY2025, 13% of profit for the year [1 p.83]. So roughly a third of reported profit comes from the balance sheet rather than from making and marketing medicine.

Cash conversion looks weak on the reported line and is not. Net cash from operations was BDT 17.30bn in FY2025, 0.72x profit [1 p.85]. But Bangladesh filings put interest received in investing cash flow: BDT 5.55bn in FY2025 [1 p.85]. Adding it back gives 0.95x. 9M FY2026 operating cash flow rose 47% to BDT 15.55bn [2 p.5]. FY2023 was the weak year (0.45x) when inventory rose by BDT 4.0bn [3 p.86].

Associates are the soft spot. Their contribution fell to BDT 1.88bn in 9M FY2026 from BDT 2.38bn [2 p.3]; the note shows Square Fashions (48.63% owned) and Square Textiles among them [s2 p.7, p.26]. We model BDT 2.60bn for FY2026F and 5% growth after. Related-party sales and the auditor's key audit matters are not covered in the pages we read; they are open items for the next update.

Tax is steady. The effective rate on pre-tax profit was 19.1% in FY2025 and 18.4% in 9M FY2026 [1 p.83][2 p.3]. The group transferred BDT 1.27bn to a tax-holiday reserve in 9M FY2026 [2 p.4], a sign that part of its profit is under a tax holiday. We use 19% throughout. WPPF takes 4.8% of profit before it, as the law requires [1 p.83].

Net cash and investments are BDT 87 a share and the FY2026 dividend is BDT 13.0, a 5.9% yield

At 31-Mar-2026 Square held BDT 77.4bn of cash, FDR and listed securities against BDT 0.36bn of loans: BDT 86.9 a share, 40% of the price [2 p.2]. Associates at book add BDT 21.9bn, or BDT 24.7 a share [2 p.2]. The company has had no bank loans for its core operations since FY2019 [1 p.5]; the BDT 0.36bn term loan left at Mar-2026 is all due within a year [2 p.2].

Which banks have the deposits is not shown on the pages we read, so we have not checked exposure to weak banks or NBFIs; that is a labelled gap. We forecast the pile keeps growing: net cash and investments reach BDT 114 a share by FY2028F after dividends [11].

Dividends have risen every year, from BDT 6.0 for FY2021 to BDT 13.0 for FY2026, all in cash [1 p.14][9]. The board declared 130% for FY2026 on 27-Oct-2026; the record date is 16-Nov-2026 [9]. At BDT 13.0 the yield is 5.9%, and the payout is 44% of our FY2026F EPS [11]. The price we use is before the record date, so the BDT 13.0 is in our cash figures.

The payout leaves the cash pile growing because free cash flow exceeds the dividend: BDT 20.5bn of free cash flow against BDT 11.5bn of dividends paid in FY2027F [11]. A higher payout or a special dividend is the obvious way to close the gap between price and value; we assume neither.

We forecast 9.6% EPS growth a year to FY2028F, close to the 11% of the last four years

We forecast EPS of BDT 29.83 in FY2026F, 32.67 in FY2027F and 35.58 in FY2028F, a 9.6% CAGR [11]. That is slightly below the 10.7% a year of FY2021–FY2025, because associates' profit resets lower and deposit yields ease. FY2026F needs a fourth-quarter EPS of BDT 6.55, against BDT 5.89 in 4Q FY2025 (27.04 less 21.15) [1 p.83][6 p.3]; 9M FY2026 EPS was BDT 23.29 [2 p.3].

FY2026 results are out but not yet in our filings: the board approved them on 26-Oct-2026 [9]. The Business Standard and The Daily Star both report net profit of Tk 2,770 crore (BDT 27.70bn) [12][13]; The Business Standard reports EPS of BDT 31.24, NAV of BDT 178.99 and NOCF of BDT 18.65 a share [12]. Our FY2026F net profit of BDT 26.44bn is 4.5% below the reported figure. We keep FY2026 as a forecast anchored on the 9M accounts until the filing reaches us. If the press-reported EPS of BDT 31.24 is confirmed (reported by The Business Standard [12]), the P/E leg rises to BDT 307 from 293, about +2 on the blended base; EBITDA has not been reported.

No consensus exists in our data, and Square gives no numeric guidance. The comparison above uses the company's own record: our FY2026F revenue is 2.3% above the LTM figure and close to the five-year growth path. The full statements follow; each forecast cell is a formula on the Assumptions tab.

Fair value BDT 218–397: sum of the parts 334, P/E 293, EV/EBITDA 250; 59% of EV is terminal

Our range is BDT 218–397, base 316: in the base case the sum of the parts gives BDT 334 (70%), P/E BDT 293 (15%) and EV/EBITDA BDT 250 (15%) [11]. The sum of the parts is primary because Square owns businesses valued differently from its own: a debt-free pharma operation (free-cash-flow DCF), stakes in a listed spinner, an unlisted garment exporter and a hospital, and a treasury book. Investment income and associates' profit are left out of the cash flows; associates and cash are added once, after a 25% group discount in the base case (40% bear, none in bull). Only the operating value is rolled forward from June to October at the cost of equity; the cash is not.

The cost of equity is 15.3%: a 9.268% risk-free rate (10-year T-bond cut-off yield, Bangladesh Bank auction of 25-Oct-2026 [10]), beta 0.8 and an equity risk premium of 7.5%. Beta 0.8 is our judgement: the raw two-year weekly beta against DSEX is 0.47 and Blume-adjusted 0.65 [7][11], with a correlation of only 0.50, so the raw figure understates risk; the bull case uses 0.65. The 0.6 floor would give a 13.8% cost of equity. With no debt, WACC equals the cost of equity. Terminal growth is 6.0% in nominal taka.

Explicit forecasts run to FY2028F; FY2029F–FY2033F fade revenue growth to 6.0% and EBIT margin to the five-year average of 29.9%. Terminal value is 58.6% of enterprise value, below the 75% level at which we would flag it. Capex fades to 6% of revenue, about twice D&A, so the terminal value pays for its own growth.

The cross-checks use Square's own history. The five-year median trailing P/E is 9.8x and the median EV/EBITDA is 5.5x [11]; these are trailing multiples, so we apply them to trailing earnings: FY2026 EPS of BDT 29.83 and EBITDA of BDT 26.3bn (our estimates until the FY2026 results are available to us). They give BDT 293 and BDT 250. The bear case instead keeps today's multiples on the same earnings (7.3x and 3.4x). The base value implies 9.7x FY2027F P/E, 6.8x EV/EBITDA, 1.8x book and a 4.7% dividend yield [11].

Against listed peers Square is cheap on earnings and in line on book: TTM P/E 7.5x against a median of 11.5x for BXPHARMA, RENATA, BEACONPHAR, ACMELAB and IBNSINA, and EV/EBITDA 4.5x against 8.2x [8]. It has the highest dividend yield of the group, 5.5% on the FY2025 dividend [8]. We use peers only as a frame; the fair value rests on the DCF and Square's own multiples.

FX moves fair value less than EPS because the P/E and EV/EBITDA legs use FY2026 earnings and the DCF lets margin return to its long-run average after FY2028F. A permanent margin loss is the bear case instead. The reverse DCF solves for the discount rate that equates the DCF to the price: about 23%, against our 15.3% [11].

Why not value the cash at face? Square earned 8.6% on its average treasury in FY2025 and about 9.4% annualised in 9M FY2026 [1 p.83][2 p.3], close to the 9.27% risk-free rate, so the cash is not destroying value; it is under-distributed. A shareholder receives it as dividends over time, and the dividend has risen every year. If the company spent the cash on low-return projects, a discount would be justified; capex of BDT 6–9bn a year is funded from operating cash flow, not the pile. But it has been retained for years at a 44–49% payout; after WPPF and tax it earns about 6.9%, which at a 9.8x P/E is worth about 0.68x book; and the deposit banks and group uses are not disclosed. We therefore take 25% off in the base case, 40% in the bear case and nothing in the bull case, and show the split on the fair-value card.

The probability-weighted value is BDT 312, close to the base [11]. We publish the range, not a point. The range is wide, BDT 218–397, because the bear case changes five things at once: growth, margin, the required return, the multiples and the cash haircut.

Risks: a 10% BDT fall with 20% API inflation costs 16% of FY2027F EPS; a persistent discount costs 6% of fair value

The largest modelled risks to fair value are a persistent market discount (-6%) and growth 4pp lower (-7%); a combined currency and API shock costs 16% of FY2027F EPS but only 5% of fair value [11]. Fair value moves less than EPS because the multiples legs use FY2026 earnings and the DCF lets margin recover after FY2028F. The most likely risk is not operational: the market has de-rated Square every year since FY2021. Each line below is a model run with one input changed.

LDC graduation is the regulatory risk we cannot size. Bangladesh is due to leave LDC status on 24-Nov-2026, and TRIPS flexibilities phase out [1 p.21][15]; the directors also cite the WTO patent exemption for LDCs running to 2033 [1 p.22]. Square does not disclose the share of sales from patented molecules, so this exposure is n.a. (not disclosed); our bear case (7% growth, 46% gross margin) is the proxy.

Reported by The Business Standard: more than 1,000 generic and biosimilar applications were held at the drug regulator for about two and a half years before graduation (31-Aug-2025) [15], and hundreds of newly registered medicines lack price approval because the pricing committees have not met (20-Jul-2026) [16]. Both slow new launches; neither is in our forecast as a separate line.

DGDA price control is the second unsized risk: the share of revenue on the essential-drug list is not disclosed. A freeze on those prices while costs rise would show up as lower gross margin, which the FX and API grid above captures.

Two governance-type risks sit outside the model. First, cash could be used for group investments rather than dividends; investment in subsidiaries and associates rose in 9M FY2026 [2 p.20], and a large related-party deal would change our view of the cash. Second, a stock dividend instead of cash would leave value unchanged but would signal less discipline; Square has paid only cash dividends for five years [1 p.14].

FAQ

What is Square Pharmaceuticals' fair value?

We estimate a range of BDT 218–397 a share, base 316, blending a DCF (50%), P/E (25%) and EV/EBITDA (25%) [11]. The price on 29-Oct-2026 was BDT 218.5 [7].

Why does the price sit at the bear value?

The market has de-rated Square from 12.0x to 7.7x trailing earnings since FY2021 and appears to discount its BDT 87-a-share cash pile; our bear case, which assumes that discount persists, gives BDT 218. The price equates to a discount rate of about 23% in our DCF [11].

How much cash does Square have?

BDT 77.4bn of cash, deposits and listed securities at 31-Mar-2026, against BDT 0.36bn of loans: BDT 86.9 a share [2 p.2].

What dividend is Square paying for FY2026?

130% in cash, BDT 13.0 a share, with a record date of 16-Nov-2026 and the AGM on 15-Dec-2026 [9].

How exposed is Square to the taka and API prices?

Raw materials are 42% of cost of goods sold [1 p.99]. In our model a 10% BDT fall with 20% API inflation cuts FY2027F EPS by 16% [11].

Is FY2026 data included?

We use the 9M FY2026 accounts to March 2026 and the declared FY2026 dividend. FY2026 results were approved by the board on 26-Oct-2026 but are not yet available to us; FY2026 figures here are our estimates and will be replaced.

Sources

1. Square Pharmaceuticals PLC Annual Report 2024-25 (FY2025, year to 30-Jun-2025) · link · accessed 2026-10-30
2. Square Pharmaceuticals PLC un-audited consolidated financial statements, 9M to 31-Mar-2026 (3Q FY2026) · link · accessed 2026-10-30
3. Square Pharmaceuticals PLC Annual Report 2023-24 (FY2024) · link · accessed 2026-10-30
4. Square Pharmaceuticals PLC Annual Report 2022-23 (FY2023) · link · accessed 2026-10-30
5. Square Pharmaceuticals Ltd Annual Report 2021-22 (FY2022) · link · accessed 2026-10-30
6. Square Pharmaceuticals PLC interim reports FY2024-FY2026 (Q1, H1, 9M; consolidated) · link · accessed 2026-10-30
7. AnalystBro price data (TradingView feed): DSE:SQURPHARMA daily and weekly bars, DSEX weekly, to 29-Oct-2026 · link · accessed 2026-10-30
8. AnalystBro screener: Bangladesh pharmaceutical stocks, close 29-Oct-2026 · link · accessed 2026-10-30
9. DSE announcement via AnalystBro events: FY2026 dividend declaration (130% cash), record date 16-Nov-2026, AGM 15-Dec-2026 · link · accessed 2026-10-30
10. Bangladesh Bank, 10-year Treasury bond auction cut-off yield 9.268%, 25-Oct-2026 (bb.org.bd) · link · accessed 2026-10-30
11. AnalystBro model: model.xlsx for this report (workbook tabs below) · accessed 2026-10-30
12. The Business Standard, 26-Oct-2026: Square Pharma announces 130% cash dividend and Tk725cr investment plan · link · accessed 2026-10-30
13. The Daily Star, 27-Oct-2026: report on Square Pharma's 130% cash dividend and FY2026 results · link · accessed 2026-10-30
14. The Daily Star, 20-Apr-2025: report on two Square Pharma directors' share purchases of Tk 64.58 crore · link · accessed 2026-10-30
15. The Business Standard, 31-Aug-2025: 1,000 drug registrations stuck as Bangladesh risks losing TRIPS waiver · link · accessed 2026-10-30
16. The Business Standard, 20-Jul-2026: Drug pricing deadlock stalls hundreds of new medicines · link · accessed 2026-10-30