The Akola-based company, with a market capitalisation of ₹94.00 crores and trading at ₹10.19, faces mounting challenges despite year-on-year revenue improvement. The stock has been in a sustained bearish trend since early November 2025, shedding 43.01% from its 52-week high of ₹17.88. The latest quarterly results underscore the company's struggle with profitability, as evidenced by a meagre PAT margin of 0.93% and deteriorating return on equity of just 2.77% in the latest period.
Financial Performance: Sequential Decline Masks YoY Improvement
In Q2 FY2026, Basant Agro Tech reported net sales of ₹105.83 crores, representing a 40.01% quarter-on-quarter decline from ₹176.41 crores in Q1 FY2026. However, on a year-on-year basis, revenue grew 25.81% from ₹84.12 crores in Q2 FY2025, reflecting the seasonal nature of the fertiliser industry where demand fluctuates significantly across quarters. The sharp sequential drop highlights the company's exposure to agricultural cycles and monsoon-dependent demand patterns.
Operating profit (PBDIT excluding other income) stood at ₹6.54 crores in Q2 FY2026, down 24.94% from ₹8.72 crores in the previous quarter, though up 12.37% year-on-year from ₹5.82 crores. Operating margin improved marginally to 6.18% from 4.94% in Q1 FY2026, suggesting some cost rationalisation efforts, but remained below the 12.16% achieved in Mar'24. The company's ability to maintain operating margins above 6% despite volume decline indicates pricing power, albeit limited.
Net profit of ₹0.98 crores in Q2 FY2026 reflected a steep 61.11% quarter-on-quarter decline, though it represented a 188.24% year-on-year improvement from ₹0.34 crores. The PAT margin compressed to 0.93% from 1.43% in the previous quarter, highlighting the impact of higher interest costs and operational deleverage. Interest expense remained elevated at ₹3.65 crores, consuming a significant portion of operating profits and limiting bottom-line expansion despite revenue growth.
| Quarter | Revenue (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | Operating Margin | PAT Margin |
|---|---|---|---|---|---|---|
| Sep'25 | 105.83 | -40.01% | 0.98 | -61.11% | 6.18% | 0.93% |
| Jun'25 | 176.41 | +33.12% | 2.52 | +119.13% | 4.94% | 1.43% |
| Mar'25 | 132.52 | +63.54% | 1.15 | +202.63% | 6.24% | 0.87% |
| Dec'24 | 81.03 | -3.67% | 0.38 | +11.76% | 6.58% | 0.47% |
| Sep'24 | 84.12 | -49.04% | 0.34 | -85.15% | 6.92% | 0.40% |
| Jun'24 | 165.08 | +66.24% | 2.29 | -66.02% | 5.03% | 1.39% |
| Mar'24 | 99.30 | — | 6.74 | — | 12.16% | 6.79% |
The quality of earnings remains a concern, with the tax rate at just 6.67% in Q2 FY2026, significantly below the normalised rate of 28.6% seen in FY2025. This abnormally low tax incidence, combined with minimal other income of just ₹0.02 crores, suggests limited non-operating cushion to support profitability during challenging periods.
Operational Challenges: Weak Returns and High Leverage
Basant Agro Tech's operational efficiency metrics paint a concerning picture. The company's return on equity (ROE) has deteriorated sharply to 2.77% in the latest period from an average of 6.70% over the past five years, indicating poor capital utilisation and shareholder value creation. Similarly, return on capital employed (ROCE) stands at a weak 6.83%, marginally below the five-year average of 7.75%, reflecting suboptimal deployment of capital in a capital-intensive fertiliser business.
The company's balance sheet reveals moderate leverage with a debt-to-equity ratio of 0.71 and long-term debt of ₹34.16 crores as of Mar'25. More concerning is the debt-to-EBITDA ratio of 3.80, which limits financial flexibility and contributes to the elevated interest burden. Interest coverage, measured by EBIT-to-interest ratio, averages a weak 2.39 times, leaving little room for error if operating performance deteriorates further. The company generated ₹43.00 crores in operating cash flow in FY2025, a positive turnaround from negative ₹12.00 crores in FY2024, though this was primarily driven by favourable working capital changes rather than underlying profit growth.
Critical Concern: Deteriorating Capital Efficiency
Basant Agro Tech's ROE has collapsed to 2.77%, well below industry standards and the company's own historical average of 6.70%. This sharp deterioration reflects inefficient capital allocation and weak profitability, raising serious questions about the company's ability to generate acceptable returns for shareholders in the current operating environment.
Working capital management remains challenging, with current assets of ₹292.81 crores substantially exceeding current liabilities of ₹187.04 crores as of Mar'25. However, trade payables of ₹50.69 crores have increased from ₹38.80 crores in the previous year, indicating extended payment cycles that could strain supplier relationships. The company's sales-to-capital-employed ratio of 1.62 times suggests modest asset turnover, typical for the fertiliser sector but below optimal levels for a growth-oriented business.
Industry Context: Navigating Fertiliser Sector Headwinds
The fertiliser industry in India operates under a complex regulatory framework with government-controlled pricing for certain products and subsidy-dependent demand. Basant Agro Tech's focus on NPK mixture granulated fertilisers and single super phosphate positions it in segments with relatively lower margins compared to speciality fertilisers. The company's "Krishi Sanjivani" brand has established recognition in its operating regions, primarily Maharashtra, but faces intense competition from larger, better-capitalised peers.
The sector has experienced volatility in raw material costs, particularly phosphoric acid and ammonia, which are largely import-dependent. While the company demonstrated 25.81% year-on-year revenue growth in Q2 FY2026, this was achieved against a weak base from the previous year when Sep'24 quarter saw depressed sales of ₹84.12 crores. The sequential 40.01% revenue decline from Jun'25 to Sep'25 underscores the seasonal nature of fertiliser demand, heavily influenced by monsoon patterns and crop cycles.
Sector Dynamics: Margin Pressures Persist
The fertiliser industry continues to grapple with input cost inflation and subsidy rationalisation by the government. Basant Agro Tech's operating margin of 6.18% in Q2 FY2026, while improved from the previous quarter, remains well below the 12.16% achieved in Mar'24, reflecting persistent pricing pressures and inability to fully pass through cost increases to farmers. The company's micro-cap status limits its negotiating power with raw material suppliers and its ability to invest in operational efficiencies.
Competitive intensity in the fertiliser sector remains high, with established players enjoying economies of scale and stronger distribution networks. Basant Agro Tech's market capitalisation of just ₹94.00 crores positions it as a niche regional player, vulnerable to competitive pressures from larger national manufacturers. The company's five-year sales CAGR of 10.45% indicates steady but unspectacular growth, insufficient to materially improve market share or achieve scale advantages.
Peer Comparison: Valuation Discount Reflects Quality Concerns
Compared to fertiliser sector peers, Basant Agro Tech trades at a significant valuation discount, reflecting its weaker fundamentals and micro-cap status. With a P/E ratio of 18.36 times, the stock appears moderately valued relative to its earnings, though this multiple is distorted by the company's volatile and thin profit margins. The price-to-book value of just 0.51 times suggests the market assigns limited value to the company's assets, potentially due to concerns about asset quality and return generation.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Basant Agro Tech | 18.36 | 0.51 | 6.70 | 0.71 | 0.49 |
| Nagarjuna Fert. | NA (Loss Making) | -0.30 | 0.0 | -0.01 | — |
| Bluegod Enterta. | 30.93 | 5.07 | 0.0 | 0.13 | — |
| Bharat Agri Fert | 149.04 | 2.66 | 0.76 | 1.49 | — |
| Teesta Agro Ind. | 7.20 | 0.52 | 5.62 | -0.12 | — |
| Phosphate Co | 24.07 | 0.57 | 3.55 | 0.13 | — |
Basant Agro Tech's ROE of 6.70% stands out positively among its peer group, where several companies report negligible or negative returns on equity. However, this relative outperformance is undermined by the company's deteriorating ROE trend, which has fallen to 2.77% in the latest period. The company's debt-to-equity ratio of 0.71 is moderate but higher than peers like Phosphate Co (0.13) and Bluegod Enterta. (0.13), indicating greater financial risk.
The dividend yield of 0.49% is modest, reflecting the company's conservative payout ratio of 10.88% and limited free cash flow generation. With a latest dividend of just ₹0.05 per share, the stock offers minimal income attraction for investors. The valuation discount to book value and modest P/E multiple suggest the market has priced in significant execution risks and limited growth visibility.
Valuation Analysis: Cheap for a Reason
At the current price of ₹10.19, Basant Agro Tech trades at a P/E ratio of 18.36 times trailing twelve-month earnings and a price-to-book value of 0.51 times. The stock's valuation grade of "Very Attractive" reflects its depressed multiples relative to historical levels, with the company having traded at significantly higher valuations during periods of stronger operational performance. The 52-week price range of ₹9.27 to ₹17.88 illustrates the stock's volatility, with the current price just 9.92% above the 52-week low.
Enterprise value metrics provide additional context, with EV/EBITDA at 7.68 times and EV/EBIT at 10.45 times. These multiples appear reasonable on the surface but must be viewed in the context of the company's weak profitability and deteriorating return ratios. The EV/Sales ratio of 0.45 times suggests the market assigns limited value to the company's revenue base, reflecting concerns about margin sustainability and competitive positioning.
The stock's "Very Attractive" valuation grade, which has oscillated between "Attractive" and "Very Attractive" over the past year, reflects price volatility rather than fundamental improvement. The sharp decline from the 52-week high of ₹17.88 to the current level of ₹10.19 represents a 43.01% drawdown, with the stock struggling to find support despite low absolute valuations. This suggests the market is pricing in significant risks related to profitability sustainability, competitive pressures, and limited growth catalysts.
Shareholding Pattern: Stable but Limited Institutional Interest
Basant Agro Tech's shareholding pattern has remained remarkably stable over the past five quarters, with promoter holding steady at 53.07% and no sequential changes. The Bhartia family, which founded and continues to control the company, demonstrates commitment through this consistent stake, with no pledging of shares—a positive indicator of promoter confidence and financial stability.
| Quarter | Promoter % | FII % | MF % | Insurance % | DII % | Non-Inst % |
|---|---|---|---|---|---|---|
| Dec'25 | 53.07 | 0.00 | 0.02 | 0.00 | 0.00 | 46.91 |
| Sep'25 | 53.07 | 0.00 | 0.02 | 0.00 | 0.00 | 46.91 |
| Jun'25 | 53.07 | 0.00 | 0.02 | 0.00 | 0.00 | 46.91 |
| Mar'25 | 53.07 | 0.00 | 0.02 | 0.00 | 0.00 | 46.91 |
| Dec'24 | 53.07 | 0.00 | 0.02 | 0.00 | 0.00 | 46.91 |
However, the near-total absence of institutional investors is a significant red flag. Foreign institutional investors (FIIs) hold 0.00%, while mutual fund holding is negligible at just 0.02%, represented by a single fund. Insurance companies and other domestic institutional investors (DIIs) have zero exposure to the stock. This complete institutional avoidance reflects concerns about liquidity, corporate governance, growth prospects, and financial performance that make the stock unsuitable for institutional portfolios.
The non-institutional shareholding of 46.91%, comprising retail investors and non-institutional entities, has also remained unchanged. The absence of any meaningful institutional accumulation or selling over the past five quarters suggests the stock is off the radar for sophisticated investors, limiting potential catalysts for re-rating. The micro-cap nature of the company, combined with weak fundamentals, makes it unlikely to attract institutional interest in the near term.
Stock Performance: Severe Underperformance Across All Timeframes
Basant Agro Tech's stock has delivered dismal returns across virtually all timeframes, significantly underperforming both the Sensex and its fertiliser sector peers. Over the past year, the stock has plunged 39.60% while the Sensex gained 7.97%, resulting in a negative alpha of 47.57 percentage points. The underperformance versus the fertiliser sector is even more pronounced, with the stock lagging the sector by 40.88 percentage points over the past year.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -0.88% | +2.94% | -3.82% |
| 1 Month | -9.18% | +0.59% | -9.77% |
| 3 Months | -27.06% | +1.02% | -28.08% |
| 6 Months | -29.68% | +5.27% | -34.95% |
| YTD | -11.08% | -1.36% | -9.72% |
| 1 Year | -39.60% | +7.97% | -47.57% |
| 2 Years | -58.68% | +17.42% | -76.10% |
| 3 Years | -45.07% | +38.25% | -83.32% |
The technical picture is uniformly bearish, with the stock trading below all key moving averages—5-day (₹10.15), 20-day (₹10.49), 50-day (₹11.26), 100-day (₹12.47), and 200-day (₹13.56). The stock entered a bearish trend on November 3, 2025, at ₹14.44 and has continued to drift lower, with technical indicators including MACD, Bollinger Bands, and KST all flashing bearish signals on both weekly and monthly timeframes.
Risk-adjusted returns paint an even grimmer picture, with the stock posting a negative risk-adjusted return of -1.03 over the past year compared to the Sensex's positive 0.69. With volatility of 38.57%—more than three times the Sensex's 11.53%—and a high beta of 1.50, the stock falls squarely into the "high risk, low return" category. The negative Sharpe ratio confirms that investors have not been compensated for the elevated risk they have borne.
Investment Thesis: Quality Concerns Outweigh Valuation Appeal
Basant Agro Tech's investment case rests primarily on its "Very Attractive" valuation, with the stock trading at a significant discount to book value and modest P/E multiple. However, this apparent cheapness is more than offset by fundamental weaknesses that justify the valuation discount. The company's quality grade of "Below Average" reflects long-term underperformance in key financial metrics, including weak average ROCE of 7.75% and deteriorating ROE that has fallen to just 2.77% in the latest period.
The financial trend, while classified as "Positive" based on recent quarterly improvements, remains fragile given the sequential profit decline in Q2 FY2026 and persistent margin pressures. Technical indicators uniformly point to continued weakness, with the stock in a sustained bearish trend and trading below all major moving averages. The combination of below-average quality, bearish technicals, and limited growth visibility creates a challenging investment proposition despite attractive headline valuations.
The company's overall Mojo score of 31 out of 100, placing it firmly in "SELL" territory, synthesises these conflicting signals into a coherent assessment. While the score has stabilised at 31 after oscillating between "Sell" and "Strong Sell" in recent months, the underlying fundamentals have not improved materially. Key concerns limiting the score include the bearish technical trend, weak long-term fundamental strength with average ROCE of just 8.79%, and flat operational performance in recent quarters.
Key Strengths & Risk Factors
Key Strengths ✓
- Brand Recognition: "Krishi Sanjivani" brand has established presence in Maharashtra's agricultural markets
- Diversified Product Portfolio: Manufactures both NPK mixture granulated fertilisers and single super phosphate, reducing product concentration risk
- Stable Promoter Holding: Consistent 53.07% promoter stake with zero pledging demonstrates long-term commitment
- Improved Operating Cash Flow: Generated ₹43.00 crores in FY2025 vs negative ₹12.00 crores in FY2024
- Valuation Discount: Trading at 0.51x book value and 18.36x P/E, below industry average of 23x
- YoY Revenue Growth: Achieved 25.81% year-on-year sales growth in Q2 FY2026
- Moderate Debt Levels: Debt-to-equity of 0.71 is manageable compared to highly leveraged peers
Key Concerns ⚠
- Collapsing ROE: Return on equity deteriorated to 2.77% from 6.70% average, indicating severe capital inefficiency
- Razor-Thin Margins: PAT margin of just 0.93% leaves no room for operational missteps or cost inflation
- High Leverage Costs: Interest expense of ₹3.65 crores consumes significant portion of operating profits
- Micro-Cap Liquidity: Market cap of only ₹94.00 crores limits institutional participation and trading liquidity
- Zero Institutional Interest: Negligible FII, MF, and insurance holdings reflect quality concerns
- Severe Stock Underperformance: Down 39.60% in past year vs Sensex gain of 7.97%, with negative alpha of 47.57%
- Seasonal Revenue Volatility: 40.01% QoQ revenue decline highlights business cyclicality and unpredictability
- Weak Interest Coverage: EBIT-to-interest ratio of 2.39x provides minimal safety margin
Outlook: What to Monitor Going Forward
Positive Catalysts
- Margin Recovery: Sustained operating margins above 6% with path to historical levels of 12%+
- Volume Growth: Sequential revenue improvement in Q3/Q4 FY2026 demonstrating demand resilience
- Debt Reduction: Meaningful deleveraging to improve interest coverage and ROE
- Working Capital Efficiency: Reduction in debtor days and inventory levels to free up cash
- Institutional Entry: Any mutual fund or insurance company initiating positions would signal improving fundamentals
Red Flags to Watch
- Further Margin Compression: Operating margins falling below 5% would indicate severe pricing pressure
- Rising Debt Levels: Any increase in debt-to-equity beyond current 0.71 would strain finances
- Promoter Selling: Reduction in 53.07% promoter stake or share pledging would be major negative
- Continued Stock Weakness: Break below ₹9.27 (52-week low) would signal further downside
- Institutional Exit: Even the single mutual fund reducing its minimal 0.02% stake would be concerning
The Verdict: Avoid Despite Valuation Discount
Score: 31/100
For Fresh Investors: Avoid initiating positions. The combination of deteriorating ROE (2.77%), razor-thin PAT margins (0.93%), severe stock underperformance (-39.60% in past year), and complete absence of institutional interest creates an unfavourable risk-reward profile. The "Very Attractive" valuation is a value trap, not a buying opportunity, as weak fundamentals justify the discount.
For Existing Holders: Consider exiting on any technical bounce or improvement in liquidity. The bearish technical trend, below-average quality grade, and limited growth catalysts suggest continued underperformance is likely. Use any rally towards ₹12-13 levels to reduce exposure rather than averaging down at current depressed levels.
Fair Value Estimate: ₹8.50-9.00 (16.5% downside risk from current ₹10.19), based on normalised earnings of ₹0.45-0.50 per share and justified P/E of 18-19x given weak ROE and high leverage.
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.
