With a market capitalisation of just ₹11.00 crores, Shanti Overseas continues to grapple with severe operational challenges that have plagued the business for years. The September 2025 quarter witnessed revenue of ₹2.64 crores, down 24.79% sequentially from ₹3.51 crores in Q1 FY2026, though showing a 29.41% year-on-year improvement. More concerning is the company's operating profit margin, which collapsed to -82.95% in Q2 FY2026 from 8.26% in the preceding quarter, highlighting fundamental profitability issues.
The dramatic promoter stake reduction from 52.09% in September 2024 to zero by September 2025 signals a complete loss of confidence from the company's founders. This exodus, coupled with the absence of any institutional investors, leaves the stock entirely in retail hands—a precarious position for any listed entity, particularly one facing operational headwinds.
Financial Performance: A Pattern of Instability
Shanti Overseas' financial trajectory reveals alarming volatility rather than consistent growth. In Q2 FY2026, net sales stood at ₹2.64 crores, representing a 29.41% increase from ₹2.04 crores in the corresponding quarter last year. However, the sequential decline of 24.79% from Q1 FY2026's ₹3.51 crores underscores the company's inability to maintain momentum.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | Operating Margin |
|---|---|---|---|---|
| Sep'25 | 2.64 | -24.79% | -0.12 | -82.95% |
| Jun'25 | 3.51 | +138.78% | 0.17 | 8.26% |
| Mar'25 | 1.47 | -91.76% | 0.28 | 12.93% |
| Dec'24 | 17.84 | +774.51% | -2.39 | -16.09% |
| Sep'24 | 2.04 | -18.07% | -0.40 | -57.35% |
| Jun'24 | 2.49 | +94.53% | -0.49 | -33.33% |
| Mar'24 | 1.28 | — | -0.09 | -43.75% |
The operating profit before depreciation, interest, and tax (excluding other income) plunged to -₹2.19 crores in Q2 FY2026 from ₹0.29 crores in Q1 FY2026, a staggering deterioration. This negative operating profit of ₹2.19 crores against revenue of ₹2.64 crores indicates the company is spending more on operations than it generates in gross profit—an unsustainable business model.
On a half-yearly basis for H1 FY2026, the company reported net sales of ₹6.15 crores, up 35.76% from H1 FY2025. However, this modest topline improvement masks deeper profitability concerns. The net profit for H1 FY2026 stood at a mere ₹0.05 crores, barely positive and insufficient to cover the cost of capital or provide returns to shareholders.
Critical Profitability Crisis
The company's operating margin collapse to -82.95% in Q2 FY2026 represents one of the weakest quarterly performances in recent history. With operating losses exceeding revenue by a significant margin, the business model appears fundamentally broken. The reliance on other income of ₹2.22 crores in Q2 FY2026 to partially offset operating losses raises questions about core business viability.
Operational Challenges: Quality Metrics Paint a Bleak Picture
Shanti Overseas' quality metrics reveal a company struggling with fundamental operational execution. The average return on equity (ROE) over recent years stands at a paltry 2.22%, far below the threshold required to create shareholder value. More alarmingly, the latest ROE has deteriorated to -26.09%, indicating the company is destroying equity capital rather than generating returns.
The return on capital employed (ROCE) paints an even grimmer picture at -52.26% on average, with the latest figure at -37.34%. These negative returns on both equity and total capital employed signal that the business is unable to generate adequate profits from the resources at its disposal. In simple terms, every rupee invested in the business is yielding negative returns—a clear warning sign for investors.
The company's five-year sales growth of -55.07% and EBIT growth of -212.42% underscore a business in structural decline. This isn't a cyclical downturn but a fundamental erosion of the company's market position and operational capabilities. The agricultural products sector has witnessed robust growth in recent years, making Shanti Overseas' contraction particularly concerning.
Balance Sheet Concerns
Shareholder funds have declined from ₹32.39 crores in March 2022 to ₹13.97 crores in March 2024, representing a 56.87% erosion in equity capital over two years. While the company maintains minimal debt with a debt-to-equity ratio of 0.12, the shrinking equity base and negative profitability raise questions about long-term sustainability. Fixed assets have declined from ₹26.49 crores to ₹0.30 crores, suggesting asset disposals or write-downs that further weaken operational capacity.
Promoter Exit: A Vote of No Confidence
Perhaps the most alarming development for Shanti Overseas has been the systematic exit of promoters from the company. Promoter holding stood at 52.09% in September 2024, representing majority control. However, over the subsequent four quarters, promoters have steadily reduced their stake: from 52.09% to 9.46% in December 2024, then to 6.54% in March 2025, 3.79% in June 2025, and finally to zero by September 2025.
| Quarter | Promoter % | QoQ Change | Non-Institutional % |
|---|---|---|---|
| Sep'25 | 0.00% | -3.79% | 100.00% |
| Jun'25 | 3.79% | -2.75% | 96.21% |
| Mar'25 | 6.54% | -2.92% | 93.46% |
| Dec'24 | 9.46% | -42.63% | 90.54% |
| Sep'24 | 52.09% | — | 47.91% |
This complete promoter exit represents a stark vote of no confidence in the company's future prospects. Promoters, who typically have the most intimate knowledge of business operations and future outlook, have chosen to divest entirely. The stock is now 100% held by non-institutional investors, predominantly retail shareholders who may lack the resources or expertise to turn around the struggling business.
Notably, there is zero participation from foreign institutional investors (FIIs), mutual funds, insurance companies, or other domestic institutional investors (DIIs). The absence of sophisticated institutional capital suggests professional investors have evaluated the company and found it lacking in investment merit.
Peer Comparison: Lagging the Industry
Within the Other Agricultural Products sector, Shanti Overseas occupies the weakest position among listed peers. While direct financial comparisons are limited by data availability, the company's negative profitability and declining revenue trajectory stand in stark contrast to the sector's overall performance.
| Company | P/E Ratio (TTM) | P/BV Ratio | ROE % | Market Cap |
|---|---|---|---|---|
| Shanti Overseas | NA (Loss Making) | 0.91x | 2.22% | ₹11 Cr |
| Prima Agro | 14.58x | — | — | — |
| Omega Ag Seeds | 28.32x | — | — | — |
| Elegant Floriculture | 4.45x | — | — | — |
The sector delivered a one-year return of 128.58%, while Shanti Overseas declined 42.22%, underperforming by a massive 170.80 percentage points. This dramatic underperformance reflects not just cyclical weakness but fundamental business deterioration that has left the company unable to participate in sector growth.
Valuation Analysis: Trading Below Book Value for Good Reason
Shanti Overseas trades at a price-to-book value of 0.91x, below its net asset value of ₹12.58 per share. While this might superficially appear attractive, the discount is entirely justified given the company's negative profitability, eroding equity base, and complete absence of promoter confidence.
The company's price-to-earnings ratio is not applicable as it is currently loss-making. Other valuation metrics like EV/EBITDA at -3.35x and EV/EBIT at -3.24x are negative, reflecting the company's negative operating profits. The EV/Sales ratio of 0.48x indicates the enterprise is valued at less than half of annual revenue—a level typically reserved for distressed businesses.
The stock has declined 60.33% from its 52-week high of ₹23.87, now trading at ₹9.47, just 13.28% above its 52-week low of ₹8.36. This proximity to multi-year lows, combined with deteriorating fundamentals, suggests further downside risk remains.
"With promoters having completely exited, negative returns on capital, and persistent operating losses, Shanti Overseas represents a value trap rather than a value opportunity."
Stock Performance: Severe Underperformance Across All Timeframes
Shanti Overseas has delivered negative returns across every measurable timeframe, significantly underperforming both the Sensex and its sector. The stock's one-year return of -42.22% compares unfavourably to the Sensex's 9.50% gain, generating negative alpha of -51.72 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -2.57% | 1.69% | -4.26% |
| 1 Month | -10.58% | 1.19% | -11.77% |
| 3 Months | -3.96% | 5.40% | -9.36% |
| 6 Months | -44.10% | 3.18% | -47.28% |
| YTD | -40.96% | 8.72% | -49.68% |
| 1 Year | -42.22% | 9.50% | -51.72% |
| 2 Years | -49.76% | 29.12% | -78.88% |
| 3 Years | -55.44% | 37.57% | -93.01% |
The stock trades below all key moving averages—5-day (₹9.57), 20-day (₹10.06), 50-day (₹10.11), 100-day (₹12.59), and 200-day (₹13.70)—indicating sustained bearish momentum. Technical indicators uniformly point to continued weakness, with the overall trend classified as bearish since November 17, 2025.
The stock's beta of 1.50 indicates high volatility relative to the broader market, with annualised volatility of 54.92%—more than four times the Sensex's 12.26%. This extreme volatility, combined with negative returns, places Shanti Overseas in the "high risk, low return" category, the worst possible quadrant for investors.
Investment Thesis: Multiple Red Flags Converge
The proprietary Mojo Score of 12 out of 100 places Shanti Overseas firmly in "Strong Sell" territory, reflecting the convergence of negative factors across all key parameters. The company's quality grade is classified as "Below Average," with financial trends rated as "Flat" and technical trends as "Bearish." The valuation, while appearing cheap on a price-to-book basis, is appropriately categorised as "Risky" given the underlying business deterioration.
Key Strengths
- No Promoter Pledging: Zero pledged shares, though promoters have now fully exited
- Minimal Debt: Debt-to-equity ratio of 0.12 indicates low financial leverage
- Below Book Value: Trading at 0.91x P/BV provides some asset backing
- Recent Revenue Growth: H1 FY2026 sales up 35.76% year-on-year
Key Concerns
- Complete Promoter Exit: Promoter stake reduced from 52.09% to 0% in one year
- Negative Profitability: Operating margin of -82.95% in Q2 FY2026
- Negative Returns: ROE of -26.09% and ROCE of -37.34% destroying capital
- Structural Decline: Five-year sales growth of -55.07% and EBIT growth of -212.42%
- Zero Institutional Interest: No FII, mutual fund, or DII participation
- Severe Underperformance: Stock down 42.22% versus sector up 128.58%
- Extreme Volatility: 54.92% annualised volatility with negative returns
Outlook: Limited Catalysts for Recovery
The outlook for Shanti Overseas remains highly challenging with limited visible catalysts for improvement. The company faces fundamental operational issues that have persisted for years, evidenced by the five-year decline in sales and profitability. The absence of promoters and institutional investors suggests a lack of strategic direction and capital support necessary for turnaround.
Positive Catalysts (Limited)
- Sector tailwinds in agricultural products
- Potential for operational restructuring
- Low debt provides some flexibility
- Asset backing at current book value
Red Flags (Multiple)
- Further operating margin deterioration
- Continued revenue volatility and decline
- Additional equity erosion from losses
- Lack of strategic investor interest
- Technical breakdown below key support levels
- Potential delisting risk if performance doesn't improve
The Verdict: Avoid This Distressed Micro-Cap
Score: 12/100
For Fresh Investors: Avoid entirely. The complete promoter exit, negative profitability, structural revenue decline, and absence of institutional support make this an extremely high-risk proposition with limited recovery prospects. The micro-cap nature compounds liquidity risks.
For Existing Holders: Consider exiting at current levels to limit further losses. The deteriorating fundamentals, lack of management confidence (evidenced by promoter exit), and bearish technical setup suggest additional downside risk. Any bounce should be used as an exit opportunity.
Fair Value Estimate: ₹6.00-7.00 (29.57% to 36.84% downside from current price of ₹9.47), based on continued operating losses and equity erosion
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.
