The company's shares closed at ₹455.65 on February 5, 2026, down 5.80% on the day, as investors digested the mixed quarterly performance. With a market capitalisation of ₹2,711 crores, Shivalik Bimetal trades at a premium valuation of 30x trailing twelve-month earnings despite recent underperformance against both the broader market and its sector peers.
The quarter's performance presents a tale of operational excellence offsetting top-line pressures. Whilst revenue growth remained healthy on a year-on-year basis at 8.88%, the sequential contraction of 2.31% to ₹134.23 crores raises questions about demand momentum in the near term. More encouragingly, the company demonstrated pricing power and cost discipline, with operating margins (excluding other income) expanding to a quarterly high of 24.01%, up from 19.91% in the year-ago period.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 | 134.23 | -2.31% | 22.18 | -10.74% | 24.01% |
| Sep'25 | 137.40 | +0.59% | 24.85 | +9.09% | 22.61% |
| Jun'25 | 136.60 | +3.14% | 22.78 | +8.22% | 23.39% |
| Mar'25 | 132.44 | +7.43% | 21.05 | +15.41% | 21.52% |
| Dec'24 | 123.28 | -2.66% | 18.24 | -8.53% | 19.91% |
| Sep'24 | 126.65 | +0.53% | 19.94 | +11.90% | 21.29% |
| Jun'24 | 125.98 | — | 17.82 | — | 18.81% |
Financial Performance: Margin Strength Compensates for Revenue Volatility
Shivalik Bimetal's Q3 FY26 revenue of ₹134.23 crores represented modest year-on-year growth of 8.88%, though the sequential decline from Q2 FY26's ₹137.40 crores suggests some demand softness in the December quarter. For the nine-month period ended December 2025, cumulative sales stood at ₹408.23 crores, up 8.60% from ₹376.91 crores in the corresponding period last year, indicating consistent if unspectacular growth momentum.
The standout feature of the quarter was margin expansion. Operating profit before depreciation, interest, and tax (excluding other income) surged to ₹32.23 crores, translating to an operating margin of 24.01%—the highest in the trailing twelve quarters. This represents a substantial improvement of 410 basis points year-on-year from 19.91% in Q3 FY24. The company's gross profit margin also strengthened to 24.64%, up from 22.06% a year earlier, suggesting effective management of raw material costs and favourable product mix.
However, the sequential profit decline of 10.74% to ₹22.18 crores from Q2's ₹24.85 crores warrants attention. Whilst other income moderated to ₹3.10 crores from ₹3.60 crores in the previous quarter, the primary driver was the revenue softness. The company's profit after tax margin of 16.52% remains robust, though it dipped from Q2's 18.09%, reflecting the operational leverage inherent in the business model.
Employee costs rose to ₹15.35 crores in Q3 from ₹14.63 crores in Q2, a 4.92% sequential increase that outpaced revenue growth and contributed to the margin pressure on a quarter-on-quarter basis. Interest expenses remained modest at ₹1.33 crores, whilst depreciation stood at ₹3.53 crores. The effective tax rate of 24.86% was marginally higher than the previous quarter's 23.37% but remained within the company's historical range.
Operational Excellence: Strong Returns on Capital Despite Valuation Premium
Shivalik Bimetal's operational efficiency metrics paint a picture of a fundamentally sound business with impressive capital productivity. The company's average return on equity (ROE) of 25.00% positions it well above most peers in the iron and steel products segment, indicating superior profitability relative to shareholder capital. This high ROE reflects the company's ability to generate substantial earnings from its equity base, a key strength that justifies investor confidence in the business model.
The average return on capital employed (ROCE) of 27.36% further underscores the company's efficient use of capital. With EBIT-to-interest coverage averaging a robust 21.93 times, Shivalik Bimetal demonstrates strong debt servicing capability, though it should be noted that the company operates with minimal leverage. The average debt-to-EBITDA ratio of just 0.55 and a negative net debt-to-equity ratio of -0.12 classify it as a net cash company—a significant quality marker in the capital-intensive manufacturing sector.
Capital Efficiency Highlight
Zero-Debt Balance Sheet: Shivalik Bimetal operates as a net cash company with negative net debt-to-equity of -0.12, providing financial flexibility for growth investments without the burden of interest obligations. Long-term debt has declined from ₹22.36 crores in FY23 to just ₹4.01 crores in FY25, whilst cash and equivalents have strengthened substantially.
The balance sheet reflects this financial strength. Shareholder funds stood at ₹405.66 crores as of March 2025, up from ₹341.51 crores a year earlier, driven by retained earnings. Long-term debt has been systematically reduced to ₹4.01 crores from ₹12.27 crores in FY24, whilst current assets of ₹329.39 crores comfortably exceed current liabilities of ₹82.13 crores, providing a healthy working capital cushion. Fixed assets have grown to ₹125.34 crores, reflecting ongoing capacity expansion efforts.
Cash flow generation remains a key strength. For FY25, the company generated ₹93.00 crores from operations, up from ₹68.00 crores in FY24, demonstrating strong cash conversion. After accounting for capital expenditure of ₹57.00 crores and financing outflows of ₹26.00 crores (primarily debt repayment and dividends), the company ended with a closing cash balance of ₹20.00 crores. This consistent cash generation capability supports both organic growth and shareholder returns.
Industry Context: Underperforming Sector Peers Amid Market Headwinds
The iron and steel products sector has faced significant headwinds over the past year, with commodity price volatility, demand fluctuations from end-user industries, and competitive pressures weighing on performance. Shivalik Bimetal's one-year stock return of -11.87% compares unfavourably to the sector's 27.49% gain, resulting in an underperformance of 39.36 percentage points. This divergence suggests company-specific concerns have overshadowed the broader sectoral recovery.
The company's underperformance extends beyond its immediate sector. Over the past year, Shivalik Bimetal has lagged the Sensex by 18.31 percentage points, with the benchmark index delivering 6.44% returns. The stock's high beta of 1.45 indicates greater volatility than the broader market, amplifying both gains and losses. This elevated volatility, combined with negative risk-adjusted returns of -0.29 over the past year, places the stock in the "high risk, low return" category—a concerning classification for risk-averse investors.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt to Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Shivalik Bimetal | 30.20 | 5.91 | 25.00 | -0.12 | 0.59 |
| Electrosteelcastings | 9.23 | 0.78 | 10.01 | 0.25 | 1.89 |
| Bansal Wire Industries | 27.50 | 3.17 | 11.31 | 0.44 | — |
| Goodluck India | 23.07 | 2.72 | 13.53 | 0.69 | 0.35 |
| Kalyani Steels | 12.72 | 1.73 | 15.05 | -0.03 | 1.28 |
| Sambhav Steel | 46.71 | 2.77 | 15.26 | 1.05 | — |
The peer comparison reveals Shivalik Bimetal's premium positioning. With a P/E ratio of 30.20x, the company trades at a significant premium to most peers, with only Sambhav Steel commanding a higher multiple at 46.71x. The company's price-to-book value of 5.91x is the highest in the peer set, more than double the next highest (Bansal Wire at 3.17x). This valuation premium appears justified by Shivalik's superior ROE of 25.00%, which substantially exceeds the peer average of approximately 13%. However, the modest dividend yield of 0.59% and elevated PEG ratio of 3.72 suggest limited value for income-focused investors and raise questions about growth sustainability.
Valuation Analysis: Premium Multiples Challenge Entry Point Attractiveness
Shivalik Bimetal's current valuation metrics position it at the expensive end of the spectrum, with multiple indicators flashing caution. At a trailing P/E ratio of 30.20x, the stock trades marginally above the industry average of 29x, though this premium appears modest given the company's superior return ratios. More concerning is the price-to-book value of 5.91x, which suggests the market has priced in substantial future growth and profitability improvements.
The enterprise value multiples paint a similar picture. With an EV/EBITDA of 22.16x and EV/EBIT of 24.88x, Shivalik Bimetal commands premium valuations that leave little room for execution missteps. The EV/Sales ratio of 4.86x is particularly elevated for a manufacturing business, reflecting investor expectations of sustained margin expansion and volume growth. The PEG ratio of 3.72 indicates the stock is expensive relative to its growth rate, with the market potentially overestimating future earnings acceleration.
The stock's valuation grade has been classified as "Very Expensive" since September 2021, having briefly touched "Expensive" and "Fair" categories earlier that year. This persistent premium valuation reflects the market's recognition of the company's quality fundamentals, but also suggests limited margin of safety for new investors. At the current price of ₹455.65, the stock trades 24.56% below its 52-week high of ₹604.00, though it remains 20.54% above its 52-week low of ₹378.00.
The dividend yield of 0.59%, based on the latest dividend of ₹1.50 per share (ex-date September 9, 2025), provides minimal income support. With a dividend payout ratio of 20.18%, the company retains the majority of earnings for reinvestment, which is appropriate given its growth stage but offers little solace to value-seeking investors at current valuations.
Shareholding Pattern: Institutional Exodus Raises Governance Questions
The shareholding pattern over the past year reveals a concerning trend of institutional divestment that may explain the stock's underperformance. Foreign institutional investors (FIIs) have steadily reduced their stake from 3.93% in December 2024 to 2.59% in December 2025, with the most recent quarter seeing a reduction of 0.44 percentage points. This sustained selling pressure from sophisticated global investors suggests concerns about valuation, growth prospects, or governance that warrant attention.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | Dec'24 |
|---|---|---|---|---|---|
| Promoter | 33.17% | 33.17% | 33.17% | 33.17% | 33.17% |
| FII | 2.59% | 3.03% | 3.14% | 3.63% | 3.93% |
| Mutual Funds | 18.51% | 18.81% | 19.56% | 19.68% | 19.78% |
| Insurance | 0.53% | 0.52% | 0.53% | 0.51% | 0.50% |
| Other DII | 0.67% | 0.87% | 0.91% | 0.87% | 0.82% |
| Non-Institutional | 44.52% | 43.60% | 42.68% | 42.13% | 41.79% |
Mutual fund holdings have similarly declined from 19.78% in December 2024 to 18.51% in December 2025, with a sequential reduction of 0.30 percentage points in Q3 FY26. Whilst the absolute level of domestic institutional ownership remains healthy at 18.51%, the directional trend is negative and mirrors the FII selling pattern. Other domestic institutional investors (DIIs) have also trimmed positions, falling from 0.87% to 0.67% in the latest quarter.
The counterbalancing force has been retail and non-institutional investors, whose collective stake has risen from 41.79% in December 2024 to 44.52% in December 2025, with a 0.92 percentage point increase in Q3 alone. This shift in shareholder composition—from institutional to retail—typically signals valuation concerns amongst professional investors, as retail participants are often late entrants attracted by past performance rather than forward-looking fundamentals.
Promoter holding has remained rock-steady at 33.17% throughout the past five quarters, with zero pledging of shares—a positive indicator of promoter confidence and governance quality. The promoter group is led by O D Finance And Investment Private Limited (15.73%) and Narinder Singh Ghumman (7.80%), with family members holding additional stakes. The absence of pledging provides comfort regarding financial stability at the promoter level.
Stock Performance: Multi-Year Underperformance Weighs on Sentiment
Shivalik Bimetal's stock performance over various timeframes reveals a company struggling to maintain investor confidence despite strong long-term returns. The one-year return of -11.87% compares poorly to the Sensex's 6.44% gain, resulting in a negative alpha of 18.31 percentage points. This underperformance has accelerated in recent months, with the six-month return of -15.20% contrasting sharply with the Sensex's 3.23% gain, producing a negative alpha of 18.43 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 9.11% | 0.91% | +8.20% |
| 1 Month | 7.60% | -2.49% | +10.09% |
| 3 Months | -2.05% | -0.17% | -1.88% |
| 6 Months | -15.20% | 3.23% | -18.43% |
| YTD | 6.05% | -2.24% | +8.29% |
| 1 Year | -11.87% | 6.44% | -18.31% |
| 2 Years | -20.45% | 16.15% | -36.60% |
| 3 Years | 16.30% | 36.94% | -20.64% |
| 5 Years | 914.52% | 64.22% | +850.30% |
The two-year performance is even more concerning, with the stock down 20.45% whilst the Sensex has gained 16.15%, producing a negative alpha of 36.60 percentage points. This sustained underperformance suggests structural challenges beyond temporary market sentiment, possibly related to valuation compression, growth deceleration, or competitive pressures. The three-year return of 16.30%, whilst positive, significantly lags the Sensex's 36.94% gain.
However, longer-term investors have been handsomely rewarded. The five-year return of 914.52% and ten-year return of 6,147.77% demonstrate the wealth creation potential of the business during its high-growth phase. These exceptional returns, which vastly exceeded the Sensex's 64.22% and 238.44% gains over the respective periods, explain the loyalty of long-term shareholders but also highlight how far the stock has fallen from its growth trajectory.
Recent price action offers some encouragement. The one-week return of 9.11% and one-month return of 7.60% suggest a potential bottoming process, with the stock outperforming the Sensex by 8.20 and 10.09 percentage points respectively. The year-to-date return of 6.05% also beats the Sensex's -2.24% performance. However, technical indicators remain cautious, with the stock trading below all major moving averages and exhibiting a "mildly bearish" overall trend.
Investment Thesis: Quality Business Trapped in Valuation Quagmire
The investment case for Shivalik Bimetal presents a classic dilemma: a fundamentally sound business with strong return metrics trading at valuations that offer limited margin of safety. The company's quality grade of "Good" reflects consistent profitability, zero debt, strong ROCE and ROE, and healthy long-term growth. The five-year sales CAGR of 25.74% and EBIT CAGR of 45.76% demonstrate genuine operational excellence, whilst the absence of promoter pledging and healthy institutional participation (22.31%) provide governance comfort.
However, the valuation parameters paint a sobering picture. The "Very Expensive" classification, elevated P/E and P/BV multiples, and high PEG ratio of 3.72 suggest the market has priced in perfection. The financial trend has decelerated to "Flat" from previously "Positive" readings, with recent quarters showing revenue volatility and sequential profit declines. The technical trend of "Mildly Bearish" and positioning below all major moving averages indicate waning momentum.
The proprietary Mojo Score of 48/100 places the stock firmly in "SELL" territory (30-50 range), reflecting the confluence of expensive valuation, moderating growth, and negative technical momentum. The score's decline from "HOLD" (54) in October 2025 to "SELL" (48) in the current period underscores the deteriorating risk-reward equation. Key concerns include the elevated PEG ratio, bearish technical trend, and flat financial performance that fails to justify premium valuations.
KEY STRENGTHS
- Superior ROE of 25.00% demonstrates excellent capital efficiency and profitability
- Net cash position with negative debt-to-equity of -0.12 provides financial flexibility
- Strong ROCE of 27.36% indicates efficient capital allocation
- Consistent margin expansion with Q3 operating margin at quarterly high of 24.01%
- Healthy long-term growth: 5-year sales CAGR of 25.74%, EBIT CAGR of 45.76%
- Zero promoter pledging signals strong governance and financial stability
- Robust cash flow generation: ₹93 crores from operations in FY25
KEY CONCERNS
- Very expensive valuation: P/E of 30.20x, P/BV of 5.91x, PEG of 3.72
- Sequential revenue and profit decline in Q3: -2.31% and -10.74% respectively
- Sustained institutional selling: FII stake down from 3.93% to 2.59%, MF from 19.78% to 18.51%
- Significant underperformance: -11.87% vs Sensex +6.44% over one year
- Underperformance vs sector: -39.36 percentage points vs iron & steel products
- High volatility with beta of 1.45 and negative risk-adjusted returns
- Financial trend downgraded to "Flat" from "Positive"
Outlook: Navigating Between Quality and Price
The forward outlook for Shivalik Bimetal hinges on the company's ability to reignite revenue growth whilst sustaining the margin expansion achieved in recent quarters. The management's focus on operational efficiency has yielded impressive results, with operating margins touching 24.01% in Q3 FY26. However, the sequential revenue decline and institutional selling pattern suggest scepticism about near-term growth catalysts.
For the stock to regain momentum, several factors need alignment. Revenue growth must accelerate beyond the current single-digit trajectory, ideally returning to the mid-teens growth rates that characterised FY23 and FY24. Margin sustainability at current elevated levels is critical—any compression would severely impact profitability given the operating leverage. Most importantly, valuation multiples need to compress or earnings growth must accelerate to justify current premium pricing.
POSITIVE CATALYSTS
- Sustained margin expansion beyond 24% levels
- Revenue growth acceleration to mid-teens
- New product launches or capacity additions
- Improvement in working capital efficiency
- Return of institutional buying interest
RED FLAGS TO MONITOR
- Further sequential revenue or profit declines
- Margin compression from current elevated levels
- Continued institutional selling pressure
- Inability to sustain double-digit growth
- Rising working capital requirements
The technical setup remains challenging, with the stock trading below its 20-day, 50-day, 100-day, and 200-day moving averages. Immediate resistance lies at ₹430.79 (20 DMA), with major resistance at ₹466.78 (100 DMA) and ₹486.02 (200 DMA). The 52-week low of ₹378.00 provides downside support, though a breach could trigger further selling. The mildly bearish trend and negative momentum indicators suggest patience is warranted before fresh commitments.
The Verdict: Quality at the Wrong Price
Score: 48/100
For Fresh Investors: Avoid initiating positions at current valuations. The stock trades at a significant premium (P/E: 30.20x, P/BV: 5.91x) that offers limited margin of safety despite strong fundamentals. Wait for a meaningful correction towards ₹350-380 levels or evidence of revenue growth re-acceleration before considering entry.
For Existing Holders: Consider booking partial profits, especially for holdings acquired below ₹400. The combination of expensive valuation, institutional selling, and moderating growth momentum suggests limited near-term upside. Retain core positions only if conviction in long-term (3-5 year) growth story remains intact and portfolio allocation is appropriate.
Fair Value Estimate: ₹380-400 (16% downside from current levels), implying a more reasonable P/E of 24-26x based on sustainable earnings trajectory and peer comparisons.
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. The views expressed are based on information available as of the publication date and may change without notice.
