The company, with a market capitalisation of ₹1,119.00 crores, delivered a year-on-year net profit growth of 36.64% in Q2 FY26, demonstrating strong underlying momentum despite the quarterly setback. However, operating margins contracted to 10.29% from 11.44% in the previous quarter, raising questions about cost management and competitive pressures in the dyes and pigments sector.
| Quarter | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 | Jun'24 |
|---|---|---|---|---|---|---|
| Revenue (₹ Cr) | 255.09 | 254.51 | 219.40 | 217.06 | 175.62 | 194.20 |
| QoQ Growth | +0.23% | +16.00% | +1.08% | +23.60% | -9.57% | +1.80% |
| Net Profit (₹ Cr) | 18.20 | 20.96 | 16.54 | 15.92 | 13.32 | 12.84 |
| QoQ Growth | -13.17% | +26.72% | +3.89% | +19.52% | +3.74% | -1.91% |
| Operating Margin | 10.29% | 11.44% | 11.26% | 10.34% | 10.86% | 9.10% |
| PAT Margin | 7.13% | 8.24% | 7.54% | 7.33% | 7.58% | 6.61% |
Financial Performance: Margin Compression Clouds Strong Top Line
Shree Pushkar Chemicals' Q2 FY26 results present a tale of two narratives. On the revenue front, the company demonstrated resilience with net sales of ₹255.09 crores, registering marginal sequential growth of 0.23% and robust year-on-year expansion of 45.25%. This marked the company's highest quarterly revenue in recent history, surpassing the ₹254.51 crores recorded in Q1 FY26.
However, profitability metrics painted a more concerning picture. Net profit declined to ₹18.20 crores in Q2 FY26 from ₹20.96 crores in the previous quarter, representing a sequential contraction of 13.17%. Operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) stood at ₹26.24 crores, down from ₹29.11 crores in Q1 FY26, resulting in an operating margin of 10.29% compared to 11.44% in the preceding quarter.
The margin compression appears to stem from multiple factors. Employee costs rose to ₹13.25 crores from ₹11.31 crores quarter-on-quarter, whilst interest expenses increased to ₹1.74 crores from ₹1.16 crores. The profit after tax margin contracted to 7.13% from 8.24% in Q1 FY26, reflecting the cumulative impact of rising costs and operational pressures.
On a positive note, the half-yearly performance for H1 FY26 remained encouraging. For the six months ended September 2025, net sales reached ₹509.60 crores, representing growth of 38.06% compared to ₹369.82 crores in H1 FY25. Net profit for H1 FY26 stood at ₹39.16 crores, up 50.00% from ₹26.16 crores in the corresponding period last year, demonstrating the company's underlying growth momentum despite quarterly volatility.
Operational Challenges: Cost Pressures and Efficiency Concerns
The sequential decline in profitability despite stable revenues highlights operational challenges that warrant attention. The company's operating profit excluding other income declined to ₹26.24 crores, marking the lowest level in recent quarters and raising questions about cost control measures and pricing power in an increasingly competitive chemical industry landscape.
A closer examination of the cost structure reveals mounting pressures. Employee costs increased by 17.15% quarter-on-quarter, potentially reflecting wage inflation and increased hiring to support business expansion. Interest expenses surged by 50.00% sequentially to ₹1.74 crores, suggesting higher working capital requirements or increased borrowings to fund growth initiatives.
From a capital efficiency perspective, Shree Pushkar Chemicals' return on equity (ROE) stands at 10.65% on average, with the latest half-yearly ROE improving to 12.39%. Whilst this represents decent returns, it remains below the 15% threshold typically associated with high-quality businesses. The return on capital employed (ROCE) averaged 11.54% over recent periods, with the latest half-yearly ROCE reaching 13.87%, indicating gradual improvement in capital deployment efficiency.
The balance sheet remains relatively healthy, with the company operating as a net cash entity. Net debt to equity averaged -0.01, indicating the company holds more cash than debt. Total debt stood at minimal levels of ₹0.16 crores as of March 2025, down from ₹0.29 crores in the previous year. This conservative capital structure provides financial flexibility for future growth investments without significant leverage risks.
Key Monitoring Point: Deteriorating Working Capital
The debtors turnover ratio for H1 FY26 declined to 4.44 times, marking the lowest level in recent periods. This suggests the company is taking longer to collect receivables, which could strain cash flows and indicate potential demand softness or customer payment delays in the chemical sector. Trade payables increased significantly to ₹157.21 crores in March 2025 from ₹73.90 crores in the previous year, highlighting stretched vendor payments that may not be sustainable long-term.
Industry Context: Navigating Sector Headwinds
The dyes and pigments sector has faced considerable challenges over the past year, with the broader industry delivering negative returns of -15.27% over the 12-month period. Against this backdrop, Shree Pushkar Chemicals' stock performance of 23.93% over the same timeframe represents significant outperformance, delivering alpha of 39.20 percentage points versus the sector benchmark.
The chemical industry has grappled with multiple headwinds including volatile raw material prices, subdued demand from key end-user industries such as textiles and paints, and intensifying competition from imports. Chinese competition, in particular, has exerted pressure on domestic manufacturers' pricing power and margins. The company's ability to maintain positive growth despite these challenges speaks to its competitive positioning and customer relationships.
Looking at longer-term trends, Shree Pushkar Chemicals has demonstrated robust growth with five-year sales compounding at 24.76% and EBIT growing at 22.34% annually. This track record of sustained expansion positions the company favourably within the sector, though maintaining this momentum amidst current industry conditions will prove challenging.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Month | +2.74% | +0.79% | +1.95% |
| 3 Months | -10.79% | +0.43% | -11.22% |
| 6 Months | -11.25% | +4.50% | -15.75% |
| 1 Year | +23.93% | +10.41% | +13.52% |
| 2 Years | +80.03% | +17.65% | +62.38% |
| 3 Years | +92.83% | +38.81% | +54.02% |
Peer Comparison: Competitive Positioning Within the Sector
When evaluated against industry peers, Shree Pushkar Chemicals presents a mixed valuation picture. The company trades at a price-to-earnings ratio of 15.67x, significantly below the peer group average of approximately 43x (excluding loss-making entities). This valuation discount suggests the market harbours concerns about the company's growth sustainability or quality of earnings compared to peers.
On profitability metrics, Shree Pushkar Chemicals' ROE of 10.65% places it in the middle of the pack, slightly ahead of peers like Kiri Industries (8.98%) and Ultramarine Pigments (7.13%), but behind Sudarshan Chemicals (10.08%) and comparable to Sudarshan Coloration (9.62%). The company's price-to-book ratio of 1.94x exceeds the peer average of approximately 1.40x, suggesting investors assign a premium to the company's asset base despite the lower P/E multiple.
The company's debt-free status (net debt to equity of -0.01) represents a significant competitive advantage over peers such as Sudarshan Chemicals (0.35 debt-to-equity) and Kiri Industries (0.30 debt-to-equity). This conservative financial structure provides greater operational flexibility and reduces vulnerability to interest rate fluctuations.
| Company | P/E (TTM) | ROE % | Debt/Equity | P/BV | Div Yield % |
|---|---|---|---|---|---|
| Shree Pushkar | 15.67 | 10.65% | -0.01 | 1.94 | 0.58% |
| Sudarshan Chem | 125.58 | 10.08% | 0.35 | 2.16 | 0.47% |
| Kiri Industries | NA (Loss Making) | 8.98% | 0.30 | 0.84 | NA |
| Ultramarine Pig. | 17.03 | 7.13% | 0.02 | 1.27 | NA |
| Sudarshan Colora | 13.32 | 9.62% | -0.33 | 1.50 | NA |
| Bhageria Indust. | 14.16 | 8.24% | 0.05 | 1.23 | 0.92% |
Valuation Analysis: Fair Pricing with Limited Upside
At the current market price of ₹347.00, Shree Pushkar Chemicals trades at a P/E ratio of 16x trailing twelve-month earnings, which appears reasonable given the company's growth profile and sector positioning. The valuation has oscillated between "Fair" and "Expensive" categories over recent months, with the current assessment landing at "Fair" as of November 2025.
The company's price-to-book value of 1.94x represents a moderate premium to book value of ₹166.64 per share. Given the ROE of 12.39% (latest), this P/BV multiple appears justified, though it leaves limited room for multiple expansion unless profitability improves materially. The EV/EBITDA multiple of 10.88x and EV/EBIT of 14.07x are in line with historical averages, suggesting the market has appropriately priced in near-term growth expectations.
The PEG ratio of 0.32x appears attractive on the surface, indicating the stock trades at a discount to its growth rate. However, investors should interpret this metric cautiously given the recent quarterly profit decline and margin pressures. The dividend yield of 0.58% provides minimal income support, with the company maintaining a conservative payout ratio of 11.03%.
Valuation Dashboard
P/E Ratio (TTM): 16x | P/BV Ratio: 1.94x | EV/EBITDA: 10.88x
Dividend Yield: 0.58% | Payout Ratio: 11.03%
Overall Assessment: Fair valuation with limited near-term upside potential
Shareholding Pattern: Stable Promoter Base, Volatile FII Interest
The shareholding structure of Shree Pushkar Chemicals reflects a stable promoter base with minimal institutional participation. Promoter holding has remained constant at 69.36% over the past five quarters, indicating strong management commitment and no dilution concerns. The promoter group, led by the Makharia family, maintains zero pledging of shares, eliminating governance concerns related to leveraged holdings.
Foreign institutional investor (FII) participation has shown volatility, declining to 0.59% in December 2025 from 1.47% in September 2025, representing an exit of 0.88 percentage points. This reduction in FII interest coincides with the recent margin compression and could signal concerns about near-term profitability trends. Mutual fund holdings remain at zero, highlighting the absence of domestic institutional support.
Notably, other domestic institutional investors (DII) entered the stock in December 2025 with a 0.38% stake, providing some institutional validation. However, the overall institutional holding of just 0.97% reflects limited coverage from large investment houses, which could constrain liquidity and valuation support.
| Quarter | Dec'25 | Sep'25 | Jun'25 | Mar'25 | Dec'24 |
|---|---|---|---|---|---|
| Promoter | 69.36% | 69.36% | 69.36% | 69.36% | 69.36% |
| FII | 0.59% | 1.47% | 0.42% | 0.86% | 0.41% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 0.38% | 0.00% | 0.00% | 0.00% | 0.00% |
| Public | 29.67% | 29.17% | 30.22% | 29.78% | 30.23% |
Stock Performance: Strong Long-Term Track Record
Shree Pushkar Chemicals has delivered impressive long-term returns despite recent volatility. The stock has generated absolute returns of 23.93% over the past year, significantly outperforming the Sensex return of 10.41% and delivering alpha of 13.52 percentage points. Over longer horizons, the outperformance becomes even more pronounced, with two-year returns of 80.03% (alpha: 62.38%) and three-year returns of 92.83% (alpha: 54.02%).
However, recent performance has deteriorated sharply. The stock has declined 10.79% over the past three months and 11.25% over six months, underperforming the Sensex by 11.22 and 15.75 percentage points respectively. Year-to-date, the stock is down 11.96%, reflecting investor concerns about margin pressures and slowing profit growth.
From a technical perspective, the stock currently trades at ₹347.00, down 27.19% from its 52-week high of ₹476.60 but up 56.94% from its 52-week low of ₹221.10. The stock is trading below all major moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), indicating a bearish technical setup. The overall technical trend is classified as "Mildly Bullish," though multiple indicators show bearish or mildly bearish signals.
The stock exhibits high volatility with an annualised standard deviation of 61.45% and a beta of 1.19, indicating it moves more aggressively than the broader market. This high-risk profile suits only those investors with appropriate risk tolerance and long investment horizons.
Investment Thesis: Quality Concerns Amid Growth Momentum
The investment case for Shree Pushkar Chemicals rests on several pillars. The company has demonstrated consistent long-term growth with sales compounding at 24.76% over five years, supported by a debt-free balance sheet and improving return ratios. The current financial trend is classified as "Positive," with half-yearly sales growing 28.34% and net profit expanding 24.04% year-on-year.
However, the company's quality grade remains "Average," reflecting concerns about capital efficiency and profitability consistency. The average ROE of 10.65% and ROCE of 11.54%, whilst improving, remain below benchmarks for high-quality businesses. The recent quarterly profit decline and margin compression raise questions about the sustainability of the growth trajectory.
The valuation appears "Fair" at current levels, offering limited margin of safety for new investors. The technical trend of "Mildly Bullish" provides minimal support, with the stock trading below all key moving averages. The overall Mojo score of 61/100 places the stock in "HOLD" territory, reflecting the balanced risk-reward profile.
Key Strengths & Risk Factors
KEY STRENGTHS
- Strong revenue growth momentum with 45.25% YoY increase in Q2 FY26
- Debt-free balance sheet with net cash position providing financial flexibility
- Improving ROCE at 13.87% (H1 FY26) indicating better capital deployment
- Stable promoter holding at 69.36% with zero pledging
- Consistent long-term growth with 24.76% sales CAGR over five years
- Strong interest coverage ratio averaging 27.43x
- Significant outperformance versus sector benchmark (39.20% alpha over 1 year)
KEY CONCERNS
- Sequential profit decline of 13.17% in Q2 FY26 despite stable revenues
- Operating margin compression to 10.29% from 11.44% quarter-on-quarter
- Rising employee costs and interest expenses pressuring profitability
- Deteriorating working capital with debtors turnover at multi-quarter low of 4.44x
- Minimal institutional participation with only 0.97% holdings
- Recent FII exit of 0.88 percentage points signalling concerns
- High volatility (61.45%) and beta (1.19) unsuitable for conservative investors
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained margin recovery above 11% levels in coming quarters
- Acceleration in profit growth matching revenue expansion
- Improvement in working capital cycle with faster receivables collection
- Entry of domestic mutual funds providing institutional support
- Continuation of debt-free status enabling higher dividend payouts
RED FLAGS
- Further sequential margin compression below 10% levels
- Continued profit decline in Q3 FY26 indicating structural issues
- Additional FII exits or continued absence of mutual fund interest
- Working capital deterioration requiring debt funding
- Inability to pass on cost increases to customers affecting pricing power
The company's management will need to demonstrate ability to protect margins whilst sustaining top-line growth. Investors should monitor the Q3 FY26 results closely for signs of margin stabilisation and profit recovery. Any improvement in working capital metrics and institutional participation would provide additional confidence in the investment thesis.
The chemical sector's recovery trajectory remains uncertain, with demand conditions likely to remain subdued in the near term. However, Shree Pushkar's diversified product portfolio across chemicals, dyes, fertilisers, and cattle feeds provides some insulation from sector-specific headwinds. The company's ability to navigate these challenges whilst maintaining its debt-free status will be critical to long-term value creation.
The Verdict: Hold for Now, Monitor Closely
Score: 61/100
For Fresh Investors: Avoid initiating new positions at current levels. The recent profit decline and margin compression warrant caution despite attractive long-term growth. Wait for stabilisation in quarterly profitability and clearer margin trends before considering entry. Better entry opportunities may emerge if the stock corrects further towards ₹300-320 levels.
For Existing Holders: Continue holding with a watchful eye on Q3 FY26 results. The company's strong balance sheet, debt-free status, and long-term growth trajectory justify maintaining positions. However, set a mental exit trigger if margins compress further or profit decline continues for another quarter. Consider partial profit booking if the stock rallies above ₹400 levels.
Fair Value Estimate: ₹365-385 (5-11% upside from current levels), contingent upon margin recovery and sustained profit growth in coming quarters.
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 does not guarantee future results. Investments in equity markets are subject to market risks, and investors may lose part or all of their invested capital.
