The stock has been under relentless selling pressure, declining 36.31% over the past year and trading at ₹27.00 as of November 14, 2025—a staggering 41.10% below its 52-week high of ₹45.84. With the company now in a bearish technical trend and posting its worst quarterly performance in recent history, investor sentiment has turned decidedly negative.
The quarterly results paint a grim picture of a company in severe financial distress. Revenue generation has collapsed to levels not seen in years, whilst the company's cost structure remains stubbornly high, creating a toxic combination that has pushed operating losses to unprecedented levels. The company's inability to generate positive cash flows from operations raises serious questions about near-term viability.
Financial Performance: A Catastrophic Deterioration
Shree Steel Wire Ropes' Q2 FY26 performance represents a dramatic worsening of an already troubled situation. Net sales of ₹0.88 crores declined 19.27% sequentially from Q1 FY26's ₹1.09 crores and collapsed 69.86% year-on-year from ₹2.92 crores in Q2 FY25. This revenue implosion suggests severe demand challenges, potential loss of key customers, or operational disruptions at the company's manufacturing facility.
The operating profit (PBDIT) excluding other income stood at negative ₹0.28 crores in Q2 FY26, translating to an operating margin of negative 31.82%—the worst quarterly performance in the company's recent history. This compares unfavourably to the negative 4.59% margin in Q1 FY26 and the positive 2.05% margin achieved in Q2 FY25. The company's employee costs of ₹0.41 crores alone consumed 46.59% of revenue, indicating a severely misaligned cost structure relative to current revenue levels.
The net loss widened to ₹0.29 crores in Q2 FY26 from ₹0.19 crores in Q1 FY26, representing a 52.63% sequential deterioration. On a year-on-year basis, the company has swung from a marginal loss of ₹0.03 crores in Q2 FY25 to the current ₹0.29 crore loss—a nearly tenfold increase in losses despite significantly lower revenue. The PAT margin of negative 32.95% in Q2 FY26 reflects the complete breakdown of profitability at current operating levels.
| Quarter | Revenue (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | Operating Margin | PAT Margin |
|---|---|---|---|---|---|
| Sep'25 | 0.88 | -19.27% | -0.29 | -31.82% | -32.95% |
| Jun'25 | 1.09 | -63.79% | -0.19 | -4.59% | -17.43% |
| Mar'25 | 3.01 | +5.99% | -0.22 | -9.30% | -7.31% |
| Dec'24 | 2.84 | -2.74% | -0.03 | 1.41% | -1.06% |
| Sep'24 | 2.92 | +14.51% | -0.03 | 2.05% | -1.03% |
| Jun'24 | 2.55 | -22.49% | 0.03 | 3.14% | 1.18% |
| Mar'24 | 3.29 | — | 0.02 | 0.91% | 0.61% |
Operational Crisis: Revenue Collapse and Cost Structure Breakdown
The company's operational challenges have reached critical levels in Q2 FY26. The precipitous decline in revenue to just ₹0.88 crores suggests either severe demand destruction in the steel wire ropes segment or significant operational disruptions. For context, the company generated ₹3.29 crores in revenue as recently as March 2024, making the current quarterly run-rate a fraction of historical levels.
Employee costs remain stubbornly elevated at ₹0.41 crores in Q2 FY26, showing minimal adjustment despite the revenue collapse. This fixed cost burden, combined with other operating expenses, has created a deeply negative operating leverage situation where every rupee of revenue lost translates into disproportionate margin compression. The company's return on equity (ROE) has deteriorated to negative 3.54% in the latest period, down from an already weak average of 2.99%, whilst return on capital employed (ROCE) stands at negative 4.70%.
Critical Operational Red Flags
Revenue Implosion: Q2 FY26 revenue of ₹0.88 crores represents a 73.25% decline from the ₹3.29 crore level achieved just six quarters ago in March 2024. This dramatic erosion suggests fundamental business model challenges rather than cyclical weakness.
Negative Operating Leverage: With employee costs of ₹0.41 crores consuming nearly half of revenue, the company's cost structure is completely misaligned with current business volumes. Immediate and drastic cost restructuring appears necessary for survival.
Cash Flow Concerns: The company's cash balance has declined from ₹2.00 crores in March 2024 to effectively zero by March 2025, whilst continuing to generate operating losses. This raises serious questions about near-term liquidity and working capital management.
On the balance sheet front, shareholder funds stood at ₹13.29 crores as of March 2025, down marginally from ₹13.44 crores a year earlier, reflecting the cumulative impact of losses. The company maintains a debt-free balance sheet with zero long-term borrowings, which provides some cushion. However, with current assets of ₹7.62 crores against current liabilities of ₹0.88 crores, the company does maintain adequate short-term liquidity—though this position is eroding rapidly with ongoing quarterly losses.
Industry Context: Underperforming a Recovering Sector
The iron and steel products sector has delivered a robust 17.60% return over the past year, making Shree Steel Wire Ropes' 36.31% decline particularly concerning. Whilst the broader sector has benefited from infrastructure spending and industrial demand recovery, the company appears to have lost significant market share or faces company-specific operational challenges that have prevented it from participating in the sector's growth.
The company's underperformance of 53.91 percentage points versus its sector peers over the past year represents one of the worst relative performances in the industry. This suggests that the company's challenges are idiosyncratic rather than sector-wide, pointing to potential issues with product competitiveness, customer relationships, operational efficiency, or management execution.
Sector Divergence Analysis
Whilst the iron and steel products sector has navigated raw material cost pressures and delivered positive returns, Shree Steel Wire Ropes has experienced a complete business model breakdown. The company's inability to maintain even modest revenue levels in a growing sector environment suggests structural rather than cyclical challenges. Competitors have managed to maintain positive margins and grow revenues, highlighting the company-specific nature of SSWRL's operational crisis.
Peer Comparison: Weakest Amongst a Challenged Peer Group
Comparing Shree Steel Wire Ropes to its micro-cap peers in the iron and steel products space reveals a consistently weak positioning across most metrics. Whilst the company's ROE of 2.99% is marginally better than some peers, this represents an average figure that masks the current negative 3.54% ROE—a clear indication of value destruction.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity |
|---|---|---|---|---|
| Sh. Steel Wire | NA (Loss Making) | 0.67 | 2.99% | -0.20 |
| T N Steel Tubes | 310.05 | 1.63 | 2.03% | 0.76 |
| Monind | NA (Loss Making) | -0.18 | 0.00% | -0.52 |
| P.M. Telelinnks | 337.51 | — | — | — |
| MFS Intercorp | NA (Loss Making) | 6.28 | 0.00% | -0.13 |
The company's price-to-book ratio of 0.67x suggests the market values the company at a significant discount to its stated book value of ₹40.28 per share. This discount reflects investor scepticism about the sustainability of the company's assets and their ability to generate future cash flows. With a market capitalisation of just ₹9.00 crores, the company ranks amongst the smallest in its peer group, limiting institutional interest and liquidity.
Valuation Analysis: Deep Discount Reflects Fundamental Concerns
Shree Steel Wire Ropes trades at a price-to-book value of 0.67x, representing a 33% discount to stated book value. Whilst this might superficially appear attractive, the discount is entirely justified given the company's negative earnings, deteriorating returns on equity, and rapidly eroding shareholder value through sustained losses. The company's valuation grade has been classified as "Risky" since January 2024, reflecting the fundamental challenges facing the business.
With negative earnings, traditional price-to-earnings multiples are not applicable. The company's enterprise value to sales ratio of 0.64x and negative EV/EBITDA of -6.29x reflect the market's view that current operations are value-destructive rather than value-creating. The stock's 41.10% decline from its 52-week high of ₹45.84 to the current ₹27.00 represents a significant de-rating as the company's financial performance has deteriorated.
The company's proprietary Mojo Score of just 12 out of 100 places it firmly in "Strong Sell" territory, reflecting the combination of bearish technical trends, flat-to-negative financial performance, below-average quality metrics, and risky valuation. This score has been in the "Sell" or "Strong Sell" range since November 2024, accurately capturing the deteriorating fundamental trajectory.
Shareholding Pattern: Stable but Uninspiring Structure
The company's shareholding pattern has remained remarkably stable over the past five quarters, with promoter holding steady at 30.77% and non-institutional investors holding the remaining 69.23%. The absence of any foreign institutional investor (FII), mutual fund, or insurance company holdings reflects the stock's illiquidity and lack of institutional appeal.
| Category | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 |
|---|---|---|---|---|---|
| Promoter | 30.77% | 30.77% | 30.77% | 30.77% | 30.76% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Non-Institutional | 69.23% | 69.23% | 69.23% | 69.23% | 69.24% |
The promoter group, led by Bholenath Developers Private Limited with 14.81%, has maintained its stake despite the company's deteriorating performance. The absence of promoter pledging is a positive, indicating no immediate financial stress at the promoter level. However, the lack of any institutional participation—zero FII, mutual fund, or insurance holdings—severely limits the stock's liquidity and market depth.
Stock Performance: Sustained Underperformance Across All Timeframes
Shree Steel Wire Ropes has delivered negative alpha across virtually every meaningful timeframe, significantly underperforming both the Sensex and its sector peers. The stock has declined 36.31% over the past year whilst the Sensex gained 9.00%, resulting in a negative alpha of 45.31 percentage points. This pattern of consistent underperformance extends across multiple timeframes, from short-term periods to longer-term horizons.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -4.86% | +1.62% | -6.48% |
| 1 Month | +1.85% | +3.09% | -1.24% |
| 3 Months | -5.69% | +4.92% | -10.61% |
| 6 Months | -15.63% | +3.97% | -19.60% |
| YTD | -31.47% | +8.22% | -39.69% |
| 1 Year | -36.31% | +9.00% | -45.31% |
| 2 Years | -21.72% | +30.23% | -51.95% |
| 3 Years | +1.12% | +37.22% | -36.10% |
The stock currently trades at ₹27.00, having declined 2.39% in the most recent trading session. It sits below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—a technical configuration that signals sustained bearish momentum. The stock's high beta of 1.50 indicates it is significantly more volatile than the broader market, amplifying downside moves during market corrections.
With a risk-adjusted return of -0.72 over the past year and volatility of 50.50%, the stock falls into the "high risk, low return" category—the worst possible quadrant for investors. The negative Sharpe ratio confirms that the stock has destroyed value on a risk-adjusted basis, failing to compensate investors for the significant volatility endured.
Investment Thesis: Multiple Red Flags, No Clear Catalysts
The investment case for Shree Steel Wire Ropes is severely challenged across all key parameters. The company's Mojo Score of 12 out of 100 reflects a combination of bearish technical trends, flat financial performance, below-average quality metrics, and risky valuation. Each of the four key investment pillars presents significant concerns rather than opportunities.
The company's quality grade of "Below Average" reflects its weak long-term financial performance, with negative 5-year sales growth of 14.27% and collapsing EBIT growth of negative 179.45% over the same period. The average ROCE of 6.93% and ROE of 2.99% are well below acceptable thresholds for value creation, whilst the current period shows negative returns on both metrics.
"With revenue collapsing 70% year-on-year, operating margins at negative 32%, and no visible turnaround catalysts, Shree Steel Wire Ropes faces an existential crisis that makes it uninvestable at any price."
Key Strengths & Risk Factors
Limited Positives
- Debt-Free Balance Sheet: Zero long-term debt provides some financial flexibility, though this advantage is being rapidly eroded by operating losses.
- No Promoter Pledging: Promoters have not pledged shares, indicating absence of immediate financial stress at the promoter level.
- Established Presence: Company has been operating since 1972 with an established manufacturing facility at Khopoli, suggesting some embedded operational knowledge.
- Adequate Liquidity: Current assets of ₹7.62 crores against current liabilities of ₹0.88 crores provide short-term liquidity cushion, though eroding rapidly.
Critical Risk Factors
- Revenue Collapse: Q2 FY26 revenue of ₹0.88 crores represents a 70% YoY decline and 73% decline from recent peak levels—indicates fundamental business model breakdown.
- Negative Operating Margins: Operating margin of negative 31.82% in Q2 FY26 is the worst in company's recent history, with no signs of stabilisation.
- Mounting Losses: Net loss widened 53% QoQ to ₹0.29 crores in Q2 FY26, with cumulative losses eroding shareholder value consistently.
- Misaligned Cost Structure: Employee costs of ₹0.41 crores consume nearly half of revenue, indicating urgent need for restructuring that hasn't materialised.
- Zero Institutional Interest: Complete absence of FII, mutual fund, or insurance holdings reflects lack of confidence from professional investors.
- Sector Underperformance: 54 percentage point underperformance versus sector peers suggests company-specific rather than cyclical challenges.
- Technical Breakdown: Stock in bearish trend, trading below all moving averages with negative momentum across all timeframes.
- High Volatility: Beta of 1.50 and volatility of 50.50% create high-risk profile without commensurate return potential.
- Micro-Cap Illiquidity: Market cap of just ₹9.00 crores limits exit options and exacerbates downside risk during selling pressure.
- No Turnaround Visibility: Absence of any disclosed restructuring plan, strategic initiatives, or management commentary on recovery path.
Outlook: What Lies Ahead
Potential Positive Catalysts (Low Probability)
- Aggressive cost restructuring programme announced with clear timelines and targets
- Strategic partnership or acquisition bringing operational expertise and customer relationships
- Major new contract wins reversing the revenue decline trajectory
- Management communication providing credible turnaround roadmap with measurable milestones
Red Flags to Monitor (High Probability)
- Further sequential revenue decline in Q3 FY26 below ₹0.80 crores
- Operating margins remaining deeply negative (below -20%) for another quarter
- Cash balance declining towards zero without credible funding plan
- Any promoter stake reduction or insider selling activity
- Continued absence of institutional investor participation
- Technical breakdown below ₹24.75 (52-week low) triggering fresh selling
The path forward for Shree Steel Wire Ropes appears extremely challenging. With no visible turnaround catalysts, mounting quarterly losses, and a revenue base that has collapsed to unsustainable levels, the company faces an existential crisis. The absence of any management communication regarding strategic initiatives, restructuring plans, or operational improvements is particularly concerning.
For the company to stabilise, it would need to demonstrate at minimum: (1) sequential revenue growth returning to at least ₹2.00 crore quarterly levels, (2) cost restructuring bringing operating margins back to breakeven, and (3) credible strategic plan communicated to investors. None of these elements are currently visible, making any investment thesis highly speculative at best.
The Verdict: Avoid at All Costs
Score: 12/100
For Fresh Investors: Completely avoid. The company faces an existential crisis with collapsing revenues, deeply negative margins, mounting losses, and zero visibility on turnaround. The risk-reward profile is entirely unfavourable, with significant downside risk and negligible upside potential. Even at a 33% discount to book value, the stock remains uninvestable given the deteriorating fundamentals and lack of catalysts.
For Existing Holders: Exit immediately at current levels or any technical bounce. Every quarter of continued losses erodes shareholder value further. The company's Q2 FY26 results represent the worst quarterly performance in recent history, with no signs of stabilisation. With the stock in a confirmed bearish technical trend and trading below all moving averages, any relief rally should be used as an exit opportunity. The 36% decline over the past year is likely to continue absent dramatic operational improvements.
Fair Value Estimate: Not applicable. With negative earnings, deteriorating operations, and no visible path to profitability, traditional valuation frameworks break down. The current market price of ₹27.00 appears to discount significant further deterioration, but even at a 33% discount to book value, the risk of permanent capital loss remains unacceptably high.
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.
