The stock, currently trading at ₹0.54, has witnessed a catastrophic erosion of shareholder wealth, declining 35.71% over the past year and 91.94% over five years. With the company's proprietary Mojo score standing at a dismal 17 out of 100 and a "STRONG SELL" rating, investors face a stark reality: this is a distressed asset requiring immediate attention and likely exit consideration.
The company's trajectory tells a troubling story. From peak revenues of ₹836.00 crores in FY19, Shrenik has witnessed a 95.93% revenue collapse to just ₹34.00 crores in FY24, reflecting a complete disintegration of its trading business. The five-year sales growth rate stands at a devastating -49.73%, whilst EBIT growth has contracted at -153.33%, indicating not just decline but accelerating deterioration in operational capacity.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | PAT Margin |
|---|---|---|---|---|
| Sep'25 | 8.51 | +45.97% | 0.22 | 2.59% |
| Jun'25 | 5.83 | +22.74% | -0.07 | -1.20% |
| Mar'25 | 4.75 | +2.15% | 0.08 | 1.68% |
| Dec'24 | 4.65 | -3.93% | -0.07 | -1.51% |
| Sep'24 | 4.84 | +49.38% | 0.05 | 1.03% |
| Jun'24 | 3.24 | -45.91% | -0.15 | -4.63% |
| Mar'24 | 5.99 | — | -108.37 | -1809.18% |
Financial Performance: Revenue Growth Masks Operational Weakness
In Q2 FY26, Shrenik Limited reported net sales of ₹8.51 crores, representing a 45.97% sequential increase from ₹5.83 crores in Q1 FY26 and a 75.83% year-on-year surge from ₹4.84 crores in Q2 FY25. Whilst these growth rates appear impressive on the surface, they must be contextualised against the company's catastrophic revenue base, which has shrunk from hundreds of crores to single-digit crores over recent years.
The company's core operations remain fundamentally unprofitable. Operating profit excluding other income stood at negative ₹0.33 crores in Q2 FY26, translating to an operating margin of -3.88%. This deterioration from -3.51% in the year-ago quarter demonstrates that the underlying trading business continues to destroy value. The company's survival hinges entirely on other income, which contributed ₹0.55 crores in Q2 FY26, representing an astonishing 250% of the reported net profit.
On a half-yearly basis (H1 FY26), the company reported combined revenues of ₹14.34 crores, marking a 77.48% increase from ₹8.08 crores in H1 FY25. However, this growth reflects recovery from an extremely depressed base rather than sustainable business momentum. The PAT margin for Q2 FY26 stood at 2.59%, but this metric is rendered meaningless given the company's reliance on non-operating income to achieve profitability.
The quality of earnings remains extremely poor. With negligible employee costs of just ₹0.01 crores per quarter, the company operates with minimal organisational infrastructure. The absence of depreciation charges and interest expenses reflects a business that has been stripped down to its bare essentials, operating with virtually no fixed assets (₹0.01 crores as of March 2024) and minimal debt.
Balance Sheet Crisis: Negative Net Worth and Existential Risk
The most alarming aspect of Shrenik Limited's financial position is its negative shareholder equity of ₹176.05 crores as of March 2024, resulting from accumulated losses that have completely eroded the company's ₹61.20 crores share capital. This represents a fundamental solvency crisis, with the company technically insolvent on a book value basis. The price-to-book value ratio of -0.19x reflects this distressed state, with the market valuing the equity at a fraction of its already-negative book value.
The company's promoter pledging at 99.94% represents perhaps the most critical red flag. With virtually all promoter holdings pledged, any adverse business development or margin calls could trigger forced selling and potential change of control. This level of pledging is extremely rare and indicates severe financial stress at the promoter level, raising questions about the company's ability to navigate future challenges.
Critical Solvency Concerns
Negative Net Worth: Shareholder equity of negative ₹176.05 crores indicates technical insolvency. The company has accumulated losses exceeding its entire share capital, representing a fundamental balance sheet crisis that typically precedes restructuring or liquidation scenarios.
Promoter Pledging: At 99.94%, virtually all promoter shares are pledged to lenders. This extreme level of pledging creates significant risk of forced selling in adverse market conditions and questions management's ability to support the business through additional capital infusions.
Current liabilities of ₹174.13 crores dwarf current assets of ₹1.54 crores, creating a severe working capital deficit. Trade payables alone stand at ₹49.92 crores, indicating potential supplier relationship stress and delayed payment cycles. With closing cash of just ₹1.00 crore as of FY24, the company operates with minimal liquidity buffers, raising concerns about its ability to meet near-term obligations.
The company's long-term debt of ₹4.77 crores represents a relatively small burden given the overall financial distress. However, the net debt-to-equity ratio calculation becomes meaningless with negative equity. The company generated operating cash flow of ₹20.00 crores in FY24, primarily through aggressive working capital reduction rather than operational improvements, as evidenced by the ₹255.00 crores positive change in working capital during the year.
Operational Decline: From Trading Giant to Micro-Cap Distress
Shrenik Limited's operational history reveals a stunning collapse from a substantial trading operation to its current diminished state. The company's revenues peaked at ₹836.00 crores in FY19, positioning it as a significant player in its trading segment. However, the subsequent years witnessed an unrelenting decline: ₹795.00 crores in FY20, ₹363.00 crores in FY21, ₹63.00 crores in FY22, ₹48.00 crores in FY23, and finally ₹34.00 crores in FY24.
This 95.93% revenue contraction over five years represents one of the most dramatic business collapses in the Indian micro-cap space. The five-year compound annual decline of -49.73% indicates not a cyclical downturn but a fundamental disintegration of the business model. The company's EBIT growth of -153.33% over the same period demonstrates that profitability deteriorated even faster than revenues, suggesting mounting operational inefficiencies and margin pressures.
| Year | Net Sales (₹ Cr) | YoY Change | PAT (₹ Cr) | PAT Margin |
|---|---|---|---|---|
| FY24 | 34.00 | -29.20% | -235.00 | -691.20% |
| FY23 | 48.00 | -23.80% | 0.00 | 0.00% |
| FY22 | 63.00 | -82.60% | -14.00 | -22.20% |
| FY21 | 363.00 | -54.30% | -1.00 | -0.30% |
| FY20 | 795.00 | -4.90% | 11.00 | 1.40% |
| FY19 | 836.00 | — | 11.00 | 1.30% |
The company's quality grade stands at "Below Average," reflecting its weak long-term financial performance. With institutional holdings at zero and no mutual fund or insurance company participation, the stock lacks any institutional support or validation. The average return on equity of 0.00% over the assessment period indicates chronic value destruction, whilst the average return on capital employed of 35.78% appears distorted by the negative capital employed base.
Peer Comparison: Isolated in Distress
Within the miscellaneous sector peer group, Shrenik Limited stands out for all the wrong reasons. Whilst comparisons prove challenging given the company's negative book value and loss-making status, the contrast with peers highlights the severity of its distress. Companies like A G Universal and Agarwal Float Glass operate with positive return on equity of 15.21% and 14.25% respectively, whilst Shrenik reports 0.00% ROE due to its negative equity base.
| Company | P/E (TTM) | P/BV | ROE | Debt/Equity |
|---|---|---|---|---|
| Shrenik | NA (Loss Making) | -0.19x | 0.00% | -0.70x |
| Lamosaic India | 5.35x | 2.74x | 0.00% | 1.06x |
| Infomedia Press | NA (Loss Making) | -0.67x | 0.00% | -0.64x |
| A G Universal | 26.82x | 1.94x | 15.21% | 1.09x |
| Agarwal Float | 12.76x | 2.12x | 14.25% | 0.91x |
The negative price-to-book value of -0.19x for Shrenik compares unfavourably with the peer average of approximately 1.50x for profitable companies in the group. This valuation discount reflects not just current distress but market scepticism about the company's ability to recover. With a market capitalisation of just ₹33.00 crores, Shrenik ranks amongst the smallest companies in its peer group, limiting its access to capital markets and institutional interest.
Valuation Analysis: Distressed Asset Pricing
Traditional valuation metrics prove largely inapplicable to Shrenik Limited given its loss-making status and negative book value. The company's P/E ratio remains undefined due to cumulative losses, whilst the negative P/BV of -0.19x reflects a market capitalisation below the company's negative net worth. The EV/EBITDA ratio of -151.85x and EV/EBIT of -151.85x indicate a distressed valuation framework where enterprise value calculations become meaningless.
The company's overall valuation assessment stands at "RISKY," having deteriorated from "Very Attractive" in early January 2023 to its current distressed state. This rapid valuation grade collapse mirrors the fundamental deterioration in the business. The EV/Sales ratio of 7.79x appears elevated given the company's operational challenges, suggesting the market may still be overvaluing the equity relative to its revenue-generating capacity.
The stock trades at ₹0.54, down 41.30% from its 52-week high of ₹0.92 but still 17.39% above its 52-week low of ₹0.46. This price range reflects ongoing volatility and uncertainty about the company's future. The absence of dividends since September 2020 eliminates any income component from the investment thesis, forcing investors to rely entirely on speculative capital appreciation in a fundamentally deteriorating business.
Shareholding Pattern: Promoter Distress and Institutional Absence
The shareholding pattern reveals a concerning concentration of risk and absence of institutional validation. Promoter holding stands at 99.94% as of June 2025, having increased from 95.18% in June 2024 through a 4.97% sequential jump in December 2024. This near-total promoter ownership eliminates free float and creates severe liquidity constraints for minority shareholders seeking exit opportunities.
| Quarter | Promoter | FII | MF | Insurance | Other DII |
|---|---|---|---|---|---|
| Jun'25 | 99.94% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mar'25 | 99.94% | 0.00% | 0.00% | 0.00% | 0.00% |
| Dec'24 | 99.94% | 70.39% | 0.00% | 0.00% | 0.05% |
| Sep'24 | 94.97% | 0.00% | 0.00% | 0.00% | 0.00% |
| Jun'24 | 95.18% | 0.00% | 0.00% | 0.00% | 0.00% |
The complete absence of institutional participation—zero FII holdings, zero mutual fund holdings, zero insurance company holdings—represents a damning indictment of the company's investment merit. The anomalous 70.39% FII holding reported in December 2024, which disappeared in subsequent quarters, likely reflects a data classification issue rather than genuine foreign institutional interest. No credible institutional investor maintains exposure to this distressed micro-cap.
Non-institutional holdings have fluctuated dramatically, standing at 74.62% in June 2025 after a 70.86% sequential increase from March 2025. These wild swings in non-institutional ownership suggest speculative trading activity rather than long-term investment conviction. The near-total promoter pledging of 99.94% creates a precarious ownership structure where any adverse development could trigger cascading margin calls and forced liquidation.
Stock Performance: Catastrophic Wealth Destruction
Shrenik Limited's stock performance represents one of the most severe cases of wealth destruction in the Indian equity markets. Over the past year, the stock has declined 35.71%, dramatically underperforming the Sensex's 4.62% gain by 40.33 percentage points. This negative alpha extends across all meaningful timeframes, with the stock declining 43.16% over two years against the Sensex's 28.14% gain, and plummeting 71.58% over three years whilst the Sensex advanced 36.01%.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -3.57% | -0.86% | -2.71% |
| 1 Month | -3.57% | +1.57% | -5.14% |
| 3 Months | -3.57% | +3.22% | -6.79% |
| 6 Months | -8.47% | +3.06% | -11.53% |
| Year to Date | -32.50% | +6.50% | -39.00% |
| 1 Year | -35.71% | +4.62% | -40.33% |
| 2 Years | -43.16% | +28.14% | -71.30% |
| 3 Years | -71.58% | +36.01% | -107.59% |
| 5 Years | -91.94% | +98.64% | -190.58% |
The five-year decline of 91.94% represents near-total capital destruction, with the stock losing over nine-tenths of its value whilst the broader market nearly doubled. This 190.58 percentage point underperformance versus the Sensex over five years places Shrenik amongst the worst-performing stocks in the Indian market. The stock's beta of 1.50 indicates higher volatility than the market, but this elevated risk has been accompanied by consistently negative returns, creating a "high risk, low return" profile that violates fundamental investment principles.
Technical indicators paint an equally bleak picture. The stock trades below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—signalling persistent downward momentum. The overall technical trend stands at "Mildly Bearish," having deteriorated from "Bearish" on September 25, 2025. With immediate support at the 52-week low of ₹0.46 and resistance at ₹0.54, the stock faces limited upside potential and significant downside risk.
Investment Thesis: A Distressed Asset Requiring Exit
The investment thesis for Shrenik Limited centres entirely on distress and restructuring potential rather than fundamental business strength. The company's Mojo score of 17 out of 100 places it firmly in "STRONG SELL" territory, reflecting the convergence of negative factors across valuation, quality, financial trends, and technical indicators. The proprietary scoring system evaluates the company as unsuitable for investment, recommending existing shareholders strongly consider exiting their positions.
The sole positive element—a "Positive" short-term financial trend for Q2 FY26—reflects marginal quarterly improvement rather than sustainable momentum. This single green light amidst a sea of red flags provides insufficient basis for investment conviction. The company's negative net worth, extreme promoter pledging, and chronic value destruction create a risk-reward profile heavily skewed towards further downside.
"With negative shareholder equity of ₹176 crores, 99.94% promoter pledging, and five-year revenue decline of 96%, Shrenik represents a distressed asset where restructuring or liquidation scenarios appear more probable than operational recovery."
Key Strengths and Risk Factors
KEY STRENGTHS ✓
- Sequential Revenue Growth: Q2 FY26 revenues of ₹8.51 crores represent 45.97% QoQ growth, indicating some business activity recovery from depressed levels.
- Return to Quarterly Profit: Net profit of ₹0.22 crores in Q2 FY26 reverses the ₹0.07 crore loss from Q1 FY26, demonstrating marginal operational stabilisation.
- Minimal Debt Burden: Long-term debt of ₹4.77 crores represents a manageable obligation given the scale of other challenges.
- Positive Operating Cash Flow: FY24 operating cash flow of ₹20.00 crores, though driven by working capital reduction, provides some liquidity buffer.
- Net Cash Position: Despite overall distress, the company maintains a net cash position with debt-to-equity of -0.70x.
KEY CONCERNS ⚠
- Negative Net Worth: Shareholder equity of negative ₹176.05 crores indicates technical insolvency and fundamental balance sheet crisis requiring immediate resolution.
- Extreme Promoter Pledging: 99.94% pledging creates existential risk of forced selling and loss of control in adverse market conditions.
- Revenue Collapse: 95.93% decline from ₹836 crores (FY19) to ₹34 crores (FY24) represents near-complete business disintegration.
- Core Business Unprofitability: Operating margin of -3.88% demonstrates the underlying trading business destroys value, with survival dependent on other income.
- Zero Institutional Support: Complete absence of FII, mutual fund, and insurance holdings signals lack of institutional validation or confidence.
- Severe Working Capital Deficit: Current liabilities of ₹174.13 crores versus current assets of ₹1.54 crores creates acute liquidity pressure.
- Catastrophic Stock Performance: 91.94% decline over five years represents near-total wealth destruction with no signs of reversal.
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained Revenue Recovery: Continuation of 75%+ YoY growth rates for multiple quarters could signal genuine business revival.
- Core Profitability: Achievement of positive operating margins excluding other income would indicate underlying business viability.
- Promoter Stake Unpledging: Reduction in pledged shares from 99.94% would signal improved promoter financial health.
- Capital Infusion: Fresh equity capital to restore positive net worth and strengthen balance sheet.
- Institutional Interest: Entry of mutual funds or insurance companies would validate investment thesis.
RED FLAGS
- Return to Quarterly Losses: Any reversal of Q2 FY26 profit to losses would confirm unsustainability of current trajectory.
- Forced Promoter Selling: Margin calls triggering sale of pledged shares could lead to change of control or further price collapse.
- Working Capital Crisis: Inability to manage ₹174.13 crores current liabilities could precipitate insolvency proceedings.
- Further Promoter Pledging: Any increase beyond 99.94% (through additional share issuance and pledging) would signal deepening distress.
- Regulatory Action: Stock exchange surveillance measures or regulatory intervention due to financial stress or governance concerns.
The path forward for Shrenik Limited requires extraordinary measures to address its existential challenges. Without significant capital infusion, debt restructuring, and fundamental business model reinvention, the company faces continued deterioration. Minority shareholders should closely monitor promoter pledging levels, quarterly profitability trends, and any signs of institutional interest as potential indicators of stabilisation or further decline.
The Verdict: A Distressed Asset Requiring Immediate Exit
Score: 17/100
For Fresh Investors: Avoid entirely. The combination of negative net worth, extreme promoter pledging at 99.94%, chronic unprofitability, and catastrophic five-year stock performance of -91.94% creates an unacceptable risk-reward profile. No fundamental or technical factors support fresh capital allocation to this distressed micro-cap.
For Existing Holders: Exit at the earliest opportunity. The company's technical insolvency, evidenced by negative shareholder equity of ₹176.05 crores, creates existential risk that far outweighs any speculative recovery potential. The marginal Q2 FY26 profit of ₹0.22 crores provides insufficient basis to hold through what appears to be a terminal decline. Consider tax-loss harvesting opportunities if applicable.
Fair Value Estimate: Not applicable given negative book value and absence of sustainable earnings. Current price of ₹0.54 may still overvalue the equity given fundamental distress. Further downside to 52-week low of ₹0.46 or below appears probable absent extraordinary restructuring measures.
Shrenik Limited represents a cautionary tale of business model failure and financial distress. Whilst the Q2 FY26 results show marginal sequential improvement, they cannot obscure the fundamental reality: this is a company with negative net worth, near-total promoter pledging, and a five-year track record of value destruction. The absence of institutional participation, persistent negative operating margins, and severe working capital constraints create a risk profile unsuitable for any investor seeking capital preservation or growth. Only speculative traders with high risk tolerance and clear exit strategies should consider exposure, and even then only with capital they can afford to lose entirely.
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. The analysis presented reflects conditions as of November 10, 2025, and may not account for subsequent developments. Past performance is not indicative of future results, and investments in distressed micro-cap stocks carry substantial risk of total capital loss.
