Shri Bajrang Alliance Q3 FY26: Sharp Revenue Decline Triggers Operating Losses

The quarter was characterised by severe revenue contraction and margin compression, with net sales plummeting 46.27% sequentially to just ₹46.96 crores—the lowest quarterly figure in recent history. Most alarmingly, the company reported an operating loss (PBDIT excluding other income) of ₹2.49 crores, translating to a negative operating margin of 5.30%, a dramatic reversal from the 3.57% margin achieved in the previous quarter.

The results underscore significant operational challenges facing the company in the structural steel segment, where demand volatility and pricing pressures appear to have intensified. The stock has been under sustained pressure, declining 10.68% over the past month and 15.10% over six months, significantly underperforming both the Sensex and the broader Iron & Steel Products sector, which delivered a 22.79% return over the past year.

Financial Performance: Revenue Collapse Drives Operating Losses

The Q3 FY26 performance represents a concerning inflection point for Shri Bajrang Alliance. Net sales of ₹46.96 crores marked the lowest quarterly revenue in recent history, plunging 46.27% from Q2 FY26's ₹87.40 crores and declining 56.21% year-on-year from ₹107.23 crores in Q3 FY24. This dramatic contraction appears to stem from weak demand conditions in the structural steel segment, where the company manufactures angles, channels, joists, beams, and rounds.

The revenue decline had a cascading impact on profitability metrics. Operating profit (PBDIT excluding other income) turned negative at ₹-2.49 crores, compared to a positive ₹3.12 crores in the previous quarter. The operating margin collapsed to -5.30% from 3.57%, indicating that the company's core steel manufacturing operations are currently loss-making. This deterioration was only partially offset by other income of ₹0.09 crores, resulting in a profit before tax of ₹-3.70 crores.

On a consolidated basis, net profit stood at ₹6.17 crores, down 38.97% quarter-on-quarter. The divergence between standalone losses and consolidated profits suggests that the company's ready-to-eat frozen food project or other business segments may be providing some cushion, though detailed segmental data is not available to confirm this hypothesis. The PAT margin on a standalone basis was deeply negative at -4.81%, whilst the consolidated margin reflects contributions from other operations.

Employee costs remained relatively stable at ₹3.61 crores, up marginally from ₹3.41 crores in Q2 FY26, suggesting the company has maintained its workforce despite the revenue slump. However, with sales collapsing, the employee cost as a percentage of revenue has surged, further pressuring margins. Interest costs increased to ₹0.47 crores from ₹0.26 crores, indicating higher borrowing costs or increased debt levels during the quarter.

Balance Sheet Quality: Leverage Concerns Emerge

Shri Bajrang Alliance's balance sheet shows signs of stress, particularly in the context of deteriorating operational performance. As of March 2025, the company had shareholder funds of ₹335.81 crores, comprising share capital of ₹9.00 crores and reserves of ₹326.81 crores. The book value per share stood at ₹369.51, significantly higher than the current market price of ₹171.50, suggesting the stock trades at a steep discount to book value (P/BV of 0.44x).

Long-term debt increased substantially to ₹15.00 crores in FY25 from nil in FY24, indicating the company has taken on fresh borrowings. This is reflected in the rising interest burden, which jumped from ₹0.26 crores in Q2 FY26 to ₹0.47 crores in Q3 FY26. The debt-to-EBITDA ratio of 12.55 times is alarmingly high, suggesting the company would need more than 12 years of current EBITDA to pay off its debt—a clear red flag given the current operating environment.

Current liabilities stood at ₹113.76 crores as of March 2025, up from ₹110.72 crores in the previous year. Trade payables increased dramatically to ₹27.92 crores from just ₹2.93 crores, indicating potential working capital pressures or delayed payments to suppliers. The cash flow statement reveals concerning trends: operating cash flow was negative at ₹-23.00 crores in FY25, driven by a ₹-29.00 crores adverse movement in working capital. The company relied on financing cash flow of ₹36.00 crores to bridge the gap, further increasing leverage.

On the positive side, the company maintains substantial investments of ₹303.15 crores as of March 2025, up from ₹259.05 crores in the previous year. These investments provide some financial flexibility, though their liquidity and valuation in the current market environment remain uncertain. Fixed assets stood at ₹42.09 crores, relatively stable year-on-year, suggesting limited capital expenditure during the period.

Sector Context: Underperformance in a Resilient Market

The Iron & Steel Products sector has demonstrated resilience over the past year, delivering returns of 22.79%, significantly outperforming Shri Bajrang Alliance's -9.43% return. This 32.22 percentage point underperformance highlights company-specific challenges rather than broad sectoral headwinds. Whilst large integrated steel players have benefited from infrastructure spending and construction activity, smaller structural steel manufacturers like Shri Bajrang Alliance appear to be facing intense competitive pressures and demand volatility.

The company's debtors turnover ratio at half-year stood at just 11.25 times, the lowest on record, indicating slower collection of receivables. This suggests either extended credit periods to customers in a competitive environment or potential difficulties in realising sales. Such working capital deterioration, combined with negative operating cash flows, raises concerns about the company's ability to maintain operations without further external financing.

The structural steel segment is highly fragmented and price-sensitive, with numerous small and medium-sized players competing for orders. Shri Bajrang Alliance's sharp revenue decline suggests it may be losing market share or facing project delays. The company's diversification into ready-to-eat frozen food, whilst providing some cushion on a consolidated basis, remains an unproven venture that adds execution complexity.

Peer Comparison: Valuation Discount Reflects Fundamental Weakness

Comparing Shri Bajrang Alliance to peers in the Iron & Steel Products sector reveals a mixed picture. The company trades at a price-to-earnings ratio of 4.28x, significantly below peers such as Remi Edelstahl (63.76x), Kanishk Steel (15.16x), and Rudra Global (14.08x). This valuation discount reflects the market's concerns about earnings quality and sustainability.

Shri Bajrang Alliance's average ROE of 18.43% is the highest among the peer group, suggesting historically superior capital efficiency. However, this metric is declining rapidly, with the latest ROE at 10.36%. The company's debt-to-equity ratio of 0.23 is relatively low compared to Rudra Global's 1.72, indicating more conservative leverage—though the absolute debt levels have increased recently.

The price-to-book ratio of 0.44x is the lowest in the peer group, with most peers trading above 1.0x book value. This deep discount reflects the market's scepticism about asset quality and the company's ability to generate returns from its capital base. The PEG ratio of 4.28 suggests the stock is not particularly attractive even at current valuations, given the growth profile.

Valuation Analysis: Discount Warranted by Deteriorating Fundamentals

At the current market price of ₹171.50, Shri Bajrang Alliance trades at attractive valuation multiples on paper—a P/E of 4.28x and P/BV of 0.44x—but these metrics mask serious underlying concerns. The company's proprietary Mojo Score of just 17 out of 100 and a "STRONG SELL" rating reflect the significant fundamental deterioration.

The EV/EBITDA multiple of 29.58x and EV/EBIT of 49.67x are elevated despite the low P/E, indicating that enterprise value is high relative to operating profitability. This discrepancy arises from the company's substantial investments (₹303.15 crores), which inflate the balance sheet but may not be generating commensurate operating returns. The EV/Sales ratio of 0.65x suggests the market values the company at less than one year's revenue, typical for businesses with very low margins.

The stock has declined 31.26% from its 52-week high of ₹249.50, reached earlier in the fiscal year. It currently trades 28.80% above its 52-week low of ₹133.15, suggesting some technical support at current levels. However, with all major moving averages (5-day, 20-day, 50-day, 100-day, and 200-day) positioned above the current price, the technical picture remains decisively bearish.

The valuation grade of "ATTRACTIVE" appears at odds with the fundamental deterioration, highlighting the disconnect between static valuation metrics and dynamic business performance. Whilst the stock is statistically cheap, the cheapness reflects genuine concerns about earnings sustainability and business viability at current operating loss levels.

Shareholding Pattern: Stable Promoter Base, Zero Institutional Interest

The shareholding pattern reveals a stable promoter holding of 63.97% across the past five quarters, with no sequential changes. The promoter group, comprising the Goel family and associated entities, has maintained its stake, suggesting confidence in the long-term prospects despite recent operational challenges. Importantly, there is no promoter pledging, which eliminates concerns about forced selling or financial distress at the promoter level.

However, the complete absence of institutional investors—zero holdings from foreign institutional investors (FIIs), mutual funds, and insurance companies—is a significant red flag. Institutional investors typically conduct rigorous due diligence and their absence suggests concerns about corporate governance, business visibility, or growth prospects. The non-institutional holding of 36.03% comprises retail and other investors, who may have limited ability to influence management decisions.

The lack of institutional participation also impacts liquidity, with daily trading volumes averaging just 2,085 shares. This thin trading makes the stock susceptible to sharp price movements and makes it difficult for investors to enter or exit positions without impacting the price.

Stock Performance: Sustained Underperformance Across All Timeframes

Shri Bajrang Alliance's stock performance has been consistently weak across most timeframes, significantly underperforming both the Sensex and its sectoral peers. Over the past year, the stock declined 9.43% whilst the Sensex gained 7.18%, resulting in a negative alpha of 16.61 percentage points. The underperformance is even more pronounced over shorter periods: down 10.68% over one month (Sensex: -2.84%), and down 15.10% over six months (Sensex: +0.97%).

The two-year performance is particularly concerning, with the stock down 43.71% compared to the Sensex's 15.65% gain—a negative alpha of 59.36 percentage points. This sustained underperformance suggests structural issues rather than temporary cyclical weakness. The stock's beta of 1.50 indicates high volatility, with movements 50% more pronounced than the broader market, amplifying both gains and losses.

On a positive note, the longer-term picture shows substantial gains: up 145.00% over five years and an impressive 521.38% over ten years, significantly outperforming the Sensex's 77.74% and 230.79% returns over the same periods. However, these historical gains appear to have been driven by periods of strong performance that have now reversed, and may not be indicative of future potential given the current operational challenges.

The stock's risk-adjusted return over one year stands at -0.20, with volatility of 47.05%—more than four times the Sensex's 11.21% volatility. This places the stock firmly in the "HIGH RISK LOW RETURN" category, an unattractive combination for investors. The Sharpe ratio is negative, indicating that the stock has delivered losses whilst taking on substantial risk.

Technical Analysis: Bearish Trend with Multiple Resistances Ahead

The technical picture for Shri Bajrang Alliance is decisively bearish. The stock entered a bearish trend on January 13, 2026 at ₹186.00, reversing from a previous "Mildly Bullish" stance. All key technical indicators point downwards: MACD is bearish on both weekly and monthly timeframes, Bollinger Bands indicate bearish momentum, and moving averages show a consistent bearish signal.

The stock trades below all major moving averages: 5-day MA at ₹175.97, 20-day MA at ₹184.53, 50-day MA at ₹191.65, 100-day MA at ₹194.82, and 200-day MA at ₹196.08. This creates multiple layers of resistance overhead, with the 20-day moving average at ₹184.53 serving as immediate resistance. A sustained move above ₹196.08 (the 200-day MA) would be required to signal a meaningful trend reversal.

Immediate support lies at the 52-week low of ₹133.15, approximately 22% below current levels. The stock's position closer to its 52-week high than its low (down 31.26% from high, up 28.80% from low) suggests room for further downside if operational metrics don't stabilise. Delivery volumes have increased 38.27% over the past month compared to the previous month, indicating some genuine buying interest, though this hasn't translated into price appreciation.

Investment Thesis: Turnaround Potential Overshadowed by Execution Risks

The investment thesis for Shri Bajrang Alliance rests on three key pillars: valuation, quality, and momentum. On valuation, the stock appears attractive with a "VERY ATTRACTIVE" grade, trading at just 0.44x book value and 4.28x trailing earnings. However, this statistical cheapness is offset by deteriorating fundamentals. The quality assessment is "BELOW AVERAGE," reflecting weak operational metrics and inconsistent performance. The financial trend is "NEGATIVE," and technical indicators are "BEARISH," creating a challenging setup for investors.

The company's proprietary Mojo Score of 17 out of 100 places it firmly in "STRONG SELL" territory (score range 0-30). This comprehensive assessment incorporates valuation, quality, financial trends, and technical factors, all of which currently point negatively. The score has been in the "Sell" to "Strong Sell" range since October 2025, with brief fluctuations but no sustained improvement.

Key Strengths & Risk Factors

Outlook: Critical Monitoring Points for Turnaround

The outlook for Shri Bajrang Alliance hinges critically on the company's ability to arrest the revenue decline and return to profitability in its core structural steel operations. The Q4 FY26 results will be crucial in determining whether Q3's collapse was an aberration or the beginning of a more sustained downturn. Investors should closely monitor several key catalysts and warning signs.

The company's management commentary on demand conditions, order book visibility, and strategic initiatives will be critical in assessing turnaround potential. Given the current operational stress, any capital allocation decisions—whether further investments in the frozen food venture or capacity expansion in steel—should be scrutinised carefully for their return potential and execution risk.