The quarter's results reveal a company grappling with significant demand headwinds. Net sales plummeted 36.91% sequentially from ₹111.77 crores in Q2 FY26 to ₹70.52 crores in Q3 FY26, marking the lowest quarterly revenue figure in the trailing seven quarters. The year-on-year comparison is equally stark, with revenues declining 38.54% from ₹114.74 crores in Q3 FY25. This pronounced contraction suggests sector-specific challenges rather than mere seasonal volatility, particularly concerning for a company that demonstrated strong momentum earlier in the fiscal year.
What distinguishes this quarter is not merely the revenue decline but the accompanying margin erosion. Operating profit margin (excluding other income) collapsed to 3.56% in Q3 FY26 from 14.79% in the preceding quarter and 14.77% in the year-ago period. This 1,123-basis-point sequential decline indicates severe operational stress, with the company struggling to maintain pricing power or control costs in a deteriorating demand environment. The absolute operating profit figure of ₹2.51 crores represents an 84.82% quarter-on-quarter decline, underscoring the severity of the margin compression.
| Quarter | Revenue (₹ Cr) | QoQ Change | Net Profit (₹ Cr) | QoQ Change | Op. Margin % |
|---|---|---|---|---|---|
| Dec'25 | 70.52 | -36.91% | 7.89 | -0.75% | 3.56% |
| Sep'25 | 111.77 | -20.53% | 7.95 | -36.25% | 14.79% |
| Jun'25 | 140.65 | +17.70% | 12.47 | -22.40% | 11.48% |
| Mar'25 | 119.50 | +4.15% | 16.07 | +17.56% | 18.08% |
| Dec'24 | 114.74 | -8.59% | 13.67 | +54.99% | 14.77% |
| Sep'24 | 125.52 | +77.77% | 8.82 | +5.76% | 12.80% |
| Dec'23 | 70.61 | — | 8.34 | — | 17.09% |
Financial Performance: Margin Collapse Overshadows Bottom-Line Resilience
Despite the dramatic revenue contraction, Shri Jagdamba Polymers managed to limit net profit erosion to just 0.75% quarter-on-quarter, declining from ₹7.95 crores in Q2 FY26 to ₹7.89 crores in Q3 FY26. This relative bottom-line stability amidst top-line chaos warrants deeper examination. The company benefited from an unusual interest income reversal, recording ₹8.08 crores as negative interest expense in Q3 FY26 compared to a positive interest outgo of ₹2.93 crores in the previous quarter. This ₹11.01-crore swing in the interest line item effectively cushioned the profit after tax figure, masking the underlying operational deterioration.
Stripping away this accounting benefit reveals a more troubling picture. Profit before tax (excluding other income) stood at ₹7.59 crores in Q3 FY26, marking the lowest level in the trailing seven quarters. The PAT margin of 10.99% in Q3 FY26, whilst appearing respectable, represents a significant improvement from the 6.60% recorded in Q2 FY26—a divergence entirely attributable to the interest income anomaly rather than operational improvement. On a year-on-year basis, the PAT margin comparison (10.99% vs 11.91% in Q3 FY25) appears benign, but this masks the severe deterioration in core operating profitability.
The company's half-yearly performance for H1 FY26 (April-September 2025) provides additional context. Net sales for the six-month period totalled ₹252.42 crores, whilst consolidated net profit reached ₹20.42 crores. However, with Q3 FY26 revenues collapsing to ₹70.52 crores, the nine-month revenue figure (April-December 2025) stands at approximately ₹322.94 crores, suggesting a concerning deceleration in business momentum as the fiscal year progresses. The latest six-month PAT (H1 FY26) of ₹15.84 crores has grown at a negative 29.57% rate, highlighting the sustained pressure on profitability.
Operational Challenges: Demand Weakness Meets Pricing Pressure
The magnitude of Shri Jagdamba Polymers' revenue decline in Q3 FY26 points to severe demand disruption in the packaging and technical textiles sector. The 36.91% sequential decline is particularly alarming given that Q3 typically represents a seasonally stronger period for industrial packaging demand. This suggests company-specific market share losses or sector-wide destocking, both concerning scenarios for near-term recovery prospects. The company's product portfolio—PP/HDPE woven and non-woven fabrics and bags—serves diverse end markets including agriculture, infrastructure, and industrial packaging, making such a broad-based revenue collapse indicative of widespread demand weakness.
Operating leverage has turned sharply negative. Employee costs remained relatively stable at ₹9.88 crores in Q3 FY26 (down marginally from ₹10.12 crores in Q2 FY26), but as a percentage of revenue, this fixed cost component surged to 14.01% from 9.05% in the previous quarter. This suggests limited flexibility in the company's cost structure to adjust to sudden revenue shocks. The operating profit (PBDIT excluding other income) of ₹2.51 crores in Q3 FY26 translates to an operating margin of just 3.56%, down from 14.79% in Q2 FY26 and significantly below the 14.30% average operating margin recorded in FY25.
Critical Operational Red Flags
Revenue Collapse: Q3 FY26 revenue of ₹70.52 crores marks the lowest quarterly performance in the trailing seven quarters, declining 36.91% QoQ and 38.54% YoY.
Margin Erosion: Operating margin (excluding other income) plummeted to 3.56% in Q3 FY26 from 14.79% in Q2 FY26, representing an 1,123-basis-point sequential decline and the lowest margin in recent history.
Negative Operating Leverage: Fixed costs as a percentage of revenue have surged, with employee costs rising to 14.01% of sales in Q3 FY26 from 9.05% in the prior quarter, highlighting structural rigidity in the cost base.
Despite these operational headwinds, the company maintains certain structural strengths. Return on capital employed (ROCE) averaged 23.97% over the past five years, with the latest half-yearly ROCE at 22.05%—the highest in recent periods. This indicates that when operating at normalised capacity, the company generates attractive returns on invested capital. The average return on equity (ROE) of 19.36% over five years demonstrates solid capital efficiency, though the latest ROE has moderated to 16.12%. These profitability metrics, whilst under pressure, remain respectable and suggest the business model is fundamentally sound when demand conditions normalise.
Balance Sheet Strength: A Silver Lining Amidst Operational Turmoil
Shri Jagdamba Polymers' balance sheet provides a critical cushion during this period of operational stress. The company maintains a net cash position, with average net debt to equity of -0.09 over the past five years, classifying it as a zero-debt company. As of March 2025, shareholder funds stood at ₹292.48 crores against long-term debt of just ₹31.73 crores, resulting in a debt-to-equity ratio of 0.11. This conservative capital structure affords management significant financial flexibility to navigate the current downturn without immediate solvency concerns.
Cash and cash equivalents for H1 FY26 reached ₹40.27 crores, the highest level in recent periods, providing adequate liquidity to fund working capital requirements during the demand slump. The company's average debt-to-EBITDA ratio of 0.53 and EBIT-to-interest coverage of 13.05 times further underscore the minimal financial leverage risk. However, the cash flow statement for FY25 reveals concerning trends: operating cash flow turned negative at ₹34.00 crores due to a ₹91.00-crore increase in working capital, whilst investing activities consumed ₹47.00 crores. The company raised ₹86.00 crores through financing activities, resulting in a modest net cash inflow of ₹4.00 crores for the year.
Balance Sheet Positives
Shri Jagdamba Polymers maintains a fortress balance sheet with net cash status (average net debt to equity of -0.09), providing crucial financial flexibility during the current operational downturn. With cash and equivalents at ₹40.27 crores in H1 FY26, long-term debt of only ₹31.73 crores, and EBIT-to-interest coverage of 13.05 times, the company possesses adequate resources to weather short-term demand weakness without compromising financial stability. Zero promoter pledging further demonstrates confidence in the business's long-term prospects.
Current assets of ₹236.44 crores as of March 2025 substantially exceed current liabilities of ₹76.52 crores, yielding a healthy current ratio of approximately 3.09. This suggests no immediate liquidity concerns despite the revenue pressure. Fixed assets stood at ₹74.90 crores whilst investments totalled ₹39.32 crores, indicating a relatively asset-light operating model with sales-to-capital-employed averaging 1.45 times. The book value per share of ₹333.96 provides a reference point for intrinsic value assessment, though the market price of ₹620.00 implies investors are willing to pay a 1.83 times premium to book value even amidst current challenges.
Peer Comparison: Valuation Discount Reflects Operational Underperformance
Within the packaging sector peer group, Shri Jagdamba Polymers presents a mixed valuation picture. The company trades at a price-to-earnings ratio of 11.34 times trailing twelve-month earnings, representing a significant discount to the industry average P/E of approximately 17 times. This valuation discount reflects market concerns about near-term earnings sustainability given the sharp Q3 FY26 profit decline. However, the company's price-to-book ratio of 1.83 times compares favourably to the peer average of approximately 3.1 times, suggesting the market is not pricing in permanent capital impairment.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity | Div Yield % |
|---|---|---|---|---|---|
| Sh. Jagdamba Pol | 11.34 | 1.83 | 19.36 | -0.09 | 0.11 |
| Sh. Rama Multi. | 14.31 | 4.84 | 11.07 | 0.04 | — |
| Commerl. Synbags | 26.05 | 4.50 | 11.76 | 0.64 | 0.22 |
| Arrow Greentech | 12.92 | 3.11 | 18.72 | -0.63 | 0.92 |
| Nahar Poly | 8.71 | 0.74 | 6.50 | 0.10 | 0.39 |
| Pyramid Technopl | 22.15 | 2.15 | 10.98 | 0.51 | 0.33 |
Shri Jagdamba Polymers' competitive advantage lies in its superior return on equity. The company's five-year average ROE of 19.36% substantially exceeds the peer group average of approximately 12%, indicating more efficient capital allocation and business model economics. This ROE premium justifies some valuation multiple, though the recent operational deterioration raises questions about ROE sustainability. The company's net cash position (debt-to-equity of -0.09) contrasts favourably with peers like Commercial Synbags (0.64) and Pyramid Technoplast (0.51), providing greater financial flexibility and lower financial risk.
However, Shri Jagdamba Polymers' dividend yield of 0.11% lags peers such as Arrow Greentech (0.92%) and Nahar Poly (0.39%), reflecting a minimal payout policy. The company paid a dividend of ₹0.75 per share with an ex-dividend date of September 4, 2025, translating to a negligible yield at current prices. This suggests management is prioritising capital retention for growth investments or balance sheet strengthening over shareholder distributions. The company's market capitalisation of ₹543 crores positions it as the sixth-largest in the peer group, indicating a mid-tier player in the packaging sector.
Valuation Analysis: Attractive Multiples Offset by Deteriorating Fundamentals
At the current market price of ₹620.00, Shri Jagdamba Polymers trades at compelling valuation multiples that superficially suggest an attractive entry point. The P/E ratio of 11.34 times represents a 33% discount to the sector average of approximately 17 times, whilst the EV/EBITDA multiple of 7.48 times appears reasonable for a packaging manufacturer. The price-to-book ratio of 1.83 times implies the market values the company's assets at nearly twice their accounting value, reflecting goodwill for the business franchise and intangible assets not captured on the balance sheet.
The enterprise value-to-sales ratio of 1.12 times and EV-to-capital-employed of 1.91 times provide alternative valuation lenses. These metrics suggest the market is valuing the company at slightly above one times revenue and approximately two times the capital deployed in the business. The PEG ratio of 0.24—derived by dividing the P/E ratio by the five-year earnings growth rate—theoretically indicates significant undervaluation, as PEG ratios below 1.0 typically signal attractive growth-adjusted valuations. However, this metric's reliability is questionable given the recent earnings deterioration.
The valuation assessment must be contextualised against the company's quality grade and recent operational performance. Whilst Shri Jagdamba Polymers maintains a "Good" quality rating based on long-term financial performance, the financial trend has turned "Negative" as of Q3 FY26. The company's valuation grade history shows volatility, having oscillated between "Very Expensive" and "Fair" during 2025 before settling at "Fair" following the recent price correction. The stock has declined 51.56% from its 52-week high of ₹1,279.95, bringing valuations to more reasonable levels but also reflecting deteriorating fundamentals.
Shareholding Pattern: Stable Base Despite Performance Concerns
The shareholding structure of Shri Jagdamba Polymers has remained remarkably stable over the past five quarters, suggesting institutional and promoter confidence has not wavered despite operational challenges. Promoter holding stands at 72.94% as of December 2025, unchanged sequentially for the past five quarters. This unwavering promoter stake, with zero pledging, indicates strong conviction in the business's long-term prospects. The key promoters include Ramakant Bhojnagarwala (34.23%), Radhadevi R Agrawal (22.24%), Hanskumar Ramakant Agarwal (11.97%), and Shradha Hanskumar Agarwal (4.50%), representing a concentrated family-controlled ownership structure.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 72.94% | 72.94% | 72.94% | 72.94% | 0.00% |
| FII | 0.02% | 0.02% | 0.02% | 0.02% | 0.00% |
| Mutual Fund | 4.67% | 4.67% | 4.67% | 4.67% | 0.00% |
| Other DII | 0.41% | 0.41% | 0.35% | 0.29% | 0.00% |
| Non-Institutional | 21.97% | 21.97% | 22.02% | 22.08% | 0.00% |
Institutional participation remains minimal, with total institutional holdings at just 5.10%. Mutual fund holding has been static at 4.67% for the past five quarters, with a single mutual fund scheme maintaining exposure. Foreign institutional investor (FII) presence is negligible at 0.02%, whilst insurance companies hold no stake. Other domestic institutional investors (DIIs) have marginally increased their holding from 0.29% in March 2025 to 0.41% in December 2025, representing the only directional change in the shareholding pattern over this period.
The absence of institutional selling despite deteriorating quarterly results suggests either a long-term investment horizon amongst existing holders or limited liquidity for meaningful position adjustments. Non-institutional holdings (primarily retail and non-promoter corporate investors) have declined marginally from 22.08% in March 2025 to 21.97% in December 2025, indicating some retail investor exits. The low institutional ownership of 5.10% presents both an opportunity and a risk: upside potential if institutional interest develops, but limited buying support if the stock faces further pressure.
Stock Performance: Severe Underperformance Across All Timeframes
Shri Jagdamba Polymers' stock price performance has been deeply disappointing across virtually all timeframes, significantly underperforming both the Sensex and the broader packaging sector. Over the past year, the stock has declined 10.38% compared to the Sensex's 9.70% gain, resulting in negative alpha of 20.08 percentage points. This underperformance has accelerated in recent months, with the stock declining 19.77% over three months versus the Sensex's 1.49% decline (alpha of -18.28%), and falling 36.44% over six months against the Sensex's 3.36% gain (alpha of -39.80%).
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -2.67% | -0.91% | -1.76% |
| 1 Month | -5.39% | -0.32% | -5.07% |
| 3 Months | -19.77% | -1.49% | -18.28% |
| 6 Months | -36.44% | +3.36% | -39.80% |
| YTD | -8.30% | -2.25% | -6.05% |
| 1 Year | -10.38% | +9.70% | -20.08% |
| 3 Years | +4.16% | +35.85% | -31.69% |
| 5 Years | +12.34% | +59.88% | -47.54% |
The stock's risk-adjusted return profile is deeply concerning. Over the past year, Shri Jagdamba Polymers delivered a risk-adjusted return of -0.22 with volatility of 47.79%, classifying it in the "HIGH RISK LOW RETURN" category. This compares unfavourably to the Sensex's risk-adjusted return of 0.84 with volatility of just 11.53%. The stock's beta of 1.08 indicates it is more volatile than the broader market, amplifying downside moves during market corrections whilst providing limited upside participation during rallies.
Technical indicators paint a uniformly bearish picture. The stock trades below all key moving averages: 5-day MA (₹657.05), 20-day MA (₹641.43), 50-day MA (₹654.17), 100-day MA (₹722.88), and 200-day MA (₹874.47). The overall technical trend is classified as "Mildly Bearish" as of February 10, 2026, having deteriorated from "Bearish" in late October 2025. Weekly MACD shows a "Mildly Bullish" signal, whilst monthly MACD remains "Bearish", suggesting short-term oversold conditions within a broader downtrend. The stock has declined 51.56% from its 52-week high of ₹1,279.95, with immediate support at the 52-week low of ₹590.20 just 5.05% below current levels.
Investment Thesis: Quality Company Facing Cyclical Headwinds
The investment case for Shri Jagdamba Polymers presents a complex risk-reward equation. The company's fundamental quality remains intact, with a "Good" quality grade based on strong five-year metrics including 18.77% sales CAGR, 23.97% average ROCE, and zero net debt. These structural strengths suggest the business model is sound when operating in normalised demand conditions. The fortress balance sheet with net cash status provides crucial downside protection, ensuring the company can survive extended periods of operational stress without financial distress.
However, the near-term outlook is clouded by significant operational challenges. The financial trend has turned "Negative" following Q3 FY26 results, with revenues at their lowest quarterly level in recent history and operating margins collapsing to 3.56%. The technical trend remains "Mildly Bearish," whilst the stock has underperformed across all timeframes with negative alpha ranging from -1.76% (one week) to -47.54% (five years). The proprietary Mojo score of 44/100 places the stock in "SELL" territory, reflecting the confluence of negative near-term drivers despite attractive valuation and good underlying quality.
Key Strengths & Risk Factors
KEY STRENGTHS ✓
- Fortress Balance Sheet: Net cash company with average net debt-to-equity of -0.09, providing substantial financial flexibility and zero solvency risk during the downturn.
- Superior Capital Efficiency: Average ROE of 19.36% and ROCE of 23.97% over five years significantly exceed peer group averages, demonstrating strong business economics.
- Strong Long-Term Growth: Five-year sales CAGR of 18.77% demonstrates the company's ability to capture market share and expand operations over the long term.
- Zero Promoter Pledging: Unwavering 72.94% promoter holding with no pledged shares signals strong management confidence and alignment with minority shareholders.
- Adequate Liquidity: Cash and equivalents of ₹40.27 crores in H1 FY26 provide sufficient working capital buffer to navigate near-term demand weakness.
- Attractive Valuation: Trading at P/E of 11.34x (33% discount to sector) and P/BV of 1.83x (below peer average of 3.1x), offering value for patient investors.
- Low Financial Leverage: Debt-to-EBITDA of 0.53 and EBIT-to-interest coverage of 13.05x ensure minimal financial risk even during earnings volatility.
KEY CONCERNS ⚠
- Severe Revenue Contraction: Q3 FY26 revenue of ₹70.52 crores declined 36.91% QoQ and 38.54% YoY, marking the lowest quarterly performance in recent history.
- Margin Collapse: Operating margin crashed to 3.56% in Q3 FY26 from 14.79% in Q2 FY26, indicating severe pricing pressure and negative operating leverage.
- Negative Financial Trend: Latest six-month PAT declined 29.57%, whilst quarterly metrics across revenue, operating profit, and EPS hit multi-quarter lows.
- Technical Breakdown: Stock trading below all major moving averages with "Mildly Bearish" trend, having declined 51.56% from 52-week high.
- Persistent Underperformance: Negative alpha across all timeframes: -20.08% (1Y), -39.80% (6M), -18.28% (3M), signalling sustained investor disenchantment.
- Minimal Institutional Support: Just 5.10% institutional holdings with single mutual fund and negligible FII presence limits potential buying support.
- High Volatility Profile: Stock volatility of 47.79% versus Sensex 11.53%, with beta of 1.08 amplifying downside moves during market weakness.
Outlook: What to Watch
POSITIVE CATALYSTS
- Revenue Stabilisation: Sequential improvement in quarterly revenues above ₹100 crores would signal demand recovery and restore investor confidence.
- Margin Recovery: Operating margins returning towards historical 14-15% range would demonstrate pricing power restoration and operational normalisation.
- Institutional Accumulation: Increased mutual fund or FII holdings beyond current 5.10% would validate investment thesis and provide price support.
- Technical Reversal: Stock reclaiming 20-day and 50-day moving averages (₹641-654 zone) would signal potential trend reversal.
- Sector Tailwinds: Broader packaging sector recovery or government infrastructure spending boost benefiting technical textiles demand.
RED FLAGS
- Continued Revenue Decline: Q4 FY26 revenues falling below ₹70 crores or failing to show sequential improvement would confirm structural demand issues.
- Further Margin Compression: Operating margins remaining below 5% or turning negative would indicate severe competitive or cost pressures.
- Working Capital Deterioration: Continued negative operating cash flows or rising debtor days signalling collection challenges.
- Technical Breakdown: Stock breaking below 52-week low of ₹590.20 would trigger further technical selling and potentially test ₹500-550 levels.
- Promoter Actions: Any reduction in promoter holding or introduction of pledging would severely damage investor confidence.
The Verdict: Avoid Until Operational Stabilisation
Score: 44/100
For Fresh Investors: Avoid initiating positions at current levels. Whilst valuations appear attractive and balance sheet strength provides downside protection, the severe operational deterioration in Q3 FY26 requires evidence of stabilisation before committing capital. Wait for at least two consecutive quarters of revenue and margin improvement before considering entry.
For Existing Holders: Consider reducing exposure on any technical bounce towards ₹650-680 levels. The confluence of negative financial trends, bearish technicals, and persistent underperformance suggests the path of least resistance remains downward until operational metrics stabilise. Long-term investors with high risk tolerance may hold small positions given the strong balance sheet, but should prepare for extended consolidation.
Fair Value Estimate: ₹550-580 (11-14% downside from current levels), based on normalised earnings potential and peer multiples, assuming gradual demand recovery over the next 12-18 months.
Rationale: Despite attractive valuation multiples and a fortress balance sheet, Shri Jagdamba Polymers faces severe near-term headwinds that outweigh its long-term quality credentials. The 36.91% sequential revenue decline and margin collapse to 3.56% in Q3 FY26 represent more than cyclical weakness—they signal potential structural challenges in the company's core markets. Until management demonstrates the ability to stabilise revenues and restore operating margins towards historical 14-15% levels, the risk-reward remains unfavourable. The stock's technical breakdown and persistent underperformance across all timeframes further reinforce the case for caution.
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. All investments carry risk, including potential loss of principal.
