Shri Vasuprada Plantations Q2 FY26: Profit Turns to Loss Despite Strong Revenue Growth

The stock, trading at ₹122.00 as of November 11, 2025, surged 10.31% following the results announcement, though technical indicators remain firmly bearish and the company's proprietary Mojo Score stands at a dismal 23/100, warranting a "Strong Sell" rating from analysts.

The September quarter's results present a troubling narrative for Shri Vasuprada, where top-line momentum failed to translate into bottom-line performance. The company's inability to control costs despite improved realisations from tea sales underscores structural challenges in its plantation operations across Upper Assam.

Financial Performance: Revenue Growth Masks Profitability Crisis

Shri Vasuprada's Q2 FY26 financial performance reveals a stark disconnect between revenue momentum and profitability. Net sales surged 32.33% year-on-year to ₹46.91 crores, marking the highest quarterly revenue in recent history and representing a robust 66.17% sequential growth from Q1 FY26's ₹28.23 crores. This impressive top-line expansion likely reflects better tea realisations and increased production volumes during the peak harvesting season.

However, the profit picture deteriorated sharply. Net profit swung to a loss of ₹0.84 crores in Q2 FY26 from a profit of ₹4.38 crores in Q2 FY25, marking a 119.18% year-on-year collapse. On a sequential basis, the loss narrowed from Q1 FY26's ₹4.85 crores, but this improvement offers little comfort given the seasonal strength typically seen in September quarter operations.

The margin compression tells the real story. Operating profit margin (excluding other income) plummeted to 4.58% in Q2 FY26 from 16.70% in Q2 FY25, a devastating 1,212 basis point contraction. Gross profit margin collapsed even more dramatically to 1.56% from 16.59%, whilst PAT margin turned negative at -1.79% compared to a healthy 12.36% in the year-ago quarter.

Employee costs emerged as the primary culprit, rising to ₹23.00 crores in Q2 FY26 from ₹22.17 crores in Q2 FY25, consuming 49.03% of revenue compared to 62.54% previously. This represents a significant operational inefficiency, particularly concerning given the revenue growth achieved during the period. Operating profit before depreciation, interest, tax and other income stood at just ₹2.15 crores, down sharply from ₹5.92 crores in Q2 FY25.

Operational Challenges: Cost Structure Under Severe Pressure

Shri Vasuprada's operational metrics reveal deep-seated structural issues beyond cyclical headwinds. The company's operating profit before depreciation, interest, tax and other income (PBDIT excluding OI) stood at ₹2.15 crores in Q2 FY26, representing a margin of just 4.58%. This marks a precipitous decline from the 16.70% margin achieved in Q2 FY25, when PBDIT excluding OI stood at ₹5.92 crores on lower revenues of ₹35.45 crores.

The balance sheet position offers mixed signals. As of March 2025, shareholder funds stood at ₹126.48 crores, providing a book value of ₹127.31 per share against the current market price of ₹122.00. Long-term debt remained manageable at ₹29.73 crores, down from ₹31.39 crores in the previous year, translating to a debt-to-equity ratio of 0.46. Fixed assets comprised ₹129.26 crores, representing the company's tea estates and processing infrastructure.

However, return metrics paint a concerning picture. Return on equity (ROE) averaged 0.0% over recent years, indicating the company has struggled to generate meaningful returns for shareholders. Return on capital employed (ROCE) averaged -5.30%, highlighting capital destruction rather than creation. The latest ROCE stood at -0.31%, marginally better than the historical average but still firmly in negative territory.

Cash flow generation has been erratic. For FY25, the company generated ₹5.00 crores from operations, a significant improvement from the negative ₹8.00 crores in FY24. However, this positive operational cash flow came after years of cash burn, with FY23 seeing negative ₹3.00 crores and FY20 recording negative ₹11.00 crores from operations.

Industry Context: Tea Sector Headwinds Intensify

The Indian tea plantation industry faces mounting challenges that disproportionately impact smaller players like Shri Vasuprada. Rising labour costs, climate variability affecting crop yields, and intense competition from international producers have compressed margins across the sector. The company's employee cost burden of 49.03% of revenues in Q2 FY26 reflects the labour-intensive nature of tea cultivation and processing, where wage negotiations and statutory obligations leave little room for cost optimisation.

Shri Vasuprada's operations in Upper Assam expose it to region-specific challenges including erratic rainfall patterns, pest infestations, and logistical bottlenecks. The company's inability to leverage scale—evident in its micro-cap status with a market capitalisation of just ₹92.00 crores—limits its bargaining power with buyers and restricts investment in productivity-enhancing technologies that larger peers can afford.

The broader FMCG sector, under which tea companies are classified, has shown divergent performance. Whilst branded consumer goods companies have maintained pricing power and margin resilience, commodity-linked businesses like tea plantations face a perfect storm of input cost inflation and limited pricing flexibility. The company's five-year sales growth of 9.88% appears respectable but masks the profitability challenges, with five-year EBIT growth of 16.57% starting from a very low base.

Peer Comparison: Valuation Discount Reflects Fundamental Weakness

Shri Vasuprada's peer comparison within the FMCG sector reveals a company trading at a significant discount to book value but commanding an elevated price-to-earnings multiple that appears unjustified given its operational performance. At a P/BV ratio of 0.72x, the stock trades below its book value of ₹127.31 per share, suggesting the market assigns little value to the company's tea estates and processing facilities beyond their accounting values.

However, the P/E ratio of 132.51x appears extraordinarily high, reflecting the minimal trailing twelve-month earnings rather than any growth premium. This compares to peer Tanvi Foods at 312.05x and Shivam Chemicals at 39.59x. The elevated P/E multiple is misleading—it stems from near-zero profitability rather than investor optimism about future prospects.

The company's return on equity of 0.0% stands in stark contrast to Shivam Chemicals' robust 37.01% and even Virat Crane Industries' 10.94%. This fundamental weakness in capital efficiency explains the valuation discount despite the low P/BV ratio. Shri Vasuprada's debt-to-equity ratio of 0.46 sits in the middle of the peer group range, neither a significant strength nor weakness.

The market capitalisation of ₹92.00 crores places Shri Vasuprada firmly in micro-cap territory, limiting liquidity and institutional interest. With zero holdings from foreign institutional investors and mutual funds, and just 2.29% institutional ownership overall, the stock lacks the sponsorship typically required for re-rating. Insurance companies hold 2.26%, representing the primary institutional presence.

Valuation Analysis: Attractive Price Masks Operational Distress

Shri Vasuprada's current valuation presents a classic value trap scenario—statistically cheap metrics masking deteriorating fundamentals. At ₹122.00, the stock trades at 0.72x book value, representing a 28% discount to the ₹127.31 per share book value as of March 2025. This discount theoretically offers downside protection, but the company's inability to generate returns on this book value erodes its significance.

The enterprise value multiples paint a more nuanced picture. EV/EBITDA of 17.54x appears reasonable for an asset-heavy plantation business, but EV/EBIT of 64.13x reflects the razor-thin operating margins. EV/Sales of 1.12x suggests modest revenue expectations, whilst EV/Capital Employed of 0.81x indicates the market values the company's productive assets below their deployment cost.

The company's proprietary Mojo Score assessment categorises the valuation as "Attractive," upgraded from "Very Attractive" on October 14, 2025. However, this attractiveness stems from distressed pricing rather than fundamental strength. The overall Mojo Score of 23/100 places the stock firmly in "Strong Sell" territory, reflecting the disconnect between statistical cheapness and operational reality.

Historical valuation context reveals persistent challenges. The stock has traded between a 52-week low of ₹98.00 and high of ₹167.00, with the current price sitting 26.95% below the peak and 24.49% above the trough. The valuation grade history shows volatility, oscillating between "Attractive," "Very Attractive," "Does Not Qualify," and "Risky" over the past year, reflecting the company's erratic financial performance.

Shareholding Pattern: Stable Promoter Base, Minimal Institutional Interest

Shri Vasuprada's shareholding structure reveals a tightly held company with minimal institutional participation. Promoter holding has remained rock-steady at 74.89% across the last five quarters through September 2025, indicating strong promoter commitment but also limited free float for trading. The promoter group comprises a constellation of entities including The Oriental Company Limited (14.33%), Gloster Limited (13.01%), and the Bangur family interests through various vehicles.

The complete absence of FII and mutual fund holdings signals institutional avoidance, likely due to the company's micro-cap status, limited liquidity, and inconsistent financial performance. Insurance companies maintain a 2.26% stake, representing the sole meaningful institutional presence. The 22.82% non-institutional holding comprises retail investors and smaller entities, with zero sequential changes across quarters indicating limited trading activity.

Positively, promoter pledging stands at zero, eliminating concerns about financial distress at the promoter level. However, the frozen shareholding pattern—with no changes across any category for multiple quarters—reflects a lack of institutional interest and limited price discovery. This static structure, combined with minimal daily trading volumes of just 200 shares on November 11, 2025, highlights severe liquidity constraints that amplify execution risk for any meaningful position.

Stock Performance: Short-Term Strength, Long-Term Weakness

Shri Vasuprada's stock performance presents a tale of two timeframes—recent strength masking longer-term underperformance. The stock delivered a robust one-year return of 23.61%, significantly outpacing the Sensex's 4.75% gain and generating alpha of 18.86 percentage points. This outperformance extended across multiple shorter timeframes, with the stock gaining 8.83% over one week (vs Sensex -0.22%), 4.95% over one month (vs Sensex 0.94%), and 13.33% over six months (vs Sensex 4.81%).

However, the longer-term picture deteriorates sharply. Over five years, the stock returned 26.95% compared to the Sensex's 91.02%, generating negative alpha of 64.07 percentage points. The ten-year performance is catastrophic, with the stock down 18.67% whilst the Sensex surged 221.93%, resulting in underperformance of 240.60 percentage points. Year-to-date, the stock has declined 6.05% against the Sensex's 6.57% gain, marking negative alpha of 12.62 percentage points.

Risk metrics reveal a highly volatile stock. With a beta of 1.50, Shri Vasuprada exhibits 50% greater volatility than the broader market, classified as a "High Beta Stock." One-year volatility stands at 58.61% compared to the Sensex's 12.38%, placing it firmly in the "HIGH RISK HIGH RETURN" category. The risk-adjusted return of 0.40 marginally exceeds the Sensex's 0.38, but this comes with substantially higher volatility that most investors would find uncomfortable.

Technical indicators paint a bearish picture despite recent price strength. The stock currently trades in a "Bearish" trend as of November 4, 2025, with MACD, RSI, Bollinger Bands, and KST all signalling bearish conditions on weekly and monthly timeframes. The stock trades above all key moving averages (5-day: ₹113.77, 20-day: ₹114.62, 50-day: ₹115.97, 100-day: ₹118.51, 200-day: ₹117.71), but this positioning appears tenuous given the overall bearish technical setup.

Investment Thesis: Fundamental Weakness Outweighs Statistical Cheapness

The investment case for Shri Vasuprada rests on a precarious foundation. The company's Mojo Score of 23/100 reflects deep-seated fundamental challenges that overshadow any apparent valuation attractions. The four-pillar Mojo analysis reveals a company struggling across multiple dimensions.

The valuation grade of "Attractive" stems from the 0.72x price-to-book ratio and depressed absolute price levels, but this attractiveness is superficial. A company trading below book value whilst generating zero return on equity represents a classic value trap—assets that appear cheap but lack the ability to generate returns justify even their discounted valuations.

Quality assessment reveals a "Below Average" company characterised by weak fundamental strength. The average return on capital employed of -5.30% indicates capital destruction rather than creation. Five-year sales growth of 9.88% appears reasonable, but the average EBIT-to-interest coverage of -1.11x highlights an inability to service debt from operating profits. The company's debt-to-EBITDA metric shows "Negative Net Debt," but this reflects minimal EBITDA rather than strong cash generation.

Outlook: What to Watch

Shri Vasuprada faces a critical juncture where operational improvements must materialise quickly to justify even the current depressed valuation. The company's ability to navigate the challenging tea plantation environment whilst controlling costs will determine whether the recent revenue momentum can translate into sustainable profitability.

The company's financial trend classification of "Flat" for Q2 FY26 masks underlying deterioration. Whilst net sales reached a quarterly high of ₹46.91 crores, the profit before tax less other income fell 145.63% to negative ₹1.20 crores, and PAT declined 119.20% to negative ₹0.84 crores. These metrics suggest the "Flat" designation understates the severity of the profitability crisis.

Management's ability to address the cost structure—particularly the elevated employee costs—will be critical. Tea plantation businesses face structural labour cost pressures, but the current 49% revenue consumption appears unsustainable. Without meaningful operational restructuring or significant pricing power improvements, the path to profitability remains unclear.