The stock, currently trading at ₹8.85 with a market capitalisation of ₹36.00 crores, has witnessed a brutal 52.47% decline over the past year, significantly underperforming both the Sensex (up 9.00%) and its sectoral peers (down 4.06%). Trading near its 52-week low of ₹8.81, the company faces mounting scepticism from investors as operational challenges persist despite top-line recovery.
The September quarter results paint a picture of a company struggling to translate revenue growth into sustainable profitability. Whilst net sales surged to ₹14.69 crores—the highest quarterly figure in the company's recent history—operating margins contracted sharply to 7.83% from 10.33% in the preceding quarter. This margin compression, occurring during a period of robust revenue expansion, signals deteriorating pricing power and rising cost pressures in the agrochemical sector.
| Metric | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 | Jun'24 |
|---|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 14.69 | 9.49 | 10.39 | 12.56 | 12.25 | 10.20 |
| QoQ Growth | +54.79% | -8.66% | -17.28% | +2.53% | +20.10% | +25.93% |
| Net Profit (₹ Cr) | 0.74 | 0.50 | -0.55 | 0.91 | 0.57 | 1.23 |
| Operating Margin | 7.83% | 10.33% | 0.38% | 11.15% | 8.90% | 17.75% |
| PAT Margin | 5.04% | 5.27% | -5.29% | 7.25% | 4.65% | 12.06% |
Financial Performance: Growth Without Quality
Super Crop Safe's Q2 FY26 revenue of ₹14.69 crores represents a commendable 19.92% year-on-year expansion and a striking 54.79% sequential surge from the subdued Q1 FY26 base of ₹9.49 crores. This top-line momentum reflects improved demand conditions during the key monsoon season, when agrochemical consumption typically peaks across India's agricultural heartland.
However, the quality of this revenue growth remains questionable. Operating profit (PBDIT excluding other income) reached ₹1.15 crores, yielding a margin of just 7.83%—a substantial 251 basis points compression from the previous quarter's 10.33%. More alarmingly, this represents a significant deterioration from the 17.75% operating margin achieved in Jun'24, highlighting a concerning structural decline in profitability over the past four quarters.
Net profit of ₹0.74 crores, whilst positive, translates to a PAT margin of merely 5.04%. The company's inability to scale profitability in line with revenue growth suggests either aggressive pricing to capture market share or inefficient cost management—neither bodes well for long-term sustainability. Interest costs remained elevated at ₹0.38 crores, consuming over 50% of operating profit and reflecting the company's heavy reliance on borrowed capital.
On a half-yearly basis (H1 FY26), Super Crop Safe reported combined revenues of ₹24.18 crores with net profit of ₹1.24 crores. Whilst these figures represent recovery from the loss-making March quarter, they underscore the company's persistent struggle to generate consistent, quality earnings. The absence of other income contribution (₹0.08 crores in Q2 FY26, negligible at best) means the company must rely entirely on operational excellence—an area where it continues to falter.
Operational Challenges: Capital Inefficiency and Weak Returns
Beneath the surface-level revenue growth lies a company grappling with fundamental operational weaknesses. Super Crop Safe's return on equity (ROE) averaged a meagre 3.58% over recent periods, with the latest figure at 4.89%—far below acceptable standards for a manufacturing business. This anaemic return generation signals that the company is destroying shareholder value rather than creating it, despite deploying significant capital.
Return on capital employed (ROCE) presents an even bleaker picture at just 1.59% on average, with the most recent reading at 5.32%. These returns fall woefully short of the company's cost of capital, indicating persistent capital misallocation. The low ROCE is particularly concerning given the company's asset-light business model in agrochemical formulation—suggesting either outdated manufacturing processes, poor product mix, or inefficient working capital management.
The balance sheet reveals mounting leverage concerns. Long-term debt surged to ₹29.27 crores in FY25 from ₹22.31 crores in FY24, pushing the net debt-to-equity ratio to 1.46. For a micro-cap company generating marginal profits, this debt burden represents a significant financial risk, especially given the cyclical nature of the agrochemical industry. The debt-to-EBITDA ratio of 2.70 further underscores the company's stretched financial position.
Critical Red Flags: Structural Profitability Issues
Capital Efficiency Crisis: With ROCE at 5.32% and ROE at 4.89%, Super Crop Safe generates returns well below its cost of capital. The company's average EBIT-to-interest coverage of just 0.06x means operating profits barely cover a fraction of interest expenses—a deeply concerning metric indicating financial distress potential.
Margin Deterioration: Operating margins have collapsed from 17.75% in Jun'24 to 7.83% in Sep'25, reflecting either intense competitive pressure or rising input costs that the company cannot pass through to customers.
Leverage Overhang: With net debt at 1.46x equity and minimal cash generation, the company faces refinancing risks if agricultural demand weakens or interest rates remain elevated.
Industry Context: Struggling in a Challenging Sector
The Indian agrochemical sector has faced headwinds throughout 2025, with channel inventory destocking, volatile commodity prices, and erratic monsoon patterns affecting demand. Super Crop Safe's 19.92% year-on-year revenue growth in Q2 FY26, whilst positive, significantly lags the industry's historical growth trajectory and reflects the company's inability to capitalise on market opportunities.
The pesticides and agrochemicals sector has witnessed consolidation, with larger players leveraging scale advantages and integrated manufacturing capabilities to maintain margins. Super Crop Safe, operating as a formulator without backward integration, faces structural disadvantages in procurement costs and pricing power. The company's inability to invest in research and development or expand its product portfolio limits its competitive positioning.
Moreover, the regulatory environment has tightened, with increased scrutiny on pesticide residues and environmental impact. Smaller players like Super Crop Safe often lack the resources to navigate complex compliance requirements or invest in sustainable manufacturing practices, potentially limiting their long-term viability.
Peer Comparison: Lagging on All Key Metrics
When benchmarked against industry peers, Super Crop Safe's underperformance becomes starkly evident. The company's ROE of 3.58% pales in comparison to sector leaders, with Best Agrolife delivering 25.19%, Bhaskar Agrochemicals at 12.05%, and even mid-tier players like Shivalik Rasayan achieving 5.85%. This wide profitability gap reflects Super Crop Safe's operational inefficiencies and weak competitive positioning.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Super Crop Safe | 24.89 | 1.22 | 3.58% | 1.46 | — |
| Best Agrolife | 55.65 | 0.92 | 25.19% | 0.48 | 0.93% |
| Shivalik Rasayan | 45.29 | 1.27 | 5.85% | 0.12 | 0.12% |
| Aimco Pesticides | NA (Loss Making) | 2.16 | 8.22% | 0.64 | — |
| Bhaskar Agrochemicals | 10.29 | 3.17 | 12.05% | 1.14 | — |
| Adarsh Plant | NA (Loss Making) | 25.36 | 16.91% | 4.15 | — |
From a valuation perspective, Super Crop Safe trades at a P/E ratio of 24.89x—seemingly reasonable compared to peers like Best Agrolife (55.65x) or Shivalik Rasayan (45.29x). However, this apparent discount reflects quality concerns rather than value opportunity. The company's price-to-book ratio of 1.22x appears fair given its weak return profile, whilst peers with superior ROEs command higher multiples.
The debt comparison is particularly telling. Super Crop Safe's debt-to-equity ratio of 1.46 significantly exceeds most peers, with Best Agrolife at 0.48 and Shivalik Rasayan at just 0.12. Only Adarsh Plant, another struggling player, carries higher leverage at 4.15. This elevated debt burden, combined with minimal profitability, constrains Super Crop Safe's financial flexibility and growth prospects.
Valuation Analysis: Cheap for a Reason
At the current price of ₹8.85, Super Crop Safe trades at a P/E ratio of 24.89x trailing twelve-month earnings—below the industry average of 31x. The stock's price-to-book value of 1.22x appears modest, whilst the EV/EBITDA multiple of 22.31x and EV/Sales of 1.75x suggest reasonable valuation on surface metrics. However, these multiples fail to account for the company's deteriorating fundamentals and weak cash generation capacity.
The company's proprietary valuation grade of "Attractive" seems misplaced given the operational realities. Whilst the stock has declined 66.53% from its 52-week high of ₹26.44, this correction reflects fundamental weakness rather than temporary setback. The absence of dividend payments (last dividend of ₹0.10 per share paid in September 2018) eliminates any income component for investors, making the investment case purely speculative on operational turnaround.
Historical valuation trends reveal inconsistency. The stock oscillated between "Fair" and "Attractive" ratings throughout 2025, with a brief upgrade to "Very Attractive" in July 2025—precisely when the stock was forming its peak. This valuation volatility, coupled with the company's operational inconsistency, suggests that current multiples inadequately price in execution risks and sector headwinds.
Shareholding Pattern: Promoter Dilution Raises Concerns
The shareholding structure reveals a troubling trend of consistent promoter stake reduction. Promoter holdings declined to 32.72% in September 2025 from 36.13% in September 2024—a cumulative reduction of 343 basis points over four quarters. This persistent dilution pattern, occurring through multiple sequential quarters, signals either financial distress requiring stake monetisation or waning promoter confidence in the business outlook.
| Quarter | Promoter % | QoQ Change | Non-Institutional % |
|---|---|---|---|
| Sep'25 | 32.72% | -1.34% | 67.28% |
| Jun'25 | 34.06% | -0.46% | 65.94% |
| Mar'25 | 34.52% | -0.30% | 65.48% |
| Dec'24 | 34.82% | -1.31% | 65.17% |
| Sep'24 | 36.13% | — | 63.87% |
The complete absence of institutional participation compounds concerns. Foreign institutional investors (FIIs), mutual funds, insurance companies, and other domestic institutional investors collectively hold 0.00% of the company—an extraordinarily rare situation for any listed entity. This institutional vacuum reflects deep scepticism about the company's governance, transparency, and growth prospects amongst sophisticated investors.
Non-institutional holdings have correspondingly increased to 67.28%, comprising primarily retail investors and non-institutional entities. This shareholder base typically exhibits higher volatility and lower long-term commitment, potentially exacerbating stock price fluctuations. The absence of any promoter pledging (0.00%) provides limited comfort, as it merely indicates that promoters haven't leveraged their holdings—not that the business fundamentals are sound.
Stock Performance: Severe Underperformance Across All Timeframes
Super Crop Safe's stock performance has been catastrophic across virtually all meaningful timeframes. The stock has plummeted 52.47% over the past year, dramatically underperforming the Sensex's 9.00% gain—translating to a negative alpha of 61.47 percentage points. More concerningly, the stock has underperformed its own sector, which declined 4.06% over the same period, by a staggering 48.41 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -13.74% | +1.62% | -15.36% |
| 1 Month | -26.86% | +3.09% | -29.95% |
| 3 Months | -27.64% | +4.92% | -32.56% |
| 6 Months | -40.00% | +3.97% | -43.97% |
| YTD | -58.84% | +8.22% | -67.06% |
| 1 Year | -52.47% | +9.00% | -61.47% |
| 3 Years | +30.53% | +37.22% | -6.69% |
The year-to-date performance is particularly brutal, with the stock down 58.84% whilst the Sensex has gained 8.22%—a divergence of over 67 percentage points. Recent momentum has deteriorated further, with one-month returns of -26.86% and one-week returns of -13.74% indicating accelerating selling pressure. The stock currently trades at ₹8.85, barely above its 52-week low of ₹8.81 and down 66.53% from its 52-week high of ₹26.44.
From a technical perspective, the stock exhibits uniformly bearish characteristics. It trades below all key moving averages—5-day (₹9.17), 20-day (₹10.55), 50-day (₹11.58), 100-day (₹12.17), and 200-day (₹14.26)—indicating sustained downtrend across all timeframes. The MACD, Bollinger Bands, and KST indicators all flash bearish signals on both weekly and monthly charts, whilst the overall technical trend classification remains firmly "Bearish" since October 23, 2025.
The stock's beta of 1.50 classifies it as high-beta, meaning it exhibits 50% greater volatility than the broader market. Combined with its negative returns, this translates to a "High Risk Low Return" profile—the worst possible combination for investors. The risk-adjusted return of -0.91 over one year, compared to the Sensex's positive 0.73, underscores the value destruction this stock has inflicted on shareholders.
Investment Thesis: Multiple Red Flags Outweigh Valuation Appeal
Super Crop Safe's investment case rests precariously on a single pillar: attractive valuation multiples. However, this apparent cheapness reflects fundamental weakness rather than opportunity. The company's proprietary Mojo Score of 23 out of 100 places it firmly in "Strong Sell" territory, with the rating agency recommending exit for existing holders and avoidance for prospective investors.
The company's quality assessment reveals deep-seated structural issues. Classified as "Below Average" quality, Super Crop Safe exhibits negative five-year sales growth (-1.19% CAGR), weak return ratios (ROE 3.58%, ROCE 1.59%), and concerning leverage metrics (debt-to-equity 1.46, debt-to-EBITDA 2.70). The EBIT-to-interest coverage of merely 0.06x means the company generates operating profits equivalent to just 6% of its interest obligations—a precarious situation indicating potential solvency concerns.
The financial trend classification of "Flat" for the most recent quarter, following previous downgrades from "Positive" to "Flat," suggests momentum has stalled despite the Q2 revenue surge. The technical trend remains entrenched in bearish territory across all major indicators, with the stock trading below all moving averages and exhibiting negative momentum on MACD, RSI, and Bollinger Band indicators.
"At 3.58% ROE and 1.59% ROCE, Super Crop Safe destroys shareholder value with every rupee of capital deployed—a fundamental flaw that no amount of revenue growth can overcome."
Key Strengths & Risk Factors
Key Strengths
✓ Revenue Momentum: Q2 FY26 revenue of ₹14.69 crores represents 19.92% YoY growth and 54.79% sequential expansion, indicating improved demand capture.
✓ Attractive Valuation: P/E of 24.89x trades below industry average of 31x, whilst P/BV of 1.22x appears modest relative to book value of ₹7.27.
✓ No Promoter Pledging: Zero pledged shares indicate promoters haven't leveraged holdings for personal borrowings.
✓ Established Presence: Operating since 1987 with manufacturing facilities spanning 15,000 square metres in Ahmedabad's GIDC industrial estate.
✓ Return to Profitability: After loss-making Q4 FY25 (₹-0.55 crores), company has posted two consecutive profitable quarters.
Key Concerns
⚠️ Abysmal Return Ratios: ROE of 3.58% and ROCE of 1.59% fall drastically below acceptable thresholds, indicating chronic capital inefficiency.
⚠️ Deteriorating Margins: Operating margin compressed from 17.75% (Jun'24) to 7.83% (Sep'25), reflecting pricing pressure or cost inflation.
⚠️ Heavy Debt Burden: Long-term debt of ₹29.27 crores with debt-to-equity of 1.46 and EBIT-to-interest coverage of just 0.06x creates refinancing risks.
⚠️ Promoter Dilution: Consistent stake reduction from 36.13% to 32.72% over four quarters signals potential distress or lack of confidence.
⚠️ Zero Institutional Interest: Complete absence of FII, mutual fund, and insurance holdings indicates sophisticated investor avoidance.
⚠️ Negative Long-Term Growth: Five-year sales CAGR of -1.19% demonstrates inability to expand business sustainably.
⚠️ Technical Breakdown: Stock in bearish trend, trading below all moving averages with negative momentum across all indicators.
Outlook: What Lies Ahead
Positive Catalysts
Seasonal Demand: Q3 FY26 typically sees strong agrochemical demand during rabi crop season, potentially supporting revenue.
Margin Recovery Potential: If input costs stabilise, operating margins could improve from current depressed levels.
Debt Reduction: Any meaningful deleveraging would improve financial flexibility and reduce interest burden.
Product Portfolio Expansion: Introduction of higher-margin formulations could enhance profitability mix.
Red Flags to Monitor
Further Promoter Dilution: Continued stake reduction would signal deepening financial stress.
Margin Compression: Any further decline below 7% operating margin would raise viability questions.
Debt Servicing Issues: With EBIT-to-interest at 0.06x, any operational hiccup could trigger covenant breaches.
Working Capital Deterioration: Negative operating cash flow of ₹2.00 crores in FY25 indicates liquidity concerns.
Regulatory Challenges: Tightening pesticide regulations could impose additional compliance costs.
The forward outlook for Super Crop Safe remains clouded by structural challenges that transcend cyclical headwinds. Whilst the company may benefit from seasonal demand patterns in upcoming quarters, the fundamental issues of capital inefficiency, margin pressure, and excessive leverage require multi-year operational transformation—an unlikely scenario given current management execution.
The agrochemical sector's competitive dynamics continue intensifying, with larger players expanding capacities and smaller entities facing margin compression. Super Crop Safe's lack of differentiation, limited R&D capabilities, and absence of backward integration leave it vulnerable to both pricing pressure from customers and cost inflation from suppliers—a classic squeeze that typically results in market share loss or business exit.
The Verdict: Value Trap Masquerading as Opportunity
Score: 23/100
For Fresh Investors: Avoid entirely. The apparent valuation discount reflects fundamental weakness rather than opportunity. With ROE at 3.58%, ROCE at 1.59%, and debt-to-equity at 1.46, this company destroys shareholder value. The absence of institutional investors, declining promoter stake, and persistent margin compression indicate deep-seated structural issues unlikely to resolve near-term. Better opportunities exist elsewhere in the agrochemical space.
For Existing Holders: Exit on any price recovery. The 52.47% one-year decline reflects deteriorating fundamentals, not temporary setback. With the stock trading near 52-week lows at ₹8.85, further downside remains probable given weak operational metrics and bearish technical setup. The lack of dividend income eliminates any reason to hold for income, whilst capital appreciation prospects appear minimal given the company's inability to generate adequate returns on deployed capital.
Fair Value Estimate: ₹6.50-7.00 (26-21% downside from current levels). Based on sustainable ROE of 4%, book value of ₹7.27, and quality discount for below-average fundamentals, the stock appears overvalued even at current depressed levels. The P/BV multiple of 1.22x cannot be justified given sub-par return generation and elevated leverage.
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, and all investments carry risk of loss.
