The stock has responded positively to recent operational momentum, surging 6.65% in the latest trading session to close at ₹17.95, extending its one-week gain to 10.39%. However, this short-term enthusiasm must be tempered against a sobering three-year track record that has seen the stock plummet 35.66% whilst the Sensex soared 37.31%—a staggering underperformance of 72.97 percentage points that reflects persistent fundamental weakness.
For a company operating in the commodity chemicals space, where scale and efficiency are paramount, Vivid Global's diminutive size and chronically low margins present formidable headwinds. The company's current proprietary score of 47 out of 100 and a "SELL" rating from our investment advisory system underscore the challenging risk-reward profile facing potential investors.
| Quarter | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 | Jun'24 | Mar'24 |
|---|---|---|---|---|---|---|---|
| Revenue (₹ Cr) | 13.92 | 10.53 | 13.11 | 7.68 | 7.04 | 13.19 | 9.95 |
| QoQ Change | +32.19% | -19.68% | +70.70% | +9.09% | -46.63% | +32.56% | — |
| YoY Change | +97.73% | -20.17% | +31.76% | — | — | — | — |
| Net Profit (₹ Cr) | 0.17 | 0.11 | 0.12 | 0.09 | 0.12 | 0.05 | 0.10 |
| Operating Margin | 4.24% | 2.18% | 2.29% | 4.69% | 3.13% | 2.27% | 3.22% |
| PAT Margin | 1.22% | 1.04% | 0.92% | 1.17% | 1.70% | 0.38% | 1.01% |
Financial Performance: Volatility Defines the Narrative
In Q2 FY26, Vivid Global Industries reported net sales of ₹13.92 crores, marking a robust 32.19% sequential increase from ₹10.53 crores in Q1 FY26 and an impressive 97.73% year-on-year surge from ₹7.04 crores in Q2 FY25. This revenue revival represents the company's highest quarterly sales figure in the trailing twelve-month period, suggesting improved demand conditions for its speciality dye intermediates including N-Methyl J. Acid, Phenyl J. Acid, and Tobias Acid.
However, the revenue growth has not translated into proportionate margin expansion. Operating profit before depreciation, interest, and tax (excluding other income) stood at ₹0.59 crores in Q2 FY26, yielding an operating margin of just 4.24%—whilst an improvement of 206 basis points sequentially from 2.18%, this remains alarmingly thin for a manufacturing enterprise. The company's gross profit margin of 3.02% and PAT margin of 1.22% underscore the intense competitive pressures and cost challenges plaguing the business.
Interest costs spiked dramatically to ₹0.32 crores in Q2 FY26 from just ₹0.04 crores in the previous quarter—an eight-fold increase that significantly eroded profitability. This surge in finance costs, despite the company maintaining minimal debt levels (debt-to-equity of -0.13 indicates a net cash position), raises questions about working capital financing requirements and short-term borrowing patterns. Depreciation remained stable at ₹0.19 crores, reflecting the company's mature asset base with fixed assets of ₹4.16 crores as of March 2025.
The tax rate of 26.09% in Q2 FY26 was consistent with the previous quarter's 26.67%, indicating normalised tax incidence. Other income contributed ₹0.15 crores, maintaining its steady quarterly run-rate and providing a modest cushion to operating profitability. Employee costs at ₹0.60 crores represented 4.31% of sales—a manageable proportion that has remained relatively stable across quarters.
Operational Challenges: The Margin Conundrum
The fundamental challenge confronting Vivid Global Industries is its inability to generate adequate returns on capital employed. The company's average return on equity (ROE) of 4.84% over the assessment period falls woefully short of acceptable thresholds for equity investments, whilst its average return on capital employed (ROCE) of 10.03% barely exceeds the cost of capital. For context, higher ROE values indicate superior capital efficiency and profitability—Vivid Global's sub-5% ROE signals weak value creation for shareholders.
The company's five-year sales compound annual growth rate (CAGR) of -2.59% reveals a contracting revenue base, whilst the EBIT CAGR of -18.17% over the same period highlights severe profitability erosion. This structural decline in operating profits, despite the recent quarterly uptick, suggests deep-seated competitive disadvantages or market share losses in the commodity chemicals segment.
Critical Concern: Profitability Under Pressure
Key Issue: Operating margins have oscillated between 2.18% and 4.69% over the past seven quarters, reflecting extreme volatility and an inability to achieve sustainable profitability. The company's PAT margins consistently below 2% indicate that even modest adverse movements in raw material costs or realisations could push the business into losses.
Balance Sheet Quality: Whilst the company maintains a debt-free status (net debt-to-equity of -0.13), shareholder funds of ₹15.28 crores supporting a business generating annual revenues of ₹41.00 crores translates to an asset turnover of just 2.72 times—suggesting inefficient capital deployment.
Working capital management presents another area of concern. Trade payables stood at ₹10.98 crores as of March 2025, up from ₹9.20 crores a year earlier, whilst current assets totalled ₹24.04 crores. The company's operating cash flow generation has been inconsistent, with FY25 recording ₹2.00 crores in cash from operations but prior years showing significant volatility including negative ₹3.00 crores in FY22.
Industry Context: Navigating Commodity Chemical Headwinds
The commodity chemicals sector in India has faced significant headwinds over the past three years, with Chinese competition intensifying and global demand remaining subdued. Vivid Global's product portfolio—comprising dye intermediates for direct and reactive dye industries—exposes it to cyclical demand patterns from textile manufacturers, who themselves face pricing pressures in export markets.
The company's one-year stock return of -8.84% compares unfavourably to the Commodity Chemicals sector return of 7.59%, representing an underperformance of 16.43 percentage points. This sector-relative weakness suggests company-specific challenges beyond broader industry trends. The stock's beta of 1.50 indicates it is 50% more volatile than the broader market, amplifying downside risk during market corrections.
From a competitive positioning standpoint, Vivid Global's micro-cap status (market capitalisation of ₹17.00 crores) places it at a significant disadvantage versus larger, better-capitalised peers who can leverage economies of scale. The company's negligible institutional holding (0.0% from FIIs, mutual funds, and insurance companies) reflects the lack of professional investor interest, likely due to concerns over liquidity, governance, and growth prospects.
Peer Comparison: Lagging on Key Metrics
When benchmarked against industry peers, Vivid Global's valuation and operational metrics reveal a mixed picture. The company trades at a P/E ratio of 31.67x and price-to-book value of 1.02x—seemingly reasonable multiples that reflect the market's scepticism about future earnings potential.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity |
|---|---|---|---|---|
| Vivid Global | 31.67 | 1.02 | 4.84 | -0.13 |
| Square Four Propack | NA (Loss Making) | 0.91 | 0.00 | 0.06 |
| Advance Petrochem | 427.95 | 4.24 | 12.82 | 2.51 |
| Emmessar Biotech | 67.34 | 1.94 | 17.56 | -0.92 |
| Sreechem Resins | NA (Loss Making) | 1.03 | 15.53 | 0.15 |
| Link Pharma Chem | NA (Loss Making) | 1.16 | 4.94 | 0.50 |
The peer comparison reveals Vivid Global's ROE of 4.84% significantly trails profitable peers like Emmessar Biotech (17.56%), Advance Petrochem (12.82%), and Sreechem Resins (15.53%). Only Link Pharma Chem posts a comparable ROE of 4.94%, highlighting the pervasive profitability challenges in this segment of the commodity chemicals space. The company's P/BV multiple of 1.02x suggests the market ascribes minimal premium to its book value, reflecting doubts about asset productivity and earnings power.
Valuation Analysis: Fair but Uninspiring
At the current market price of ₹17.95, Vivid Global Industries trades at a P/E ratio of 31.67x based on trailing twelve-month earnings. This multiple appears elevated given the company's anaemic ROE and negative sales growth trajectory, though it sits below the industry P/E of 43x. The valuation grade has oscillated between "Fair" and "Expensive" over recent months, currently settling at "Fair"—a designation that acknowledges the stock is neither egregiously overvalued nor attractively priced.
The enterprise value-to-EBITDA multiple of 9.18x and EV-to-sales ratio of 0.30x reflect the company's modest scale and profitability. With book value per share at ₹15.65 against the current price of ₹17.95, the stock trades at a 14.7% premium to book—a valuation that assumes the company can maintain current profitability levels, a questionable assumption given historical volatility.
The company's PEG ratio of 0.50x might superficially suggest undervaluation relative to growth, but this metric loses relevance when applied to a business experiencing negative long-term growth. The absence of dividend yield (latest dividend of ₹0.20 per share paid in September 2021 has not been repeated) eliminates any income component to total returns, placing the entire investment case on uncertain capital appreciation.
Shareholding: Stable Promoter Base, Zero Institutional Interest
The shareholding pattern reveals a stable promoter holding of 48.80% across the past five quarters, with no sequential changes. This consistency provides some governance comfort, as the promoter group—led by the Mody family including Sumish S Mody (10.81%), Meena Sumish Mody (8.83%), and Sudhir Muljibhai Mody (8.17%)—maintains significant skin in the game. The complete absence of promoter pledging (0.0%) eliminates concerns about financial distress at the promoter level.
| Category | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|
| Promoter | 48.80% | 48.80% | 48.80% | 0.00% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% |
| Non-Institutional | 51.20% | 51.20% | 51.20% | 0.00% |
However, the complete absence of institutional investors—zero holdings from foreign institutional investors, mutual funds, insurance companies, and other domestic institutional investors—represents a significant red flag. Professional investors have evidently concluded that Vivid Global's risk-reward profile does not merit inclusion in portfolios, likely due to concerns over liquidity (average daily volumes under 11,000 shares), corporate governance transparency, and growth visibility.
The non-institutional shareholding of 51.20% comprises retail investors and non-institutional entities, a shareholder base that typically exhibits higher volatility during market stress. The absence of any quarter-on-quarter changes across all categories over the past year suggests a stagnant shareholder base with limited fresh interest in the stock.
Stock Performance: Short-Term Rally, Long-Term Underperformance
Vivid Global's stock performance presents a tale of two timeframes. The recent momentum has been encouraging, with the stock delivering 6.65% returns in the latest trading session, 10.39% over one week, and 12.19% over three months—substantially outperforming the Sensex across these shorter periods and generating positive alpha of 6.98%, 9.43%, and 8.01% respectively.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 10.39% | 0.96% | +9.43% |
| 1 Month | 7.55% | 0.86% | +6.69% |
| 3 Months | 12.19% | 4.18% | +8.01% |
| 6 Months | 12.19% | 2.85% | +9.34% |
| YTD | -12.01% | 8.36% | -20.37% |
| 1 Year | -8.84% | 9.48% | -18.32% |
| 3 Years | -35.66% | 37.31% | -72.97% |
| 5 Years | 21.28% | 91.65% | -70.37% |
However, extending the analysis beyond six months reveals a starkly different picture. Year-to-date returns stand at -12.01% versus the Sensex's 8.36% gain, whilst the one-year return of -8.84% compares unfavourably to the benchmark's 9.48% advance. The three-year performance is particularly concerning, with the stock declining 35.66% whilst the Sensex surged 37.31%—a catastrophic 72.97 percentage point underperformance that has destroyed shareholder wealth.
The stock's risk-adjusted returns paint an even grimmer picture. With one-year volatility of 48.22%—nearly four times the Sensex's 12.26%—and a negative risk-adjusted return of -0.18, investors have been penalised for taking on substantially higher risk. The stock's classification as "HIGH RISK LOW RETURN" accurately captures the unfavourable risk-reward trade-off.
From a technical perspective, the stock recently transitioned to "Mildly Bullish" on November 17, 2025, at ₹17.00, reversing from a "Mildly Bearish" stance. The stock currently trades above all key moving averages—5-day (₹16.40), 20-day (₹16.41), 50-day (₹17.12), 100-day (₹16.89), and 200-day (₹16.43)—suggesting near-term momentum. However, technical indicators present mixed signals, with MACD showing bearish weekly trends and RSI providing no clear directional bias.
Investment Thesis: Quality Deficit Overshadows Valuation
The investment thesis for Vivid Global Industries must be evaluated through the lens of four critical parameters: valuation, quality, financial trend, and technical trend. Whilst the company scores modestly on valuation (graded "Fair") and exhibits a "Positive" near-term financial trend, these bright spots are overwhelmed by fundamental quality concerns.
The company's "Below Average" quality grade reflects structural weaknesses that cannot be ignored. With five-year sales CAGR of -2.59% and EBIT CAGR of -18.17%, Vivid Global has demonstrated an inability to grow profitably. The average ROE of 4.84% and ROCE of 10.03% fall well short of acceptable hurdles for equity investments, indicating poor capital allocation and weak competitive positioning.
The proprietary Mojo score of 47 out of 100, resulting in a "SELL" recommendation, synthesises these concerns. Key factors limiting the score include weak long-term fundamental strength, consistent underperformance against benchmarks, and structural profitability challenges. Whilst the quarterly financial trend has turned positive and technical indicators show mildly bullish momentum, these near-term positives do not outweigh the fundamental quality deficit.
"A company that has destroyed 73 percentage points of relative value over three years whilst generating sub-5% returns on equity presents a fundamentally challenged investment proposition, regardless of near-term operational improvements."
Key Strengths & Risk Factors
KEY STRENGTHS
- Debt-Free Balance Sheet: Net cash position with debt-to-equity of -0.13 eliminates solvency concerns and provides financial flexibility.
- Zero Promoter Pledging: Complete absence of pledged shares indicates promoter confidence and eliminates governance red flags.
- Recent Revenue Momentum: Q2 FY26 revenue of ₹13.92 crores represents highest quarterly sales, showing demand recovery.
- Positive Operating Cash Flow: FY25 generated ₹2.00 crores in cash from operations, demonstrating ability to convert profits to cash.
- Established Product Portfolio: Specialised dye intermediates with technical expertise in N-Methyl J. Acid and related products.
KEY CONCERNS
- Critically Low Margins: PAT margins below 2% and operating margins under 5% leave no cushion for adverse movements.
- Negative Long-Term Growth: Five-year sales CAGR of -2.59% and EBIT CAGR of -18.17% indicate structural decline.
- Weak Return Ratios: ROE of 4.84% and ROCE of 10.03% significantly below acceptable investment thresholds.
- Zero Institutional Interest: Complete absence of FII, MF, and insurance holdings signals professional investor scepticism.
- Extreme Volatility: Beta of 1.50 and annual volatility of 48.22% expose investors to disproportionate downside risk.
- Micro-Cap Liquidity: Market cap of ₹17.00 crores and average daily volumes under 11,000 shares create exit challenges.
- Severe Underperformance: Three-year negative alpha of 72.97 percentage points reflects persistent value destruction.
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained revenue above ₹13 crores quarterly for three consecutive quarters
- Operating margins expanding above 6% and stabilising at that level
- PAT margins crossing 2% threshold on consistent basis
- Any institutional investor (MF/FII) initiating position
- Capacity expansion or product diversification announcements
RED FLAGS
- Quarterly revenue falling below ₹10 crores
- Operating margins compressing below 3%
- Interest costs remaining elevated above ₹0.25 crores per quarter
- Any promoter stake reduction or pledging
- Negative operating cash flow in any quarter
The path forward for Vivid Global Industries requires demonstrating sustained profitability improvement over multiple quarters. Investors should monitor whether the Q2 FY26 revenue uptick represents a genuine inflection point or merely cyclical volatility. The company must prove it can consistently generate operating margins above 6% and PAT margins above 2% to justify continued equity exposure. Any deterioration in these metrics would reinforce the structural concerns that have plagued the stock.
The Verdict: Structural Challenges Outweigh Tactical Bounce
Score: 47/100
For Fresh Investors: Avoid initiating positions. The combination of weak return ratios (ROE 4.84%), negative long-term growth (-18.17% EBIT CAGR), and extreme volatility (beta 1.50) creates an unfavourable risk-reward profile. The recent quarterly uptick does not offset structural profitability challenges and three-year underperformance of 72.97 percentage points.
For Existing Holders: Consider reducing exposure on any further rallies towards the ₹20.00 level. Whilst the debt-free balance sheet provides downside protection, the company's inability to generate acceptable returns on capital and sustained margin pressures justify profit-taking. The absence of institutional interest and high volatility create unfavourable holding conditions for long-term wealth creation.
Fair Value Estimate: ₹15.00-16.00 (12-16% downside from current levels), based on 1.0x price-to-book valuation given sub-par ROE and negative growth trajectory.
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. Investments in micro-cap stocks carry heightened risks including liquidity constraints, volatility, and potential for capital loss.
