Current Rating and Its Significance
MarketsMOJO’s Strong Sell rating for Shalimar Paints Ltd. indicates a cautious stance for investors, signalling that the stock is expected to underperform relative to the broader market and its sector peers. This rating is based on a comprehensive assessment of four key parameters: Quality, Valuation, Financial Trend, and Technicals. The downgrade from Sell to Strong Sell on 23 April 2024 reflected a significant deterioration in the company’s outlook, with the Mojo Score plunging from 33 to a mere 3 points, underscoring heightened risks associated with the stock.
Here’s How Shalimar Paints Looks Today
As of 15 February 2026, Shalimar Paints continues to face considerable challenges across multiple fronts. The company’s market capitalisation remains in the microcap category, reflecting its relatively small size and limited liquidity. The stock has delivered a disappointing return of -49.91% over the past year, underperforming the BSE500 index consistently over the last three years, one year, and three months. This sustained underperformance highlights the stock’s struggle to regain investor confidence.
Quality Assessment
The quality grade assigned to Shalimar Paints is below average, signalling fundamental weaknesses in its operational and financial health. The company has reported operating losses, with operating profit declining at an annualised rate of -3.01% over the past five years. This negative growth trajectory points to structural issues in the business model or competitive pressures within the paints sector. Furthermore, the company’s ability to service its debt is notably weak, with an average EBIT to interest ratio of -2.88, indicating that earnings before interest and tax are insufficient to cover interest expenses. This financial strain raises concerns about the company’s solvency and long-term viability.
Valuation Perspective
From a valuation standpoint, Shalimar Paints is considered risky. The stock is trading at levels that do not reflect a margin of safety for investors, especially given the company’s negative EBITDA and operating losses. Despite the stock’s sharp decline in price, the company’s profits have paradoxically risen by 36% over the past year, suggesting a disconnect between market sentiment and underlying earnings performance. However, this profit improvement has not translated into positive returns, likely due to concerns over sustainability and other financial risks.
Financial Trend Analysis
The financial trend for Shalimar Paints remains negative. The company has declared losses for the last three consecutive quarters, with the latest quarterly PAT at a loss of ₹22.05 crores, down 35.7% compared to the previous four-quarter average. Interest expenses have increased by 22.87% over the last six months, reaching ₹13.54 crores, further pressuring profitability. Additionally, profit before tax excluding other income fell by 17.9% in the latest quarter. These figures underscore ongoing operational difficulties and rising financial costs, which weigh heavily on the company’s outlook.
Technical Outlook
The technical grade for Shalimar Paints is bearish, reflecting negative momentum in the stock price. The share price has declined by 1.55% on the most recent trading day and has shown consistent weakness over weekly (-1.81%), monthly (-9.73%), and quarterly (-15.98%) periods. The high proportion of promoter shares pledged at 70.51%, which has increased by 9.16% over the last quarter, adds to the downward pressure on the stock. In falling markets, such high pledged holdings often lead to forced selling, exacerbating price declines and increasing volatility.
Investor Implications
For investors, the Strong Sell rating suggests that Shalimar Paints is currently a high-risk investment with limited upside potential. The combination of weak fundamentals, risky valuation, deteriorating financial trends, and bearish technical signals indicates that the stock is unlikely to recover in the near term without significant operational improvements or a change in market conditions. Investors should exercise caution and consider the potential for further downside before committing capital to this stock.
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Summary of Key Metrics as of 15 February 2026
Shalimar Paints’ stock returns over various timeframes illustrate the ongoing challenges faced by the company: a 1-day decline of -1.55%, 1-week drop of -1.81%, 1-month fall of -9.73%, 3-month decrease of -15.98%, 6-month loss of -13.76%, year-to-date virtually flat at -0.02%, and a steep 1-year decline of -49.91%. These figures highlight persistent negative sentiment and weak price performance.
The company’s financial dashboard reveals a weak long-term fundamental strength, with operating losses and poor debt servicing capacity. Negative quarterly results and rising interest expenses further compound the financial stress. The high level of pledged promoter shares remains a significant risk factor, potentially triggering forced sales in volatile markets.
Overall, the Strong Sell rating reflects a comprehensive evaluation of Shalimar Paints’ current state, signalling that investors should approach the stock with caution and consider alternative opportunities with stronger fundamentals and more favourable valuations.
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