Shilp Gravures Ltd is Rated Sell

Current Rating and Its Implications

MarketsMOJO's 'Sell' rating on Shilp Gravures Ltd indicates a cautious stance for investors, suggesting that the stock may underperform relative to the broader market or its sector peers. This rating is derived from a comprehensive evaluation of four key parameters: quality, valuation, financial trend, and technicals. The downgrade from 'Hold' to 'Sell' on 17 Nov 2025 reflected a significant reassessment of the company's prospects, with the Mojo Score dropping from 51 to 31, signalling weaker confidence in the stock's near-term performance.

Here's How Shilp Gravures Looks Today

As of 06 January 2026, the stock continues to face challenges across multiple dimensions. The Mojo Score of 31 remains firmly in the 'Sell' territory, underscoring persistent concerns. The stock's price has declined by 3.48% on the day, with a one-year return of -47.17%, highlighting significant investor caution and negative market sentiment.

Quality Assessment

The quality grade for Shilp Gravures is assessed as average. Over the past five years, the company has demonstrated modest growth, with net sales increasing at an annualised rate of 7.71% and operating profit growing at a subdued 3.12%. These figures suggest limited operational momentum and a lack of robust earnings expansion. Furthermore, the latest nine-month profit after tax (PAT) stands at ₹4.67 crores, reflecting a sharp decline of 40.05% compared to previous periods. The return on capital employed (ROCE) is notably low at 4.57%, indicating inefficient utilisation of capital resources. Additionally, the debtors turnover ratio of 4.45 times points to slower collection cycles, which may impact liquidity.

Valuation Considerations

Currently, Shilp Gravures is considered expensive relative to its fundamentals. The stock trades at a price-to-book value of 1.2, which is a premium compared to its peers' historical averages. This elevated valuation is difficult to justify given the company's subdued profitability and declining returns. The return on equity (ROE) is a mere 2.7%, signalling limited shareholder value creation. Over the past year, the stock has delivered a negative return of 45.23%, while profits have contracted by 73.2%, further emphasising the disconnect between price and performance.

Financial Trend Analysis

The financial trend for Shilp Gravures is flat, reflecting stagnation in key performance indicators. The company’s operating profit growth of 3.12% over five years is insufficient to drive meaningful shareholder returns. The recent nine-month PAT decline of 40.05% and the 73.2% drop in annual profits highlight deteriorating earnings quality. Such trends raise concerns about the company’s ability to generate sustainable cash flows and maintain profitability in a competitive environment.

Technical Outlook

The technical grade for Shilp Gravures is bearish, signalling negative momentum in the stock price. The recent price performance shows consistent declines across multiple time frames: a 1-month drop of 14.43%, a 3-month fall of 23.66%, and a 6-month decrease of 19.41%. Year-to-date, the stock has lost 8.73%, reflecting weak investor confidence. This bearish technical stance suggests that the stock may continue to face downward pressure unless there is a significant change in fundamentals or market sentiment.

What This Means for Investors

For investors, the 'Sell' rating on Shilp Gravures Ltd serves as a cautionary signal. The combination of average quality, expensive valuation, flat financial trends, and bearish technicals suggests limited upside potential and elevated risk. Investors should carefully consider these factors before initiating or maintaining positions in the stock. The current market environment and company-specific challenges imply that capital preservation may be a priority over seeking gains in this microcap industrial products firm.

Summary

In summary, Shilp Gravures Ltd’s current 'Sell' rating reflects a comprehensive assessment of its operational and market challenges. The stock’s average quality, expensive valuation, flat financial performance, and bearish technical indicators collectively suggest that investors should approach with caution. While the company operates in the industrial products sector, its microcap status and recent financial trends warrant careful scrutiny. Monitoring future quarterly results and market developments will be essential for reassessing the stock’s outlook.

Only Rs. 9,999 - Get MojoOne + Stock of the Week for 1 Year (MRP = Rs. 34,999) Start Today