Shivam Autotech Ltd is Rated Strong Sell

Understanding the Current Rating

The Strong Sell rating assigned to Shivam Autotech Ltd indicates a cautious stance for investors, signalling that the stock is expected to underperform relative to the broader market and its peers. This rating is derived from a comprehensive assessment of four key parameters: Quality, Valuation, Financial Trend, and Technicals. Each of these factors contributes to the overall Mojo Score, which currently stands at 17.0, reflecting a significant decline from the previous score of 38. The rating change on 17 February 2025 saw the grade shift from 'Sell' to 'Strong Sell', underscoring concerns about the company’s outlook.

Here’s How Shivam Autotech Ltd Looks Today

As of 03 January 2026, Shivam Autotech Ltd remains a microcap player in the Auto Components & Equipments sector, with financial and market indicators painting a challenging picture. The stock has experienced a volatile performance over recent periods, with a 1-day gain of 7.3% and a 1-week increase of 7.07%, yet it has declined by 7.95% over the past month and 21.11% over three months. The year-to-date return is a modest 4.43%, but the stock has delivered a steep negative return of -46.24% over the last year, signalling sustained underperformance.

Quality Assessment

The company’s quality grade is categorised as below average, reflecting weak long-term fundamentals. Shivam Autotech Ltd carries a notably high debt burden, with a debt-to-equity ratio averaging 2.68 times and peaking at an alarming 192.05 times in the half-year period ending September 2025. This excessive leverage undermines financial stability and increases risk for investors. Furthermore, the company has reported losses, resulting in a negative return on equity (ROE), which is a critical indicator of shareholder value creation. Net sales have contracted at an annualised rate of -0.18% over the past five years, while operating profit has declined by -7.92% annually, highlighting persistent operational challenges.

Valuation Considerations

Despite the weak fundamentals, the valuation grade is marked as expensive. The stock trades at an enterprise value to capital employed ratio of 2, which is relatively high given the company’s subdued returns on capital employed (ROCE) of just 0.6%. This suggests that investors are paying a premium for a company with limited profitability and growth prospects. Although the stock is trading at a discount compared to its peers’ historical valuations, the current price does not appear justified by the underlying financial performance, especially considering the negative profit growth of -29.4% over the past year.

Financial Trend Analysis

The financial trend for Shivam Autotech Ltd is flat, indicating stagnation rather than growth or improvement. The company’s operating results for the half-year ended September 2025 were unimpressive, with a return on capital employed (ROCE) at a low 1.15%. This flat trend is compounded by the company’s high debt levels, which have not been effectively managed to generate positive returns. The lack of growth in sales and profitability over recent years, coupled with the negative returns, suggests that the company is struggling to improve its financial health.

Technical Outlook

From a technical perspective, the stock is rated bearish. The downward momentum is evident in the stock’s performance over the medium term, with declines of 19.87% over six months and 21.11% over three months. The bearish technical grade reflects weak price action and a lack of positive signals that would indicate a reversal or recovery. This technical weakness aligns with the fundamental concerns and valuation challenges, reinforcing the cautious stance for investors.

Comparative Performance and Market Context

Shivam Autotech Ltd has underperformed key benchmarks such as the BSE500 index over the last one year, three years, and three months. This underperformance highlights the stock’s relative weakness within the broader market and its sector. The auto components and equipment sector has seen varied performance, but Shivam Autotech’s struggles with debt, profitability, and valuation place it at a disadvantage compared to peers.

What This Rating Means for Investors

For investors, the Strong Sell rating on Shivam Autotech Ltd serves as a warning signal. It suggests that the stock currently carries significant risks due to its weak financial health, expensive valuation relative to returns, and negative technical indicators. Investors should carefully consider these factors before initiating or maintaining positions in the stock. The rating implies that better opportunities may exist elsewhere in the market, particularly in companies with stronger fundamentals and more favourable valuations.

That said, the stock’s recent short-term gains, such as the 7.3% rise in a single day and 7.07% over a week, indicate some volatility and potential trading interest. However, these movements do not offset the broader concerns highlighted by the comprehensive analysis.

Summary

In summary, Shivam Autotech Ltd’s current Strong Sell rating by MarketsMOJO, last updated on 17 February 2025, reflects ongoing challenges in quality, valuation, financial trends, and technical outlook as of 03 January 2026. The company’s high debt levels, negative profitability, flat financial trends, and bearish technical signals combine to create a cautious investment environment. Investors should weigh these factors carefully and monitor any developments that could alter the company’s outlook.

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