Shivamshree Businesses Ltd Downgraded to Strong Sell Amid Technical and Fundamental Weaknesses

Technical Trends Shift to Bearish Territory

The most significant trigger for the downgrade was the change in the technical grade, which shifted from mildly bullish to mildly bearish. Key technical indicators paint a cautious picture for the stock’s near-term prospects. The Moving Average Convergence Divergence (MACD) on both weekly and monthly charts now signals mild bearishness, reflecting weakening momentum. Similarly, the Relative Strength Index (RSI) on the weekly timeframe has turned bearish, indicating increased selling pressure, although the monthly RSI remains neutral with no clear signal.

Bollinger Bands present a mixed view: weekly readings are bearish, suggesting the stock price is trending towards the lower band, while monthly bands remain mildly bullish, hinting at some longer-term support. The daily moving averages still show mild bullishness, but this is overshadowed by other negative signals.

Additional technical tools such as the Know Sure Thing (KST) oscillator and Dow Theory analysis reinforce the bearish stance on a weekly basis, with KST mildly bearish and Dow Theory showing no clear trend monthly. On-Balance Volume (OBV) also reflects mild bearishness weekly, indicating that volume trends are not supporting price advances.

These technical shifts have contributed decisively to the downgrade, signalling that the stock’s price momentum is weakening and caution is warranted for traders and investors alike.

Valuation and Market Performance

Shivamshree Businesses Ltd currently trades at ₹2.09, down 2.34% on the day from a previous close of ₹2.14. The stock’s 52-week high stands at ₹2.66, while the low is ₹1.27, indicating a wide trading range and volatility. Despite this, the stock has delivered a remarkable 64.57% return over the past year, significantly outperforming the Sensex’s 8.47% return in the same period. However, this market-beating performance masks underlying fundamental weaknesses.

Over shorter timeframes, the stock has underperformed sharply. It declined 9.13% in the past week and 12.55% over the last month, compared to negligible or modest declines in the Sensex. Year-to-date, the stock is down 3.24%, slightly worse than the Sensex’s 1.94% fall. Over the long term, the stock’s performance is poor, with a 10-year return of -78.5% versus the Sensex’s 241.73% gain, highlighting structural challenges.

Financial Trend and Profitability Concerns

Despite a positive quarterly performance in Q2 FY25-26, with net sales for the nine months reaching ₹8.62 crores, growing at 79.21%, and the highest quarterly PBDIT recorded at ₹0.16 crores, the company’s long-term financial health remains fragile. The operating profit has declined at a staggering compound annual growth rate (CAGR) of -168.43% over the last five years, signalling severe erosion in core profitability.

The company’s ability to service debt is notably weak, with an average EBIT to interest ratio of -0.24, indicating that earnings before interest and tax are insufficient to cover interest expenses. This raises concerns about financial stability and credit risk.

Return on Equity (ROE) is negligible at an average of 0.05%, reflecting minimal profitability generated from shareholders’ funds. The company’s EBITDA is negative, further underscoring operational challenges and riskiness from an investment perspective.

These financial trends justify the downgrade in the fundamental quality assessment, as the company struggles to generate sustainable profits despite recent sales growth.

Quality Assessment and Shareholding Pattern

Shivamshree Businesses Ltd’s quality grade remains poor, consistent with its Strong Sell rating. The company’s weak long-term fundamentals and negative profitability metrics overshadow the recent positive quarterly results. The majority of shareholders are non-institutional, which may imply limited institutional confidence and liquidity concerns.

Given the combination of weak financial metrics, poor debt servicing capacity, and negative EBITDA, the company’s quality grade remains firmly in the lower tier, reinforcing the cautious stance.

Summary of Rating Change

The downgrade from Sell to Strong Sell on 16 January 2026 reflects a comprehensive reassessment across four key parameters:

• Technicals: Downgraded from mildly bullish to mildly bearish, with multiple indicators signalling weakening momentum and increased selling pressure.


• Valuation: Despite recent price gains, the stock trades at risky valuations relative to historical averages, with short-term underperformance and high volatility.


• Financial Trend: Long-term operating profits have declined sharply, with poor debt servicing ability and negligible returns on equity, signalling fundamental weakness.


• Quality: The company’s overall quality grade remains low due to negative EBITDA, weak profitability, and a shareholder base dominated by non-institutional investors.

These factors collectively justify the MarketsMOJO Mojo Score of 23.0 and the Strong Sell grade, signalling investors to exercise caution and consider alternative opportunities.

Investor Takeaway

While Shivamshree Businesses Ltd has demonstrated some short-term sales growth and delivered market-beating returns over the past year, the underlying financial and technical signals caution against optimism. The downgrade to Strong Sell reflects the stock’s deteriorating momentum, risky valuation, and poor fundamental health. Investors should weigh these factors carefully and consider the company’s weak debt servicing capacity and negative profitability before committing capital.

Given the stock’s volatility and the mixed signals from technical indicators, short-term traders may find opportunities, but long-term investors are advised to remain cautious. The company’s inability to generate consistent operating profits and its poor return on equity highlight structural challenges that are unlikely to be resolved in the near term.

In summary, the downgrade serves as a warning signal, urging investors to reassess their exposure to Shivamshree Businesses Ltd and explore more stable and fundamentally sound alternatives within the FMCG sector and broader market.

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