Shivamshree Businesses Ltd Downgraded to Strong Sell Amid Weak Fundamentals and Technical Setbacks

Quality Assessment: Weakening Fundamentals

Despite a positive financial performance in the third quarter of FY25-26, Shivamshree Businesses Ltd continues to struggle with its long-term fundamental strength. The company has recorded a staggering negative compound annual growth rate (CAGR) of -168.43% in operating profits over the past five years, underscoring persistent operational challenges. This weak profitability is further reflected in the company’s average Return on Equity (ROE) of just 0.05%, indicating minimal returns generated per unit of shareholders’ funds.

Moreover, the company’s ability to service its debt remains precarious, with an average EBIT to interest coverage ratio of -0.24. This negative ratio suggests that earnings before interest and taxes are insufficient to cover interest expenses, raising concerns about financial stability and credit risk. The presence of negative EBITDA further compounds the risk profile, signalling operational inefficiencies and cash flow constraints.

Valuation Metrics: Elevated Risk Compared to Historical Levels

Shivamshree Businesses Ltd is currently trading at valuations that are considered risky relative to its historical averages. The stock price closed at ₹2.16 on the latest trading day, down 1.82% from the previous close of ₹2.20. Over the past year, the stock has generated a flat return of 0.00%, while profits have declined sharply by 76%. This disconnect between price stability and deteriorating profitability raises questions about the stock’s valuation support.

The 52-week price range of ₹1.59 to ₹2.66 highlights significant volatility, with the current price closer to the lower end of this spectrum. Such valuation pressures, combined with weak financial metrics, justify the downgrade in the investment rating.

Financial Trend: Mixed Quarterly Results Amid Long-Term Decline

On a quarterly basis, Shivamshree Businesses Ltd reported some encouraging figures for the six months ending December 2025. Net sales rose to ₹7.86 crores, while PBDIT reached a quarterly high of ₹0.19 crores. However, the company still posted a negative Profit Before Tax (PBT) excluding other income of ₹-0.06 crores, indicating that profitability remains elusive despite revenue growth.

When viewed over longer horizons, the company’s financial trend is decidedly negative. The stock’s returns lag significantly behind the benchmark Sensex, which posted a 1-year return of 7.07% and a 10-year return of 239.52%. In contrast, Shivamshree Businesses Ltd’s 10-year return stands at a dismal -75.73%, reflecting sustained underperformance and erosion of shareholder value.

Technical Analysis: Shift from Mildly Bullish to Sideways Trend

The downgrade to Strong Sell is largely driven by a deterioration in technical indicators. The technical grade has shifted from mildly bullish to sideways, reflecting uncertainty and lack of clear directional momentum in the stock price.

Key technical signals include a weekly and monthly Moving Average Convergence Divergence (MACD) that is mildly bearish, indicating weakening momentum. The Relative Strength Index (RSI) on both weekly and monthly charts shows no clear signal, suggesting indecision among traders. Bollinger Bands present a mixed picture with weekly readings bearish but monthly readings mildly bullish, further underscoring the sideways trend.

Other technical indicators such as the Know Sure Thing (KST) oscillator and Dow Theory also show mild bearishness on monthly charts, while daily moving averages remain mildly bullish. The On-Balance Volume (OBV) indicator shows no discernible trend, indicating a lack of strong buying or selling pressure.

Overall, these mixed technical signals have contributed to the downgrade, signalling caution for investors relying on chart-based analysis.

Market Performance and Shareholding Pattern

Shivamshree Businesses Ltd’s stock has underperformed the broader market indices significantly. Over the past week, the stock declined by 7.3%, while the Sensex gained 1.59%. Over the past month, the stock fell 6.09% compared to the Sensex’s 1.74% loss. Year-to-date, the stock has remained flat, whereas the Sensex is down 1.92%.

The majority of the company’s shares are held by non-institutional investors, which may contribute to higher volatility and lower liquidity. This ownership structure can sometimes lead to less stable price movements and increased risk for minority shareholders.

Conclusion: Elevated Risks and Cautious Outlook

The downgrade of Shivamshree Businesses Ltd to a Strong Sell rating by MarketsMOJO reflects a convergence of negative factors across quality, valuation, financial trends, and technical analysis. While the company has shown some positive quarterly sales growth, its long-term fundamentals remain weak, with poor profitability, negative cash flows, and inadequate debt servicing capacity.

Valuation risks are heightened by the stock’s stagnant price performance amid declining profits, and technical indicators signal a lack of clear upward momentum. The stock’s underperformance relative to the Sensex and its volatile trading range further reinforce the cautious stance.

Investors should weigh these risks carefully and consider alternative investment opportunities within the FMCG sector or broader market that demonstrate stronger fundamentals and more favourable technical setups.

Unlock special upgrade rates for a limited period. Start Saving Now →