Shraddha Prime Projects Ltd Upgraded to Buy on Strong Technical and Financial Performance

Technical Trends Shift to Mildly Bullish

The primary catalyst for the upgrade was a marked improvement in the technical outlook. The technical grade transitioned from mildly bearish to mildly bullish, signalling a positive momentum shift in the stock’s price action. Key technical indicators reveal a nuanced picture: the Moving Average Convergence Divergence (MACD) on a monthly basis remains bullish, while weekly MACD has moved from bearish to a more neutral stance. The Relative Strength Index (RSI) shows no clear signal weekly but remains bearish monthly, indicating some caution in short-term momentum.

Bollinger Bands have shifted from mildly bearish weekly to bullish monthly, suggesting increasing volatility with an upward bias. Daily moving averages are mildly bullish, supporting the recent price gains. However, the Know Sure Thing (KST) indicator remains mildly bearish on both weekly and monthly charts, and Dow Theory shows no definitive trend, highlighting that while momentum is improving, some technical uncertainty persists.

On 5 February 2026, the stock closed at ₹187.95, up 6.61% from the previous close of ₹176.30, with a day’s trading range between ₹176.00 and ₹187.95. The 52-week high stands at ₹258.90, while the low is ₹100.00, indicating substantial room for growth relative to its historical peak.

Valuation Adjusted from Attractive to Fair

Alongside technical improvements, the valuation grade was revised from attractive to fair. The company’s price-to-earnings (PE) ratio currently stands at 22.68, which is reasonable compared to peers in the engineering and realty sectors. The price-to-book value is 7.94, while enterprise value to EBIT and EBITDA are 22.95 and 22.90 respectively, reflecting a premium but not excessive valuation.

The PEG ratio is notably low at 0.08, indicating that earnings growth is outpacing the price increase, a positive sign for investors. Return on capital employed (ROCE) is 13.87%, and return on equity (ROE) is a robust 34.99%, underscoring efficient capital utilisation and strong profitability. Dividend yield remains modest at 0.11%, consistent with the company’s growth orientation.

When compared to peers such as A B Infrabuild (PE 61.86) and Permanent Magnet (PE 60.37), Shraddha Prime’s valuation appears fair and justified by its growth prospects. This re-rating reflects the market’s recognition of the company’s improving fundamentals and growth trajectory.

Outstanding Financial Trend and Growth

Shraddha Prime’s financial performance has been exceptional, particularly in recent quarters. The company reported net sales growth at an annualised rate of 325.60%, with operating profit surging by 453.71%. The latest quarterly results for Q2 FY25-26 showed net sales of ₹134.33 crores, the highest recorded, and a profit after tax (PAT) of ₹17.71 crores over the last six months, reflecting a 99.66% increase.

Return on capital employed (ROCE) for the half-year period reached 16.26%, the highest in recent history, signalling efficient use of capital to generate profits. The company has delivered positive results for eight consecutive quarters, demonstrating consistent operational strength and resilience.

Over the past year, Shraddha Prime’s stock has generated a remarkable return of 72.43%, significantly outperforming the BSE500 index’s 7.87% return. Profit growth over the same period was even more impressive at 277%, reinforcing the company’s strong earnings momentum.

Quality Assessment and Market Position

The company’s quality grade remains strong, supported by its robust financial metrics and operational consistency. Despite its relatively small market capitalisation and micro-cap status, Shraddha Prime has demonstrated market-beating performance and solid fundamentals. The Mojo Score of 72.0 and a Buy grade reflect confidence in the company’s prospects.

However, some risks remain. The company’s debt servicing ability is a concern, with a high Debt to EBITDA ratio of 5.57 times, indicating leverage that could pressure cash flows if earnings falter. Additionally, domestic mutual funds hold no stake in the company, which may suggest limited institutional confidence or insufficient research coverage at current valuations.

Comparative Returns and Long-Term Outlook

Examining longer-term returns, Shraddha Prime has delivered extraordinary gains. Over five years, the stock has returned an astonishing 8,928.17%, dwarfing the Sensex’s 65.60% return over the same period. Even over ten years, the stock’s return of 9,976.84% far exceeds the Sensex’s 244.38%, underscoring the company’s exceptional growth trajectory.

Shorter-term returns show some volatility, with a one-month decline of 6.49% compared to the Sensex’s 2.27% drop, and a year-to-date decline of 4.08% versus the Sensex’s 1.65%. These fluctuations reflect market dynamics and sector-specific factors but are overshadowed by the company’s strong annual and multi-year performance.

The stock’s current trading price of ₹187.95 remains below its 52-week high of ₹258.90, suggesting potential upside for investors who believe in the company’s fundamentals and growth prospects.

Conclusion: Balanced Upgrade Reflecting Growth and Risks

The upgrade of Shraddha Prime Projects Ltd from Hold to Buy is well supported by a combination of improved technical indicators, fair but justified valuation, outstanding financial growth, and strong quality metrics. The company’s ability to generate substantial returns and maintain consistent profitability over multiple quarters has earned it a favourable rating.

Nevertheless, investors should remain mindful of the company’s leverage and the absence of institutional backing, which could pose risks in volatile market conditions. Overall, the upgrade signals confidence in Shraddha Prime’s capacity to sustain growth and deliver shareholder value in the medium to long term.

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