Current Rating and Its Significance
The 'Hold' rating assigned to Shree Krishna Paper Mills & Industries Ltd indicates a neutral stance for investors. It suggests that while the stock may not be an immediate buy opportunity, it is also not a sell candidate at present. Investors are advised to maintain their existing positions and monitor the stock closely for any significant changes in fundamentals or market conditions. This rating reflects a balanced view, considering both the strengths and challenges the company currently faces.
Quality Assessment
As of 05 January 2026, the company’s quality grade is assessed as below average. This is primarily due to its modest long-term fundamental strength, with an average Return on Capital Employed (ROCE) of 8.01%. While this indicates some ability to generate returns from its capital base, it remains relatively weak compared to industry standards. Additionally, the company’s debt servicing capability is constrained, evidenced by a high Debt to EBITDA ratio of 4.21 times. This elevated leverage level poses risks, particularly in volatile market conditions, and weighs on the overall quality assessment.
Valuation Perspective
Currently, Shree Krishna Paper Mills is considered very expensive from a valuation standpoint. The stock trades at an Enterprise Value to Capital Employed ratio of 3.1, which is high relative to its peers. Despite this, it is noteworthy that the stock is trading at a discount compared to the average historical valuations of its sector counterparts. The company’s Price/Earnings to Growth (PEG) ratio stands at a low 0.3, reflecting strong profit growth relative to its price. This suggests that while the stock appears costly on traditional metrics, its growth prospects may justify a premium valuation to some extent.
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- - Fundamental Analysis
- - Technical Signals
- - Peer Comparison
Financial Trend and Profitability
The financial trend for Shree Krishna Paper Mills is very positive as of 05 January 2026. The company has demonstrated consistent growth, with net sales increasing by 12.59% in the most recent quarter. It has reported positive results for four consecutive quarters, highlighting improving operational performance. Quarterly net sales reached a peak of ₹62.25 crores, while Profit Before Tax excluding other income stood at ₹0.97 crore, the highest recorded in recent periods. The Profit After Tax for the nine months ended is ₹2.55 crores, reflecting a significant rise in profitability.
Over the past year, the stock has delivered an impressive return of 240.19%, while profits have surged by 233.5%. This strong earnings growth underpins the positive financial grade assigned to the company. However, investors should remain cautious given the company’s microcap status and the inherent volatility associated with smaller stocks.
Technical Outlook
From a technical perspective, the stock exhibits a bullish trend. Recent price movements show strong momentum, with a 3-month gain of 71.18% and a 6-month surge of 168.81%. The one-month return of 34.38% further confirms the positive technical sentiment. Despite a slight year-to-date decline of 3.73%, the overall technical grade remains favourable, suggesting that market participants currently view the stock positively.
Risks and Considerations
Investors should be mindful of certain risks associated with Shree Krishna Paper Mills. A significant concern is the high level of promoter share pledging, with 84.38% of promoter shares pledged as of the latest data. This can exert downward pressure on the stock price during market downturns, as pledged shares may be sold to meet margin calls. Additionally, the company’s weak long-term fundamental strength and high leverage ratio warrant caution.
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What This Rating Means for Investors
The 'Hold' rating on Shree Krishna Paper Mills & Industries Ltd suggests that investors should maintain their current holdings without initiating new positions or exiting existing ones immediately. The stock’s mixed profile — combining strong recent returns and positive financial trends with valuation concerns and leverage risks — calls for a cautious approach. Investors with a higher risk tolerance may find the stock’s growth potential attractive, but it is essential to monitor the company’s debt levels and promoter share pledging closely.
In summary, the rating reflects a balanced view that recognises the company’s improving profitability and bullish technical signals, while also acknowledging valuation challenges and financial risks. This nuanced perspective helps investors make informed decisions based on the latest data as of 05 January 2026.
Company Overview
Shree Krishna Paper Mills & Industries Ltd operates within the Paper, Forest & Jute Products sector and is classified as a microcap company. Its market capitalisation remains modest, which can contribute to higher volatility and liquidity considerations. The company’s recent operational improvements and consistent quarterly results indicate a potential turnaround, but investors should weigh these positives against the structural risks inherent in its financial profile.
Summary of Key Metrics as of 05 January 2026
- Mojo Score: 56.0 (Hold Grade)
- Return on Capital Employed (ROCE): 8.01% (average long-term)
- Debt to EBITDA Ratio: 4.21 times
- Net Sales Growth (latest quarter): 12.59%
- Profit After Tax (9 months): ₹2.55 crores
- Stock Returns: 1 Year +240.19%, 6 Months +168.81%, 3 Months +71.18%
- Promoter Shares Pledged: 84.38%
Investors should consider these metrics in conjunction with broader market conditions and sector trends when evaluating the stock’s potential.
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