Shreyas Intermediates Ltd Downgraded to Strong Sell Amid Technical and Fundamental Concerns

Quality Assessment: Weak Long-Term Fundamentals

Despite a positive financial performance in the second quarter of FY25-26, Shreyas Intermediates continues to struggle with fundamental weaknesses. The company’s average Return on Capital Employed (ROCE) remains at a concerning 0%, indicating minimal efficiency in generating profits from its capital base. Over the past five years, operating profit growth has been modest at an annualised rate of just 2.37%, underscoring a lack of robust expansion in core earnings.

Moreover, the company’s debt servicing capacity is under pressure, with a Debt to EBITDA ratio of -1.00 times, reflecting negative EBITDA and raising concerns about financial sustainability. This negative EBITDA status further amplifies the risk profile, as it suggests operational cash flow challenges despite recent profit growth of 23.9% over the last year.

Valuation: Trading at Risky Levels

Shreyas Intermediates is currently trading at ₹8.32 per share, down 4.81% on the day and significantly below its 52-week high of ₹12.99. The stock’s valuation appears stretched relative to its historical averages, especially given the company’s weak fundamentals and negative EBITDA. Over the past year, the stock has delivered a return of -30.67%, markedly underperforming the Sensex, which gained 7.67% over the same period.

Longer-term comparisons reveal consistent underperformance: over three years, the stock has declined by 37.91%, while the Sensex rose 37.58%. Even over five and ten years, Shreyas Intermediates’ returns lag the benchmark significantly, with 5-year returns at -23.25% versus Sensex’s 71.32%, and 10-year returns at 61.55% compared to the Sensex’s 235.19%. This persistent underperformance highlights valuation concerns and questions the stock’s appeal as a long-term investment.

Financial Trend: Mixed Signals Amid Profit Growth and Debt Concerns

While the company reported its highest quarterly PBDIT at ₹0.07 crore and a peak debtors turnover ratio of 6.52 times in the half-year period, these positives are overshadowed by a negative PBT less other income of ₹-0.36 crore. The financial trend is thus mixed, with some operational improvements but persistent losses at the profit before tax level.

Additionally, the company’s ability to service debt remains weak, as indicated by the negative Debt to EBITDA ratio. This financial strain is a critical factor in the downgrade, signalling that despite some short-term profit growth, the company’s overall financial health remains fragile.

Technical Analysis: Downgrade Driven by Sideways Momentum and Bearish Indicators

The downgrade to Strong Sell was primarily triggered by a shift in technical trends. The technical grade changed as the stock’s momentum moved from mildly bullish to sideways, reflecting uncertainty and lack of clear directional strength. Key technical indicators present a mixed but predominantly bearish picture:

• MACD shows a bullish signal on the weekly chart but bearish on the monthly, indicating short-term strength but longer-term weakness.


• Relative Strength Index (RSI) on both weekly and monthly charts shows no clear signal, suggesting indecision among traders.


• Bollinger Bands are bearish on both weekly and monthly timeframes, signalling increased volatility and downward pressure.


• Moving averages on the daily chart remain mildly bullish, but this is insufficient to offset the broader negative signals.


• KST indicator is bullish weekly but bearish monthly, reinforcing the mixed momentum.


• Dow Theory analysis shows mildly bearish weekly trends but mildly bullish monthly trends, further highlighting the stock’s technical uncertainty.

These conflicting signals have culminated in a cautious stance, with the technical outlook no longer supporting a buy or hold recommendation.

Market Performance and Shareholding

Shreyas Intermediates’ stock price has declined sharply in recent periods, with a one-week return of -9.47% and a one-month return of -22.24%, both significantly worse than the Sensex’s respective returns of -2.55% and -1.29%. Year-to-date, the stock is down 14.23%, compared to the Sensex’s modest decline of 1.93%. These figures underscore the stock’s vulnerability amid broader market conditions.

The company’s majority shareholding remains with promoters, which can be a stabilising factor but also concentrates risk if operational challenges persist.

Mojo Score and Grade Implications

MarketsMOJO’s proprietary scoring system has assigned Shreyas Intermediates a Mojo Score of 29.0, resulting in a Strong Sell grade, downgraded from the previous Sell rating. This reflects the aggregation of weak quality metrics, risky valuation, negative financial trends, and deteriorating technical signals. The company’s market capitalisation grade stands at 4, indicating a relatively small market cap that may contribute to liquidity and volatility concerns.

Given these factors, the downgrade signals a clear warning to investors to reassess their exposure to this stock, especially in light of its consistent underperformance against benchmarks such as the BSE500 and Sensex indices.

Conclusion: Elevated Risks Outweigh Recent Positives

While Shreyas Intermediates Ltd has demonstrated some positive quarterly financial results and operational metrics, these are overshadowed by weak long-term fundamentals, risky valuation levels, and a technical outlook that has shifted to sideways and bearish tendencies. The stock’s persistent underperformance relative to major indices and its negative EBITDA status further compound concerns.

Investors should approach Shreyas Intermediates with caution, recognising that the downgrade to Strong Sell reflects a comprehensive reassessment of the company’s risk profile across quality, valuation, financial trend, and technical parameters. Until there is a clear improvement in these areas, the stock remains a high-risk proposition within the commodity chemicals sector.

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