Shekhawati Industries Ltd Reports Sharp Deterioration in Quarterly Financial Performance

Quarterly Revenue and Profitability: A Deepening Downturn

The latest six-month net sales for Shekhawati Industries stand at ₹5.14 crores, representing a staggering decline of 84.5% compared to previous periods. This steep contraction in top-line revenue is a critical concern, especially in an industry where scale and volume are key drivers of profitability. The company’s quarterly profit after tax (PAT) has also taken a severe hit, registering a loss of ₹0.51 crores, which is a 133.8% fall relative to the average PAT of the preceding four quarters. This negative swing in earnings underscores the operational and market pressures the company is currently facing.

Margins and Operational Ratios: Signs of Stress

Shekhawati Industries’ earnings before depreciation, interest, and taxes (PBDIT) for the quarter have dropped to a low of ₹-0.20 crores, while profit before tax excluding other income (PBT less OI) has also declined sharply to ₹-0.56 crores. These figures highlight margin contraction and the inability to cover fixed costs effectively. The earnings per share (EPS) for the quarter has fallen to ₹-0.15, marking the lowest level in recent history and signalling diminished shareholder value.

Operational efficiency metrics further illustrate the company’s struggles. The inventory turnover ratio for the half-year period is at a low 2.11 times, indicating slower movement of stock and potential overstocking issues. Conversely, the debtors turnover ratio is exceptionally high at 3,223 times, which, while seemingly positive, may reflect accounting anomalies or timing differences rather than genuine collection efficiency.

Stock Price and Market Performance: Under Pressure

Shekhawati Industries’ stock price closed at ₹15.74 on 22 Jan 2026, down 3.73% from the previous close of ₹16.35. The stock’s 52-week high was ₹31.59, while the low is currently at ₹15.74, indicating a significant depreciation in market value over the past year. Intraday volatility was evident with a high of ₹16.91 and a low of ₹15.74 on the day of reporting.

Comparative Returns: Lagging Behind the Sensex

When benchmarked against the Sensex, Shekhawati Industries’ returns have been notably weaker in the short and medium term. Over the past week, the stock declined by 13.61%, compared to a modest 1.77% fall in the Sensex. The one-month return for the stock was down 23.78%, far exceeding the Sensex’s 3.56% decline. Year-to-date, the stock has lost 16.37%, while the Sensex fell by 3.89%. Over the last year, the stock’s performance was particularly poor, plunging 49.23%, whereas the Sensex gained 8.01% in the same period.

However, it is important to note that Shekhawati Industries has delivered extraordinary long-term returns, with a three-year gain of 2,321.54% and a five-year return of 3,560.47%, vastly outperforming the Sensex’s 35.12% and 65.06% respectively. Even over a decade, the stock has appreciated by 774.44%, compared to the Sensex’s 241.83%. This contrast highlights the company’s historical growth potential but also emphasises the recent sharp reversal in fortunes.

Mojo Score and Analyst Ratings: Downgrade to Strong Sell

Reflecting the deteriorating fundamentals, Shekhawati Industries’ Mojo Score has dropped to 15.0, accompanied by a downgrade in Mojo Grade from Sell to Strong Sell as of 20 Mar 2025. The Market Capitalisation Grade remains low at 4, underscoring concerns about the company’s size and liquidity in the market. These ratings suggest heightened risk and caution for investors considering exposure to this micro-cap garment and apparel stock.

Industry Context and Outlook

The garments and apparels sector has faced headwinds from fluctuating raw material costs, supply chain disruptions, and changing consumer demand patterns. While some peers have managed to stabilise margins and grow revenues, Shekhawati Industries’ recent results indicate it has struggled to adapt effectively. The sharp decline in sales and profitability, coupled with operational inefficiencies, raises questions about the company’s competitive positioning and management execution.

Investors should weigh the company’s impressive long-term returns against the current financial stress and negative momentum. The very negative financial trend score and downgraded analyst ratings suggest that caution is warranted in the near term. Recovery will likely depend on the company’s ability to improve inventory management, enhance sales growth, and restore profitability.

Conclusion: A Challenging Phase for Shekhawati Industries

Shekhawati Industries Ltd is currently navigating a difficult phase marked by steep revenue contraction, margin erosion, and negative earnings. Despite a strong historical performance track record, the recent quarterly results and financial trend deterioration highlight significant risks. The downgrade to a Strong Sell rating and the low market cap grade reflect these concerns. Investors should monitor upcoming quarters closely for signs of operational turnaround or further deterioration before considering fresh exposure to this stock.

Given the current landscape, a prudent approach would be to explore alternative investment opportunities within the garments and apparels sector or broader markets that offer more stable fundamentals and growth prospects.

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