Shivam Autotech Ltd Reports Sharp Decline in Quarterly Performance Amid Rising Financial Strains

Quarterly Financial Performance: A Steep Downturn

In the December 2025 quarter, Shivam Autotech’s net sales declined by 9.4% to ₹96.18 crores compared to the average of the previous four quarters. This contraction in top-line growth marks a reversal from the company’s earlier flat revenue trend, signalling emerging challenges in demand or operational execution. The operating profit margin also shrank considerably, with operating profit to net sales falling to a low of 5.25%, reflecting margin pressure amid rising costs or subdued pricing power.

Profit after tax (PAT) plunged dramatically to a loss of ₹23.41 crores, representing a 65.1% decline relative to the prior four-quarter average. This sharp fall in bottom-line profitability is a key concern for investors, highlighting the company’s struggle to contain expenses and generate sustainable earnings. Earnings per share (EPS) correspondingly dropped to a negative ₹1.87, the lowest in recent history.

Worsening Financial Ratios Underscore Operational Strain

Several financial ratios further illustrate the company’s deteriorating health. The return on capital employed (ROCE) for the half-year period hit a nadir of 1.15%, signalling poor capital efficiency and weak returns on invested funds. Meanwhile, the debt-equity ratio surged to an alarming 192.05 times, indicating a highly leveraged balance sheet that raises concerns about financial risk and solvency.

The operating profit to interest coverage ratio dropped to a precarious 0.27 times for the quarter, underscoring the company’s limited ability to service its interest obligations from operating earnings. Interest expenses reached a peak of ₹19.05 crores, further burdening profitability. The PBDIT (profit before depreciation, interest and tax) also fell to a low of ₹5.05 crores, reflecting constrained operational cash flow generation.

Positive Aspect: Efficient Debtor Management

On a more positive note, Shivam Autotech’s debtor turnover ratio for the half-year stood at 9.00 times, the highest recorded in recent periods. This suggests improved efficiency in collecting receivables, which could help ease working capital pressures. However, this strength is overshadowed by the broader negative financial trends.

Stock Price and Market Capitalisation Context

Shivam Autotech’s share price closed at ₹22.00 on 5 Feb 2026, down 3.64% from the previous close of ₹22.83. The stock has traded within a 52-week range of ₹18.42 to ₹40.75, reflecting significant volatility and a downward bias over the past year. The company’s market cap grade stands at 4, indicating a relatively modest market capitalisation compared to peers.

The company’s Mojo Score has deteriorated to 9.0, with the Mojo Grade downgraded from Sell to Strong Sell on 17 Feb 2025, signalling heightened caution among analysts and investors.

Long-Term Returns Paint a Challenging Picture

Examining Shivam Autotech’s stock returns relative to the Sensex reveals a stark underperformance. Over the past year, the stock has lost 45.38%, while the Sensex gained 6.48%. Over three and ten years, the stock’s returns have been negative at -14.89% and -56.04% respectively, contrasting sharply with the Sensex’s robust gains of 36.98% and 238.55% over the same periods. This persistent underperformance highlights structural challenges facing the company and its sector positioning.

Sector and Industry Comparison

Within the Auto Components & Equipments sector, Shivam Autotech’s recent financial deterioration stands out negatively. While the sector has faced headwinds from global supply chain disruptions and fluctuating demand, many peers have managed to maintain stable revenue growth and margin expansion. Shivam Autotech’s sharp contraction in sales and profitability, coupled with its stretched leverage, places it at a disadvantage relative to industry benchmarks.

Outlook and Investor Considerations

Given the current financial trajectory, investors should exercise caution. The company’s negative financial trend score of -19 for the quarter, down from -1 three months prior, signals accelerating deterioration. High leverage and weak interest coverage ratios increase financial risk, while declining sales and profitability raise questions about operational resilience.

However, the improved debtor turnover ratio suggests some operational efficiencies that could be leveraged if the company manages to stabilise its cost structure and reduce debt burden. Close monitoring of upcoming quarterly results and management commentary will be essential to assess any turnaround prospects.

Conclusion

Shivam Autotech Ltd’s latest quarterly results reveal a company grappling with significant financial and operational challenges. The sharp decline in revenue, profitability, and key financial ratios, combined with a highly leveraged balance sheet, have led to a downgrade to Strong Sell by MarketsMOJO analysts. While some operational efficiencies are evident, the overall outlook remains subdued amid a tough industry environment and competitive pressures.

Investors should weigh these risks carefully against the company’s valuation and sector alternatives before considering exposure. The stock’s persistent underperformance relative to the Sensex and peers further underscores the need for prudence.

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