Shri Jagdamba Polymers Ltd Quality Grade Downgrade: A Detailed Fundamental Analysis

Quality Grade Downgrade and Market Reaction

On 9 February 2026, Shri Jagdamba Polymers Ltd’s quality grade was downgraded from good to average by MarketsMOJO, accompanied by a Mojo Score of 34.0 and a Sell rating, a step down from its previous Hold status. This downgrade signals concerns over the company’s underlying financial health and growth prospects. The stock price has reflected this sentiment, closing at ₹625.00 on 17 February 2026, down 4.87% from the previous close of ₹657.00. The stock’s 52-week high of ₹1,279.95 contrasts sharply with its current valuation, underscoring the recent weakness.

Sales and Earnings Growth: A Mixed Picture

Over the past five years, Shri Jagdamba Polymers has delivered a respectable compound annual sales growth rate of 13.03%, indicating steady demand for its packaging products. However, this growth has not fully translated into earnings expansion, with EBIT growth over the same period lagging at a modest 3.17%. This disparity suggests margin pressures or rising costs that have constrained profitability improvements.

Return Ratios: ROCE and ROE Remain Robust

Despite the earnings growth challenges, the company maintains strong return metrics. Its average Return on Capital Employed (ROCE) stands at 23.97%, while the average Return on Equity (ROE) is 19.36%. These figures indicate efficient utilisation of capital and equity to generate profits, which remains a positive aspect of the company’s fundamentals. However, the downgrade to average quality implies that these returns may not be sustainable or are offset by other concerns.

Leverage and Interest Coverage: Conservative Debt Profile

Shri Jagdamba Polymers exhibits a conservative debt profile, with an average Debt to EBITDA ratio of 0.53 and a Net Debt to Equity ratio of just 0.07. The company’s EBIT to Interest coverage ratio is a healthy 7.49, signalling strong ability to service debt obligations. This low leverage reduces financial risk and provides flexibility, a favourable trait in volatile market conditions.

Capital Efficiency and Taxation

The company’s sales to capital employed ratio averages 1.45, reflecting moderate capital turnover. While not exceptionally high, this ratio suggests reasonable efficiency in deploying capital to generate revenue. The tax ratio of 27.98% aligns with standard corporate tax rates, indicating no unusual tax burdens affecting net profitability.

Comparative Industry Positioning

Within the packaging sector, Shri Jagdamba Polymers’ quality rating now aligns with peers such as Everest Kanto and Sh. Rama Multilayer, both rated average. Competitors like Kanpur Plastipack and Shree Tirupati Balaji have been rated below average, while Bluegod Entertainment stands out with a good quality rating. This peer comparison highlights the company’s middling position in terms of business quality and operational consistency.

Stock Performance Relative to Sensex

Shri Jagdamba Polymers’ stock has underperformed the broader market over multiple time horizons. Year-to-date, the stock has declined 7.56%, compared to a 2.28% gain in the Sensex. Over one year, the stock fell 9.66%, while the Sensex gained 9.66%. Even over three and five years, the stock’s returns of 5.00% and 13.25% respectively lag behind the Sensex’s 35.81% and 59.83%. This underperformance reflects investor concerns about the company’s growth trajectory and risk profile.

Valuation and Price Volatility

The stock’s current price of ₹625.00 is near its 52-week low of ₹590.20, indicating recent selling pressure. The wide gap from its 52-week high of ₹1,279.95 suggests significant volatility and a loss of investor confidence. The day’s trading range between ₹609.00 and ₹643.95 further underscores short-term uncertainty.

Dividend and Shareholding Patterns

Shri Jagdamba Polymers currently has no pledged shares, which is a positive sign of promoter confidence and reduced risk of forced selling. Institutional holding is relatively low at 5.10%, indicating limited participation from large investors. The dividend payout ratio is not specified, which may suggest a conservative dividend policy or reinvestment focus.

Outlook and Investor Considerations

The downgrade in quality rating from good to average reflects a cautious stance on Shri Jagdamba Polymers’ future prospects. While the company boasts strong capital returns and a conservative debt profile, its subdued earnings growth and underwhelming stock performance relative to the Sensex raise concerns. Investors should weigh the company’s solid fundamentals against its growth limitations and market challenges.

Given the packaging sector’s competitive dynamics and evolving demand patterns, Shri Jagdamba Polymers will need to enhance operational efficiencies and accelerate earnings growth to regain investor confidence. Monitoring quarterly earnings, margin trends, and capital allocation decisions will be critical for assessing any potential recovery in quality and valuation.

Summary of Key Financial Metrics

To recap, Shri Jagdamba Polymers’ key averages over recent years include:

• Sales Growth (5 years): 13.03%
• EBIT Growth (5 years): 3.17%
• EBIT to Interest Coverage: 7.49
• Debt to EBITDA: 0.53
• Net Debt to Equity: 0.07
• Sales to Capital Employed: 1.45
• Tax Ratio: 27.98%
• ROCE: 23.97%
• ROE: 19.36%

These figures illustrate a company with solid capital efficiency and low leverage but facing challenges in translating sales growth into proportional earnings expansion.

Investors should consider these fundamentals alongside market conditions and sector trends before making allocation decisions.

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