SJVN Ltd. Reports Flat Quarterly Performance Amid Margin Pressures and Rising Debt

Quarterly Financial Performance: A Mixed Bag

The latest quarter saw SJVN Ltd. achieve its highest-ever net sales at ₹1,081.97 crores, marking a significant milestone for the company. Profit after tax (PAT) surged by 50.6% to ₹224.38 crores, reflecting operational efficiencies and improved revenue realisation. Additionally, profit before tax excluding other income (PBT less OI) reached a peak of ₹378.50 crores, underscoring robust core earnings.

These figures contributed to a notable improvement in the company’s financial trend score, which rose from a negative -19 three months ago to a flat 1 in the current quarter. This shift indicates that while the company has halted its decline, it has yet to return to a growth trajectory.

Challenges Persist Despite Revenue Growth

However, the positive top-line and bottom-line growth are tempered by several concerning financial metrics. Interest expenses for the latest six months ballooned by 49.12% to ₹559.75 crores, reflecting increased borrowing costs or higher debt levels. This rise in interest burden is a critical factor pressuring profitability and cash flows.

Return on capital employed (ROCE) for the half-year period hit a low of 4.08%, signalling suboptimal utilisation of capital resources. This is particularly worrisome given the company’s elevated debt-equity ratio of 2.03 times, the highest recorded in recent periods, which raises questions about financial leverage and risk.

Moreover, cash and cash equivalents dropped to ₹3,058.07 crores, the lowest in recent history, potentially limiting liquidity buffers. The debtors turnover ratio also declined to 3.13 times, indicating slower collection cycles and potential working capital inefficiencies.

Stock Price Movement and Market Context

SJVN’s stock price closed at ₹77.29 on 12 Feb 2026, up 6.17% from the previous close of ₹72.80. The intraday range was ₹71.92 to ₹78.48, reflecting heightened volatility. Despite this recent uptick, the stock remains well below its 52-week high of ₹107.50, indicating room for recovery.

Comparing returns with the broader Sensex index reveals a mixed performance. Over the past week, SJVN outperformed the Sensex with a 4.47% gain versus 0.50% for the benchmark. Year-to-date, the stock is up 3.36%, while the Sensex has declined by 1.16%. However, over the last year, SJVN has underperformed significantly, falling 15.11% compared to the Sensex’s 10.41% rise.

Longer-term returns paint a more favourable picture for SJVN. Over three and five years, the stock has delivered impressive gains of 138.92% and 192.21% respectively, far outpacing the Sensex’s 38.81% and 63.46% returns. This suggests that while short-term challenges persist, the company has historically rewarded patient investors.

Mojo Score and Analyst Ratings

MarketsMOJO currently assigns SJVN a Mojo Score of 35.0, categorising it as a ‘Sell’ with a recent upgrade from a ‘Strong Sell’ rating on 6 Nov 2024. The market cap grade stands at 2, reflecting moderate size and liquidity considerations. This rating upgrade aligns with the company’s stabilising financial trend but also acknowledges ongoing risks from leverage and operational metrics.

Investors should weigh the improved quarterly earnings against the elevated debt levels and declining efficiency ratios before making allocation decisions. The flat financial trend suggests a cautious stance until clearer signs of sustained growth emerge.

Outlook and Investor Considerations

Looking ahead, SJVN’s ability to manage its debt profile and improve capital efficiency will be critical to reversing its flat financial trend. The company’s power generation assets remain strategically important in India’s energy mix, offering long-term growth potential amid rising demand for clean energy.

However, investors should remain vigilant about the company’s interest burden and liquidity position, which could constrain future expansion or dividend payouts. The current ROCE of 4.08% is well below industry averages, signalling the need for operational improvements.

Given the mixed signals, a balanced approach is advisable. Investors with a higher risk appetite may view the recent earnings growth as a positive inflection point, while more conservative investors might prefer to monitor further quarterly results before increasing exposure.

In summary, SJVN Ltd.’s latest quarterly results mark a stabilisation after a period of decline, with record sales and profit growth offset by rising costs and leverage concerns. The company’s long-term track record remains strong, but near-term challenges warrant a cautious stance.

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