At a Glance
Shanthala FMCG is a low-profile distributor of everyday FMCG goods — from agarbattis and biscuits to Sunpure oil and ITC soaps. It went public in 2023 with a ₹79 high and now trades under ₹30. The problem? Margins thinner than Lay’s wafers and a net profit that can’t buy a half-decent TV spot.
1. 📦 Business Model – “FMCG ke Thekedaar”
They aren’t making products — just distributing 450+ FMCG SKUs through a 750+ retailer network. Key categories:
- Packaged foods
- Personal care
- Stationery (yes, notebooks still exist)
- Tobacco & agarbatti (diversity goals ✅)
- Distribution partners include ITC and Sunpure
🧠 Edu POV: Think of them as your city’s top FMCG stockist — but now publicly listed, without pricing power.
2. 📊 Financials – Steady Growth, But Barely Any Profit
| Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
|---|---|---|---|---|---|
| Revenue (₹ Cr) | 39.3 | 32.3 | 40.5 | 41.3 | 52.8 |
| PAT (₹ Cr) | 0.14 | 0.05 | 0.18 | 0.29 | 0.97 |
| EPS (₹) | 28.0 | 10.0 | 3.6 | 0.43 | 1.45 |
| OPM (%) | 1.0% | 0.6% | 1.1% | 0.2% | 0.6% |
| ROE | – | – | ~4% | 4.0% | 4.4% |
📈 Revenue up 28% YoY
💸 Profit up 234% YoY (sounds sexy… until you realize it’s just ₹97 lakhs)
💀 Operating margins still stuck below 1%
🧾 Other income = ₹1.03 Cr → more than core profit
3. ⚠️ Business Reality Check
- OPM of 0.64% = YouTube ads have better margins
- Working capital improving (161 days → 37 days), but cash from ops is still negative most years
- FY24 & FY25 saw no dividend payout, despite being “profitable”
📉 Stock is down 59% from peak
📦 Almost zero pricing power – all brand leverage is with ITC & Sunpure
🏥 Chairman hospitalized in June 2025 — ops now handled by CFO/Director
4. 📊 Valuation – Cheap? Or Just Not Worth More?
| Metric | Value |
|---|---|
| CMP | ₹29.4 |
| FY25 EPS | ₹1.45 |
| P/E | 20.3x |
| Book Value | ₹33.9 |
| CMP/BV | 0.87x (undervalued on surface) |
Edu Fair Value Estimate:
| Scenario | P/E | Fair Value |
|---|---|---|
| Pessimistic (Low growth, flat margins) | 12x | ₹17 |
| Neutral (Stabilize at current profits) | 18x | ₹26 |
| Optimistic (ROE > 8%, margin > 1%) | 25x | ₹36 |
🎯 Edu FV Range: ₹17 – ₹36
➡️ CMP of ₹29.4 = fairly priced only if margins improve significantly
5. 🧿 Peer Comparison – Goliaths vs This David
| Company | EPS | OPM | ROE | P/E | Mcap |
|---|---|---|---|---|---|
| Godfrey Phillips | ₹293 | 21% | 24% | 37x | ₹43,000 Cr |
| VST Industries | ₹53 | 20% | 16% | 23x | ₹4,945 Cr |
| Shanthala FMCG | ₹1.45 | 0.64% | 4.4% | 20x | ₹20 Cr |
📌 Crayons might be colorful. Shanthala? Transparent margins.
📌 It has the lowest scale, lowest profitability, and lowest brand control.
6. 🚩 Red Flags
- 🧾 FY25 profit includes ~₹1 Cr in other income (vs ₹0.97 Cr PAT)
- ⚠️ No dividend history, despite years of operations
- 🪫 OPM of 0.6% = business runs on volume, not value
- 🏥 Chairman health concerns + promoter-dependent ops
- 🧮 P/E of 20x makes no sense without margin expansion
7. 🧠 EduInvesting Verdict: “Small Cap, Smaller Margins”
Shanthala is not a fraud. It’s a boring but real business — distributing goods to small stores in Tier 2/3 India. But:
- This is not a multibagger unless OPM > 2%
- They are middlemen, not brand owners
- Market cap is < ₹20 Cr — means no liquidity, no FII/DII interest, no exit
Unless they crack D2C or retail expansion, this remains a low-risk, low-reward penny play. It’s not broken — just… dull.
Tags:
shanthala fmcg, fmcg distributor sme, sme ipo review, low margin fmcg, nse shanthala, microcap analysis, eduinvesting
✍️ Written by Prashant | 📅 26 June 2025
