At a Glance
Divyashakti Ltd—the company turning rocks into export revenue—just posted Q1 FY26 numbers that looked surprisingly shiny on the profit front. Revenue stood at ₹14.8 Cr (↓21% YoY), but net profit surged 280% YoY to ₹0.95 Cr, riding on better margins and other income. Stock rallied 6.6% to ₹67.5, still trading at a laughably low 0.36x book value, because the market thinks granite is as exciting as watching cement dry. However, ROE and ROCE are near geological levels (1.6% and 2.1% respectively). Investors cheer the profit pop, but this remains a high-debtor, low-growth story with a sweet dividend yield of 3%.
Introduction
Divyashakti Ltd is not your average glamour stock. It doesn’t make EV batteries, AI chips, or rocket parts—it makes granite slabs, quartz tiles, and monuments. Think of it as the strong, silent type: a company that ships shiny stones abroad while staying under the market’s radar.
But here’s the paradox: despite delivering almost no sales growth in the past decade, the company maintains a cult-like dividend policy (65% payout!) and virtually no debt. The problem? Pathetic returns on equity, crazy 658-day debtor cycles, and margins that fluctuate like a politician’s promises. Q1 FY26 was a rare case where profits rose while sales fell—blame it on other income and cost control.
Business Model (WTF Do They Even Do?)
The business is straightforward—quarry, cut, polish, and export granite & quartz slabs. They cater to global markets, particularly the US and EU, where Indian granite has strong demand. Divyashakti’s products are used in countertops, flooring, and monuments.
Export-driven revenue means forex plays a role, but the business is low margin, high debtor, and seasonal based on construction trends abroad. The company is almost debt-free, which is nice, but capital is tied up in receivables like a hostage situation. Bottom line: a simple business with geological patience required.
Financials Overview
Brace for numbers that could put an auditor to sleep:
- Q1 FY26 Revenue: ₹14.81 Cr (↓21% YoY)
- Operating Profit: ₹1.62 Cr (margin 11%)
- Net Profit: ₹0.95 Cr (↑280% YoY)
- EPS (Q1): ₹0.93
TTM EPS: ₹3.16
Fresh P/E Calculation: ₹67.5 / (₹0.93×4 = ₹3.7) ≈ P/E ~18.2 (vs Screener’s 21.5)
Commentary: Revenue erosion continues, but profit improved on cost cuts. High P/E for a slow-growth rock seller? That’s the irony.
Valuation
Let’s drag the numbers through three methods:
- P/E Method:
- Peer avg P/E ~15
- Applying 10–12 (due to stagnant growth) on EPS ₹3.5 → Fair Value: ₹35–₹42
- EV/EBITDA Method:
- TTM EBITDA ₹2.97 Cr, EV/EBITDA peer ~7x → EV ₹21 Cr → Fair Value ~₹40
- DCF (Quick & Dirty):
- Assuming 2% growth, 12% discount → Fair Value ~₹40
Fair Value Range: ₹35–₹45 (stock at ₹67 is overvalued based on fundamentals).
What’s Cooking – News, Triggers, Drama
- Dividend Heroics: 65% payout continues—investors love the cash even if profits are pebbles.
- Exports: Any uptick in global construction or forex tailwind can help.
- Risks: Slow demand, debtor delays, and fluctuating margins.
- Buzz: None—this is as sleepy as a quarry at night.
Balance Sheet
| (₹ Cr) | Mar 2025 |
|---|---|
| Assets | 220.8 |
| Liabilities | 23.0 |
| Net Worth | 197.8 |
| Borrowings | 1.9 |
Auditor Remark: Clean sheet, no debt. But working capital is trapped in debtors longer than your Netflix watchlist backlog.
Cash Flow – Sab Number Game Hai
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Operating CF | -9.0 | -1.5 | -3.7 |
| Investing CF | 7.1 | 1.1 | 0.7 |
| Financing CF | -2.2 | 2.0 | -4.5 |
Remarks: Cash flows are negative in ops—profits are bookish, cash is missing. Classic quarry cash crunch.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 1.6% |
| ROCE | 2.1% |
| P/E | 18.2 |
| PAT Margin | 4.4% |
| D/E | 0.01 |
Remarks: Ratios are about as sexy as a rock. P/E suggests market optimism, but ROE/ROCE scream stress.
P&L Breakdown – Show Me the Money
| (₹ Cr) | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 75.5 | 69.8 | 63.9 |
| EBITDA | 5.6 | 3.0 | 1.5 |
| PAT | 7.8 | 2.3 | 2.5 |
Remarks: Revenue shrinking, margins shrinking, profits barely alive.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Ramco Industries | 1,659 | 181 | 13.9 |
| Vishnusurya Proj. | 271 | 29 | 15.0 |
| Divyashakti | 68 | 3.2 | 18.2 |
Remarks: Divyashakti trades at a premium P/E despite tiny profits and low growth—market clearly overpays for patience.
Miscellaneous – Shareholding, Promoters
- Promoters: 73.20% – strong control
- Public: 26.80% – retail hopefuls
- FIIs/DIIs: None worth mentioning
Promoters maintain control, but there’s no buzz of strategic partnerships or acquisitions.
EduInvesting Verdict™
Divyashakti Ltd is a classic micro-cap rock business—steady, dividend-paying, but painfully slow-growing. Q1 FY26 profits looked good, but this was a blip driven by other income and cost control. Fundamentally, the company struggles with growth, cash flows, and low returns on equity.
Past performance? Sales flat for a decade, profits inconsistent, ROE low.
Upcoming tailwinds? Global demand recovery, forex gains, new quartz product lines.
Headwinds? High debtor cycle, low growth, limited scalability.
SWOT Analysis
- Strengths: Debt-free, export presence, high dividend yield.
- Weaknesses: Low ROE/ROCE, negative cash flow, stagnant sales.
- Opportunities: Export diversification, premium granite/quartz niches.
- Threats: Global slowdown, debtor risk, margin pressure.
Final Word: A safe but stagnant stock. Dividend lovers may hold, growth hunters should look elsewhere—because waiting for this one to rally is like waiting for rocks to dance.
Written by EduInvesting Team | 01 Aug 2025SEO Tags: Divyashakti Ltd, Granite Export, Construction Materials, Q1 FY26 Results
