SBEC Sugar Limited

Consumer Defensive — Confectioners · BSE

₹64.16−₹1.30 (−1.99%)

DalalBaazaar Score

44 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, short-term liabilities exceed short-term assets, negative free cash flow.

In simple words: Strong business and financial position, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

The 60-second version of SBEC Sugar Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

SBEC Sugar Limited, engages in the production of sugar and related by products in India. The company was incorporated in 1991 and is based in Baghpat, India.

IndustryConfectioners

SectorConsumer Defensive

Employees344

Annual revenue₹547 Cr

How does it make money?

Turns over ₹547 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹15 left at the operating level before interest, tax and depreciation. Each of its 344 employees supports ₹1.59 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin15.0%

Net margin3.4%

Revenue / employee₹1.59 Cr

Who are its competitors?

The closest listed comparisons in its industry are HINDUSTAN UNILEVER LTD., ITC LTD, NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

HINDUSTAN UNILEVER LTD.P/E 42.5x · ROE 21.5%

ITC LTDP/E 16.6x · ROE 27.4%

NESTLE INDIA LIMITEDP/E 59.8x · ROE 79.9%

BRITANNIA INDUSTRIES LTDP/E 44.1x · ROE 51.0%

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 24.3%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 11.1% against a peer median of 51.0% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE24.3%

ROE11.1%

Peer median ROE51.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -15% while net margin moved -309% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect-15%

Margin effect-309%

DalalBaazaar Score

44/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Debt/Equity of 1.63x is high — earnings must service borrowings before shareholders see anything
✗ Current ratio of 0.44 — short-term liabilities exceed short-term assets
✗ Free cash flow is negative — growth is being funded by borrowing or fresh equity
✗ Interest cover of only 1.4x — little room if profits dip
✗ Debt has grown 33.8% a year — worth checking what it bought

Quality vs. Valuation

Company Quality

43/ 100

Weak

How good the business is, ignoring the share price entirely.

Valuation

66/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

5.7x

1.3Y Median

3.3x

16 monthly readings · mean 6.9x · range 2.9x–17.8x

Sector Median

43.3x

median of 4 sector peers

⚠️Current valuation is approximately 73% above its 1.3y median of 3.3x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 87% below the peer median of 43.3x.

vs. its own history

Expensive

3.3x median over 16 months · +73%

vs. sector peers

Cheap

43.3x median of 4 peers · -87%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

5.7x

P/B

1.83x

EV/EBITDA

7.0x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 4.8% to 15.0% over 3 years.
High return on capital employed
ROCE of 24.3% is the mark of a business that converts capital into profit efficiently.

🔴 What Needs Attention6

Debt is rising
Total debt is up 139% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on capital is falling
ROCE has declined from 31.7% to 24.3% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 51% against revenue growth of -15% — customers are taking longer to pay.
Valuation above its historical average
At 5.7x the stock trades 73% above its own median of 3.3x.
Short-term liquidity is tight
Current ratio of 0.44 — near-term obligations exceed near-term assets.

Red Flags

7 items require attention · 4 high · 3 watch

🔴Debt has risen sharplyFinancial
Total debt is up 139% over 3 years, from ₹114 Cr to ₹273 Cr.
🔴High leverageFinancial
Debt/Equity of 1.63x — earnings must service borrowings before shareholders see anything.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.4x — little room if earnings dip.
🔴Receivables growing faster than salesFinancial
Receivables up 51% against revenue up -15% — sales are being booked faster than they are collected.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 2.3x to 1.4x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹29 Cr in the latest year.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.44 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 24.3% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 4.8% to 15.0%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 87% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 3.3x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 51% against revenue up -15%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
The price already assumes success
The stock trades 73% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 13%✓ 15.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.3x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹29 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.4x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 21%✓ 24.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✗ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

3 good · 4 neutral · 4 weak

Market Cap

₹306 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

5.7x

Cheap

Cheap against the generic band

P/B Ratio

1.83x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹11.3

Profitable

Profitable on a per-share basis

ROE

11.1%

Moderate

Moderate capital efficiency

ROCE

24.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.63x

High

High leverage

Revenue Growth (YoY)

-17.4%

Shrinking

Sales are contracting

Profit Growth (YoY)

-61.2%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹29 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹64.16

Operating Margin

4.5%

Weak

Thin margins leave little room for error

Net Margin

10.2%

Good

Strong bottom-line conversion

Current Ratio

0.44

Tight

Tight short-term liquidity

Beta (vs Nifty)

-0.37

Defensive

Steadier than the market

52W Range Position

60%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

69.5 / 67.6

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

40.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹643 Cr	₹653 Cr	₹629 Cr	₹547 Cr	-5.2%
EBITDA	₹31 Cr	₹46 Cr	₹107 Cr	₹82 Cr	+38.4%
EBITDA Margin	4.8%	7.0%	17.0%	15.0%	—
PAT (Net Profit)	-₹10 Cr	-₹12 Cr	₹48 Cr	₹19 Cr	—
EPS	₹-2.2	₹-0.69	₹10.09	₹3.91	—
ROE	—	—	33.6%	11.1%	—
ROCE	31.7%	106.8%	37.8%	24.3%	—
Total Debt	₹114 Cr	₹232 Cr	₹202 Cr	₹273 Cr	+33.8%
Free Cash Flow	₹54 Cr	-₹58 Cr	₹68 Cr	-₹29 Cr	—

🔴 Revenue has shrunk at 5.2% a year over 3 years.

🟢 EBITDA has grown at 38.4% a year over 3 years.

🟢 EBITDA Margin has risen from 4.8% to 15.0% over 3 years (+10.2 pts).

🟢 PAT (Net Profit) has turned positive, from -₹10 Cr to ₹19 Cr.

🟢 EPS has turned positive, from ₹-2.2 to ₹3.91.

🔴 ROE has fallen from 33.6% to 11.1% over 3 years (-22.4 pts).

🔴 ROCE has fallen from 31.7% to 24.3% over 3 years (-7.4 pts).

🔴 Total Debt has grown at 33.8% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹54 Cr to -₹29 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹904 Cr

Total Liabilities

₹737 Cr

Total Debt

₹273 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

-₹27 Cr

Capex

-₹2 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

82.3%

Peer Comparison

Company	P/E	ROE
HINDUSTAN UNILEVER LTD.	42.5x	21.5%
ITC LTD	16.6x	27.4%
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%

Recent News

1 mixed5 general

SBEC Sugar Ltd. Lower Circuit Today: Price, Data and Peers

Univest, 29 Sept

SBEC Sugar closes trading window ahead of Q2FY27 results

scanx.trade, 25 SeptResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

SBEC Sugar Ltd. Peer Comparison – Compare with Others

Value Research, 30 Aug

Sugar stocks gain up to 5% on E22-E30 petrol duty waiver; check top picks

Business Standard, 11 Jun

Dwarikesh Sugar to Balrampur Chini: What’s behind an up to 10% surge in sugar stocks today? Explained

Livemint, 10 Nov

SBEC Sugar secures ₹100 Cr unsecured loan from Longwell Investment

scanx.trade, 19 Jun

Watch Items

Revenue growth is negative (-17.4%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate12.6/20

🔴Financial HealthStretched4.5/20

🔴GrowthWeak5/20

🟢ProfitabilityStrong9.9/15

🟡ValuationFair8.4/15

🔴RiskHigh3.7/10

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 4 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 13%15.0%
✗Debt / EBITDA falls below 3x3.3x
✗Free cash flow remains positive-₹29 Cr
✗Interest cover stays above 3x1.4x
✓ROCE stays above 21%24.3%