Spectrum Foods Limited

Consumer Defensive — Packaged Foods · BSE

₹19.50+₹0.65 (+3.45%)

DalalBaazaar Score

44 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by negative free cash flow, micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:45 pm

Understanding the Business

Company site ↗

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

What does this company do?

Spectrum Foods Limited manufactures and sells spices and industrial and edible salts in India.

IndustryPackaged Foods

SectorConsumer Defensive

Annual revenue₹28 Cr

How does it make money?

Turns over ₹28 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹4 left at the operating level before interest, tax and depreciation.

Who are its competitors?

The closest listed comparisons in its industry are NESTLE INDIA LIMITED, BRITANNIA INDUSTRIES LTD, TATA CONSUMER PRODUCT LTD, DABUR INDIA LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 0.9% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

Peer median ROE51.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +77% while net margin moved -58% 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+77%

Margin effect-58%

DalalBaazaar Score

44/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of 0.9% is below 10% — capital is not working hard
✗ ROCE has fallen by 40.9 points — returns are eroding
✗ EBITDA margin of 4.4% is thin — little cushion if costs rise
✗ Net margin of 2.6% is slim
• Revenue has compounded at 20.9% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

42/ 100

Weak

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

Valuation

48/ 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

59.1x

3Y Median

63.4x

40 monthly readings · mean 67.6x · range 8.7x–199.8x

Sector Median

51.7x

median of 4 sector peers

🟡Currently trading close to its 3y median of 63.4x — the market is paying about what it usually pays for this company.

🟡Against its sector it is priced broadly in line with the peer median of 51.7x.

vs. its own history

Fair

63.4x median over 40 months · -7%

vs. sector peers

Fair

51.7x median of 4 peers · +14%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

50.4x

PEG

1.83

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 41.8% to 0.9% — often a sign of competition or overexpansion.

Red Flags

7 items require attention · 3 high · 4 watch

🔴Debt has risen sharplyFinancial
Total debt is up 1205% over 3 years, from ₹1 Cr to ₹15 Cr.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 9.7 points, from 14.2% to 4.4%.
🔴Receivables growing faster than salesFinancial
Receivables up 230% against revenue up 77% — sales are being booked faster than they are collected.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 44.3x to 2.7x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹23 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 25% over 3 years.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 110% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 14.2% to 4.4%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 12.3x 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 230% against revenue up 77%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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

1Revenue growth stays above 16% a year✓ 20.9% CAGR
Latest reported year was 24.7%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 2%✓ 4.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 12.3x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹23 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 2.7x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

6 / 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

5 good · 2 neutral · 4 weak

Market Cap

₹47 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

59.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

1.16x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.33

Profitable

Profitable on a per-share basis

ROE

0.7%

Weak

Weak capital efficiency

ROCE

0.9%

Weak

Low return on total capital employed

Debt/Equity

0.38x

Low

Conservative leverage

Revenue Growth (YoY)

24.7%

Healthy

Healthy top-line growth

Profit Growth (YoY)

32.3%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

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

Free Cash Flow

-₹23 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

23.5%

Good

Healthy core-business profitability

Net Margin

2.6%

Weak

Very little revenue reaches the bottom line

Current Ratio

6.40

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.09

Defensive

Steadier than the market

52W Range Position

88%

Near high

Near its 52-week high

Technical Snapshot

SMA 20 / SMA 50

18.9 / 17.8

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

47.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹16 Cr	₹22 Cr	₹22 Cr	₹28 Cr	+20.9%
EBITDA	₹2 Cr	₹3 Cr	₹1 Cr	₹1 Cr	-17.9%
EBITDA Margin	14.2%	14.0%	3.9%	4.4%	—
PAT (Net Profit)	₹0 Cr	₹1 Cr	₹0 Cr	₹0 Cr	-9.2%
EPS	₹0.33	₹2.74	₹0.26	—	—
ROE	—	100.6%	0.3%	0.7%	—
ROCE	41.8%	56.9%	0.3%	0.9%	—
Total Debt	₹1 Cr	₹2 Cr	₹1 Cr	₹15 Cr	+135.4%
Free Cash Flow	₹9 Cr	₹1 Cr	-₹32 Cr	-₹23 Cr	—

🟢 Revenue has grown at 20.9% a year over 3 years.

🔴 EBITDA has shrunk at 17.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 14.2% to 4.4% over 3 years (-9.7 pts).

🔴 PAT (Net Profit) has shrunk at 9.2% a year over 3 years.

🔴 ROE has fallen from 100.6% to 0.7% over 3 years (-99.9 pts).

🔴 ROCE has fallen from 41.8% to 0.9% over 3 years (-40.9 pts).

🔴 Total Debt has grown at 135.4% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹9 Cr to -₹23 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹61 Cr

Total Liabilities

₹20 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹8 Cr

Capex

-₹15 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

58.9%

Peer Comparison

Company	P/E	ROE
NESTLE INDIA LIMITED	59.8x	79.9%
BRITANNIA INDUSTRIES LTD	44.1x	51.0%
TATA CONSUMER PRODUCT LTD	59.3x	7.5%
DABUR INDIA LTD	34.7x	17.2%

Recent News

1 mixed5 general

Spectrum Foods closes trading window ahead of Q2FY27 results

scanx.trade, 26 SeptResults

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

Spectrum Foods Ltd Valuation Shifts Amidst Market Outperformance

MarketsMojo, 08 Oct

Spectrum Foods Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 31 Aug

Global food price surge adds to India’s inflation challenge

AgroSpectrum India, 15 Oct

Spectrum Foods concludes 32nd AGM, approves related party transactions

scanx.trade, 29 Sept

13 penny stocks surge up to 260% in just 3 months; 2 turn multibaggers. Did you own any?

The Economic Times, 05 Jul

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

MiddlingFinancial Health · Growth · Valuation

WeakBusiness Quality · Profitability · Risk

Points for each in the Score ↑

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. 3 high-severity red flags sit above this conclusion and should be read first.

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive; Interest cover stays above 3x · see Key things to watch ↑