RENUKA - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 1.6

📊 Financials: Renuka has a market cap of ₹5,453 Cr. Current price is ₹25.6 with a 52-week high/low of ₹41.3/₹24.7. PAT this quarter is -319 Cr vs -215 Cr in the previous quarter, showing worsening losses. ROCE at 9.99% reflects modest efficiency, while ROE is negative due to losses. Book value is -₹4.35, indicating erosion of net worth. Debt-to-equity ratio not disclosed but implied stress from negative equity.

💹 Valuation: Stock P/E is not meaningful due to negative earnings. P/B ratio cannot be applied with negative book value. EPS is -₹3.17, highlighting continued losses. PEG ratio unavailable. Industry PE is 12.4, but Renuka’s losses make comparison irrelevant. Dividend yield is 0.00%, offering no shareholder return.

🏭 Business Model: Renuka operates in sugar and ethanol production. Competitive advantage lies in scale and integrated operations, but profitability is under pressure due to cyclical commodity prices, high debt, and weak margins. Business model is consumption-driven but vulnerable to global sugar price volatility and regulatory changes.

📈 Entry Zone: Technically, DMA 50 (₹28.0) and DMA 200 (₹31.2) are above current price, showing bearish trend. Entry is favorable only near ₹24–₹26 if signs of turnaround emerge. Current RSI at 46.1 indicates neutral momentum.

🕰️ Long-Term Holding: Loss-making status, negative book value, and weak fundamentals limit attractiveness for long-term compounding. Investors should avoid fresh entry until profitability stabilizes and balance sheet improves.

Positive

• ✅ Large-scale operations in sugar and ethanol
• ✅ FII holding increased (+0.12%)
• ✅ Strong trading volumes (5.2M vs avg 2.7M)

Limitation

• ⚠️ Negative PAT (-319 Cr)
• ⚠️ Negative EPS (-₹3.17)
• ⚠️ Negative book value (-₹4.35)
• ⚠️ No dividend yield (0.00%)

Company Negative News

• 📉 DII holding reduced (-0.05%)
• 📉 Quarterly losses worsening (PAT -215 Cr → -319 Cr)
• 📉 Quarterly profit variation (-1,670%)

Company Positive News

• 📈 FII inflows (+0.12%)
• 📈 Potential ethanol blending demand support

Industry

• 🏭 Sugar industry PE at 12.4 highlights fair sector valuation
• 🏭 Sector supported by ethanol blending policies and consumption demand

Conclusion

🔎 Renuka is fundamentally weak with losses, negative book value, and poor return ratios. Despite scale and ethanol potential, valuations remain unjustified. Entry zone lies near ₹24–₹26 only for speculative traders. Long-term investors should avoid until profitability stabilizes and balance sheet strengthens.

Would you like me to extend this with a peer benchmarking overlay comparing Renuka against other sugar and ethanol producers, or a sector scan to highlight stronger consumption-driven companies in the agro-commodity space?