Tirupati Starch & Chemicals Ltd – Equity Note with PEG-based Perspective

(Price and data updated up to 1 July 2026; all INR)

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1. Company & Industry Overview

Tirupati Starch & Chemicals Ltd (BSE: 524582) manufactures maize-based starch and derivatives such as maize starch powder, dextrose anhydrous/monohydrate, liquid glucose, dextrin, and several by-products like maize bran, cattle feed, germ and gluten. (screener.in)

It operates in a cyclical, commodity-linked segment where profitability is driven by:

- Maize (corn) price volatility

- Industrial demand from paper, textiles, food, pharma and adhesives

- Level of value-addition versus basic commodity starch

- Working-capital intensity and leverage

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2. Recent Financial Performance (FY22–FY26)

Consolidated financials (StockAnalysis, millions INR, fiscal year April–March): (stockanalysis.com)

Revenue and margins

- Revenue grew from ~₹320 crore in FY22 to ~₹366 crore in FY26 (3–4% CAGR), but with notable volatility:

- FY22: ₹3,199m

- FY23: ₹3,648m

- FY24: ₹3,065m

- FY25: ₹3,902m

- FY26: ₹3,660m

- Gross margin has been broadly stable (≈27–30%).

- EBITDA margin improved marginally to ~7.5% in FY26 (7.5% in FY26 vs ~5.9–6.8% in earlier years).

- Net profit margin remains thin and volatile (0.7–2.6%), reflecting high interest cost and limited pricing power.

Profitability and EPS

Net profit and EPS (basic) over FY22–FY26: (stockanalysis.com)

- Net profit (₹ crore approx.): 8.26 (FY22), 6.57 (FY23), 2.20 (FY24), 7.53 (FY25), 6.46 (FY26)

- EPS (₹): 11.80 (FY22), 9.00 (FY23), 2.52 (FY24), 7.85 (FY25), 6.86 (FY26)

Observations:

- Over the last four years (FY22–FY26), EPS CAGR is negative (EPS fell from 11.8 to 6.86).

- FY24 was a weak year (EPS collapse to 2.52), followed by a sharp rebound (EPS 7.85 in FY25), then a decline again in FY26 (6.86, -12.6% YoY).

- This pattern underlines earnings cyclicality rather than consistent structural growth.

Quarterly trend (recent)

Groww and Screener show, for the last few reported quarters (Dec’24–Dec’25): (screener.in)

- Quarterly revenue mostly in the ₹90–100 crore range.

- Quarterly EPS fluctuating between almost zero and ~₹7–8 per share, indicating quarter-to-quarter volatility.

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3. Balance Sheet and Return Metrics

From Screener (consolidated, ₹ crore): (screener.in)

- Net worth (equity + reserves, Mar 2025): ~₹63 crore (Equity 10, Reserves 51).

- Borrowings (Mar 2025): ~₹136 crore.

- Debt-to-equity: ~2.1–2.2x – meaning the business is leveraged.

- ROE (last year): ~13%; ROCE: ~10%.

Implications:

- Leverage magnifies returns in good years but also increases sensitivity to downturns and interest-rate cycles.

- Mid-teens ROE with >2x leverage suggests underlying core returns are modest once leverage is adjusted for.

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4. Valuation – P/E and PEG Analysis

4.1 Current valuation snapshot

Key inputs (latest available):

- Share price: ₹120.70 (close on 1 July 2026, StockAnalysis) (stockanalysis.com)

- EPS (FY26, basic): ₹6.86 (year ended 31 March 2026) (stockanalysis.com)

From these:

- Trailing P/E (FY26) ≈ 120.7 / 6.86 ≈ 17.6x

For reference, Screener (at an earlier date, 13 Feb 2026) showed: (screener.in)

- Price: ₹160

- Stock P/E: 14.5x

- Book value per share: ~₹65.1

Due to price correction since February, the P/E based on the latest price and FY26 EPS is now ~17.6x (lower price but also lower EPS vs earlier TTM).

4.2 PEG ratio – framework

PEG = (P/E) / (Expected EPS growth rate, %)

- A rule-of-thumb:

- PEG < 1: often considered “cheap vs growth”

- PEG ~1–1.5: broadly “fair”

- PEG > 1.5: often “expensive vs growth”

- For Tirupati Starch there are no published broker growth estimates publicly visible; hence growth assumptions must be derived from past trends and treated as illustrative only, not forecasts or advice.

Historical context for growth:

- Revenue FY22–FY26 CAGR: ~3–4% (low single-digit top-line growth). (stockanalysis.com)

- EPS over same period: negative CAGR with high volatility; EPS in FY26 is ~42% lower than FY22 (6.86 vs 11.80). (stockanalysis.com)

Given this, a conservative, “mid-cycle” EPS growth assumption would likely be in the 5–10% range, unless there is a clear structural driver that is not visible in current numbers.

4.3 PEG under different growth assumptions (illustrative)

Using:

- Price = ₹120.70

- EPS(FY26) = ₹6.86

- P/E ≈ 17.6x

Illustrative 5-year EPS growth assumptions and resulting PEG:

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\*Interpretation is purely illustrative and based on generic PEG rules-of-thumb, not a recommendation.

Key takeaway from PEG:

- Given historical revenue growth (~3–4%) and negative EPS CAGR over FY22–26, assuming 15–20% sustainable EPS growth would require a clear, credible growth driver (capacity expansion, margin structurally higher, stronger product mix, etc.), which is not yet obvious from reported numbers alone. (stockanalysis.com)

- Under more conservative 5–10% EPS growth, the PEG ratio remains >1.5, indicating that on a PEG basis the stock looks fully valued to expensive relative to its historical growth profile.

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5. Qualitative Positives and Risks

Positives

- Established player in maize starch and derivatives with a reasonably diversified product basket. (screener.in)

- EBITDA margins have improved somewhat in recent years (towards ~7–8%). (stockanalysis.com)

- ROE in low double digits despite a small-cap base, helped by leverage. (screener.in)

Risks / Concerns

- High earnings volatility – EPS swing between very low and moderate levels year to year; low visibility on stable compounding. (stockanalysis.com)

- Leverage – D/E around 2x; interest costs meaningfully eat into thin operating margins. (screener.in)

- Commodity & cycle exposure – Sensitive to maize prices and industrial demand cycles; margins can compress quickly.

- Thin net margins (mostly <3%) leave little room for error. (stockanalysis.com)

- Limited evidence (from published numbers) of strong, sustained top-line or EPS compounding so far.

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6. Overall PEG-based View (Analytical, Not Advice)

- At the latest available price (~₹120.70) and FY26 EPS (₹6.86), Tirupati Starch trades at ~17.6x trailing earnings. (stockanalysis.com)

- Historically, the business has delivered low single-digit revenue growth and volatile, non-compounding EPS over FY22–26.

- On PEG:

- If one assumes only 5–10% EPS growth, PEG in the 1.8–3.5 range suggests the stock is not cheap relative to its growth profile.

- The stock would start to look attractive on a PEG basis only if you can justify sustained 15–20% EPS CAGR, which would require a significant and durable uplift in margins and/or volume growth versus history.

This analysis is illustrative and based solely on publicly available numbers and generic PEG rules-of-thumb. It is not a buy/sell/hold recommendation. Any investment decision should factor in your risk profile, time horizon, position sizing, and additional qualitative due diligence (management track record, capacity plans, customer concentration, detailed credit rating notes, etc.).

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