Megastar Foods Ltd. (MEGASTAR) AI Stock Analysis

• Market Cap: ₹2.70B
• Dividend Yield: N/A
• Average Volume (3M): 4.35K
• Price to Earnings (P/E): 21.2
• Beta (1Y): 0.82
• Revenue Growth: 62.82%
• EPS Growth: 27.59%
• Country: IN
• Employees: 181
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Packaged Foods
• EPS (TTM): 2.71
• Shares Outstanding: 11,293,700
• 10 Day Avg. Volume: 147
• 30 Day Avg. Volume: 4,346
• PEG Ratio: -1.28
• Price to Book (P/B): 2.37
• Price to Sales (P/S): 0.61
• P/FCF Ratio: -3.69
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 64 Neutral
• Price Target: ₹241.00 ▲(6.87% Upside)
• Action: Reiterated Date: 11/21/25
• Date: Action: Reiterated 11/21/25

Megastar Foods Ltd. benefits from strong revenue growth and positive technical indicators, but faces significant challenges with profitability, cash flow, and valuation. The high P/E ratio and negative cash flow metrics are key concerns, necessitating careful financial management to sustain growth.

Positive Factors

Revenue Growth

A 68% revenue increase indicates durable demand and successful commercial execution. Sustained top-line expansion supports scale economics, channel leverage, and reinvestment capacity over the next several quarters, enabling longer-term product distribution and market share gains.

Improving Gross and EBIT Margins

Rising gross margin and a double-digit EBIT margin reflect better cost management and operating efficiency. These structural margin improvements can translate into more sustainable operating cash generation as volumes scale, supporting reinvestment and competitive pricing flexibility.

Balanced Equity Base and Positive ROE

An equity ratio near 40% shows a balanced mix of financing, providing a cushion against asset shocks. A positive ROE, albeit modest, signals the business earns returns on shareholder capital, which supports gradual capital accumulation and resilience through normal industry cycles.

Negative Factors

Negative Operating Cash Flow

Negative operating cash flow implies core operations are not generating sufficient cash to fund working capital or capex. Over months this erodes liquidity, forces reliance on external financing, and increases execution risk for growth initiatives and supplier relationships.

Rising Leverage

A D/E ratio of 1.41 shows growing reliance on debt financing. Higher leverage raises fixed interest obligations and tightens financial flexibility; if cash generation remains weak, servicing debt could constrain investments and elevate solvency risk over the medium term.

Weak Net Profitability and Negative EBITDA

A very low net margin and negative EBITDA indicate limited earnings buffer and possible core operational or non-operating cost issues. This reduces capacity to absorb shocks, fund growth internally, or pay down debt without meaningful improvements to underlying profitability.

Megastar Foods Ltd. Business Overview & Revenue Model

Company Description

Megastar Foods Limited engages in the bulk food processing and producing a range of wholesome wheat flour products in India. The company offers atta, wheat flour, suji, rawa, chokar, organic atta, organic whole wheat flour, and organic wheat flour products. Its products are used in biscuits/cookies, pizzas, breads and buns, and other products. The company also exports its products. Megastar Foods Limited was incorporated in 2011 and is headquartered in Chandigarh, India.

How the Company Makes Money

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Megastar Foods Ltd. Financial Statement Overview

Summary

Megastar Foods Ltd. shows strong revenue growth but faces profitability and cash flow challenges. The increased leverage and negative cash flow metrics highlight potential financial risks.

Income Statement

Megastar Foods Ltd. has demonstrated consistent revenue growth with a significant increase from 2024 to 2025, reflecting strong market demand and effective business strategies. The gross profit margin improved to 13.45% due to better cost management, while the net profit margin remained low at 1.05%, suggesting potential profitability challenges. The EBIT margin of 10.70% indicates operational efficiency, but the negative EBITDA margin highlights issues with core operations or non-operating expenses.

Balance Sheet

The company's debt-to-equity ratio has increased to 1.41, indicating a higher reliance on debt financing which could pose financial risks if cash flows falter. Return on equity (ROE) was 4.05%, showing moderate profitability relative to shareholder investments. The equity ratio of 39.66% suggests balanced asset financing but highlights the need for cautious financial management amid growing liabilities.

Cash Flow

Megastar Foods Ltd. faced a significant decline in operating cash flow, turning negative in 2025, which could strain liquidity. The free cash flow growth rate is negative, reflecting substantial capital expenditures without sufficient cash inflows. The operating cash flow to net income ratio is negative, showing cash flow management concerns, while the free cash flow to net income ratio is also negative, indicating challenges in generating cash from operations.

Breakdown	TTM	Mar 2025	Mar 2024	Mar 2023	Mar 2022	Mar 2021
Income Statement
Total Revenue	4.59B	3.61B	2.75B	3.04B	1.85B	1.62B
Gross Profit	647.36M	485.93M	217.67M	274.74M	234.26M	193.76M
EBITDA	310.05M	222.87M	149.10M	218.47M	120.54M	95.20M
Net Income	57.53M	37.93M	63.23M	100.82M	54.53M	40.95M
Balance Sheet
Total Assets	3.56B	2.36B	1.56B	1.11B	747.89M	899.55M
Cash, Cash Equivalents and Short-Term Investments	102.67M	38.00M	18.43M	39.73M	12.57M	1.05M
Total Debt	1.74B	1.32B	568.54M	578.24M	343.24M	501.47M
Total Liabilities	2.58B	1.42B	634.04M	645.56M	389.21M	598.75M
Stockholders Equity	979.11M	936.72M	921.26M	460.86M	358.68M	300.80M
Cash Flow
Free Cash Flow	-268.56M	-601.37M	-353.86M	-166.61M	182.04M	-268.07M
Operating Cash Flow	-214.58M	-99.04M	164.09M	115.42M	274.09M	-220.16M
Investing Cash Flow	-96.40M	-489.70M	-532.51M	-262.71M	-80.27M	-46.36M
Financing Cash Flow	369.00M	608.31M	347.12M	174.48M	-182.33M	259.84M

Megastar Foods Ltd. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 225.50
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For IN:MEGASTAR, the sentiment is Positive. The current price of 225.5 is below the 20-day moving average (MA) of 228.89, below the 50-day MA of 226.68, and below the 200-day MA of 243.20, indicating a neutral trend. The MACD of 2.73 indicates Negative momentum. The RSI at 55.60 is Neutral, neither overbought nor oversold. The STOCH value of 87.30 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for IN:MEGASTAR.

Megastar Foods Ltd. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
PONNIERODE	68 Neutral	₹2.30B	5.98	―	1.13%	―	―
KMSUGAR	67 Neutral	₹2.35B	3.04	―	―	21.76%	113.02%
MEGASTAR	64 Neutral	₹2.70B	21.19	―	―	62.82%	27.59%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
DAVANGERE	57 Neutral	₹5.45B	50.57	―	―	-10.78%	-4.71%
SAKHTISUG	56 Neutral	₹1.77B	-1.68	―	―	1.70%	-71.32%
KOTARISUG	49 Neutral	₹1.99B	4.71	―	―	-39.31%	-110.49%

Megastar Foods Ltd. Corporate Events

Megastar Foods Files SEBI Depository Compliance Certificate for Q3 FY2025-26

Megastar Foods Limited has submitted to the stock exchanges a compliance certificate from its registrar and transfer agent, Skyline Financial Services Private Limited, confirming adherence to Regulation 74(5) of the SEBI (Depositories and Participants) Regulations, 2018 for the quarter ended December 31, 2025. The filing underscores the company’s ongoing compliance with depository-related regulatory requirements, providing investors and market participants with assurance on procedural and securities-handling standards, though it does not indicate any change in operations or financial outlook.

Megastar Foods Gains CARE Ratings Upgrade on Bank Facilities

Megastar Foods Limited has announced that CARE Ratings has upgraded the company’s long-term bank facility rating to CARE BBB- with a Stable outlook from CARE BB+ with a Stable outlook, reflecting an improvement in the company’s credit profile. CARE has also assigned ratings of CARE BBB-; Stable/CARE A3 to additional long-term/short-term bank facilities of ₹6.71 crore and upgraded similar facilities totaling ₹173 crore, even as that facility amount was reduced from ₹183 crore, signaling enhanced lender confidence and potentially better borrowing terms for the company.