Whalesbook
Shivam Autotech Limited has raised ₹120 crore through a preferential issue of optionally convertible debentures (OCDs). The issuance, completed between February 10-12, 2026, is being closely watched by CARE Ratings Limited. As of March 31, 2026, the company had utilized ₹105.15 crore of these funds, leaving ₹14.84 crore unutilized.
This situation comes as Shivam Autotech continues to report net losses. For the fiscal year 2025, the company posted a loss of ₹48.04 crore (Standalone). The trend persisted into the nine months ended March 31, 2026, with a loss of ₹33.28 crore (Standalone).
The delays in utilizing the raised funds are a key concern highlighted by CARE Ratings. This, combined with persistent losses, raises questions about the company's financial health and its ability to manage its debt obligations.
Adding to the financial pressures, the company faces a proposed tax demand of ₹2.46 crore (Standalone), along with a proposed penalty of ₹2.11 crore (Standalone).
A significant point of concern is the divergence between Shivam Autotech's current stock price and the conversion price of its OCDs. As of May 8, 2026, the stock traded at ₹19.58, well below the OCD conversion price of ₹28.81. This disparity increases the risk of the company facing direct repayment obligations if the debentures are not converted by investors.
Historically, Shivam Autotech has navigated financial challenges, including continuous net losses since FY17. The company previously made a partial repayment of Non-Convertible Debentures (NCDs) using its own funds, followed by reimbursement from OCD proceeds. This pattern has raised questions about the company's fund management strategies.
Looking ahead, investors will be watching closely for progress on deploying the remaining ₹14.84 crore for working capital. Management's ability to demonstrate a clear path toward profitability and resolve the proposed tax demand will be crucial for improving the company's financial structure and stock valuation.
In contrast to Shivam Autotech's situation, peers like Minda Corporation and Sharda Motor Industries in the automotive component sector generally focus on growth and margin enhancement, often operating with stronger financial metrics.
Key risks for Shivam Autotech include the execution of deploying remaining funds, ongoing financial losses impacting liquidity, the potential for mandatory repayment if stock prices don't recover, and the resolution of tax and penalty demands.