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    Sadbhav Engineering Limited's (NSE:SADBHAV) Shares Lagging The Industry But So Is The Business

    Simply Wall St·12/19/2025 00:10:24
    語音播報

    When you see that almost half of the companies in the Construction industry in India have price-to-sales ratios (or "P/S") above 1.4x, Sadbhav Engineering Limited (NSE:SADBHAV) looks to be giving off some buy signals with its 0.2x P/S ratio. Nonetheless, we'd need to dig a little deeper to determine if there is a rational basis for the reduced P/S.

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    Check out our latest analysis for Sadbhav Engineering

    ps-multiple-vs-industry
    NSEI:SADBHAV Price to Sales Ratio vs Industry December 19th 2025

    What Does Sadbhav Engineering's Recent Performance Look Like?

    For example, consider that Sadbhav Engineering's financial performance has been poor lately as its revenue has been in decline. Perhaps the market believes the recent revenue performance isn't good enough to keep up the industry, causing the P/S ratio to suffer. If you like the company, you'd be hoping this isn't the case so that you could potentially pick up some stock while it's out of favour.

    Although there are no analyst estimates available for Sadbhav Engineering, take a look at this free data-rich visualisation to see how the company stacks up on earnings, revenue and cash flow.

    Do Revenue Forecasts Match The Low P/S Ratio?

    Sadbhav Engineering's P/S ratio would be typical for a company that's only expected to deliver limited growth, and importantly, perform worse than the industry.

    Retrospectively, the last year delivered a frustrating 22% decrease to the company's top line. This means it has also seen a slide in revenue over the longer-term as revenue is down 52% in total over the last three years. So unfortunately, we have to acknowledge that the company has not done a great job of growing revenue over that time.

    In contrast to the company, the rest of the industry is expected to grow by 15% over the next year, which really puts the company's recent medium-term revenue decline into perspective.

    In light of this, it's understandable that Sadbhav Engineering's P/S would sit below the majority of other companies. However, we think shrinking revenues are unlikely to lead to a stable P/S over the longer term, which could set up shareholders for future disappointment. There's potential for the P/S to fall to even lower levels if the company doesn't improve its top-line growth.

    The Bottom Line On Sadbhav Engineering's P/S

    Typically, we'd caution against reading too much into price-to-sales ratios when settling on investment decisions, though it can reveal plenty about what other market participants think about the company.

    Our examination of Sadbhav Engineering confirms that the company's shrinking revenue over the past medium-term is a key factor in its low price-to-sales ratio, given the industry is projected to grow. At this stage investors feel the potential for an improvement in revenue isn't great enough to justify a higher P/S ratio. Unless the recent medium-term conditions improve, they will continue to form a barrier for the share price around these levels.

    It's always necessary to consider the ever-present spectre of investment risk. We've identified 3 warning signs with Sadbhav Engineering (at least 2 which are a bit concerning), and understanding them should be part of your investment process.

    If you're unsure about the strength of Sadbhav Engineering's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.