Shankara Building Products Limited — financial distress indicators
Financial-health summary
Shankara Building Products Limited's reported numbers place it in the 'Weak' financial-health band (distress score 50/100). The main indicators are market-implied default probability >20%, thin interest coverage and very high leverage. Independently, the Ohlson accounting model puts its 1-year failure probability at 48% and the market-implied (Merton) default probability is 68.2%. In its favour: high insider/promoter ownership (71%) aligns management with survival.
Stress by dimension
Share price — last 12 months
Indicators behind the score
Each red flag shows the evidence from the company’s own filings and the financial or legal principle behind it. Points add to the 0–100 score.
Merton distance-to-default -0.47 σ → PD 68%.
Structural (Merton/KMV) model: equity is a call option on assets; low distance-to-default means assets are close to the default point.
Interest coverage is only 1.34× (lenders typically require ≥ 2–3×).
Low coverage leaves little buffer against a profit dip before a debt-service or covenant breach.
Total debt is 6.5× EBITDA.
Debt above ~6× EBITDA is deep sub-investment-grade territory; refinancing becomes difficult when rates or earnings move against the company.
Price is -88% from its 52-week high.
Equity markets price distress early; collapses of this size usually reflect fear of wipe-out in a restructuring.
Operating cash flow negative in 2 of the last 3 years. The company is profitable, so this likely reflects working-capital or loan-book growth.
A business that cannot fund itself from operations depends on external capital to survive.
Revenue vs net income
Cash generation
Debt vs cash vs equity
✅ Mitigating factors
- High insider/promoter ownership (71%) aligns management with survival.
📰 Recent news scan
- Shankara Buildpro Share Price Fall: Valuation and Peers - UnivestGoogle News · 2026-10-08
- News by CNBC TV18 on TradingView, 2026-10-07 — cnbctv:808533d2a094b:0 - TradingViewGoogle News · 2026-10-07
- Shankara Build Sets October 8 Record Date To Split ₹10 Shares Into Five ₹2 Shares - SahiGoogle News · 2026-10-07
- Stock split, spin-off: Last chance to buy these stocks today - Check record date, share performance - TradingViewGoogle News · 2026-10-07
- Shankara Buildpro splits equity shares into five; new ISIN live Oct 8 - scanx.tradeGoogle News · 2026-10-02
⚖️ Indian legal pathway — the IBC, 2016
How insolvency starts
- A financial creditor (§7), an operational creditor after a demand notice (§§8–9) or the company itself (§10) can apply to the NCLT once a default of at least ₹1 crore occurs (§4).
- On admission a moratorium (§14) stops suits and recovery; the board is suspended and an insolvency professional runs the company.
- The Committee of Creditors approves a resolution plan with 66% of voting share (§30(4)) within an outer limit of 330 days (§12); otherwise liquidation (§33) under the §53 waterfall — equity ranks last. Defaulting promoters are generally barred from bidding (§29A).
Earlier warning stages
- RBI's Prudential Framework for Resolution of Stressed Assets (7 June 2019): lenders must review a borrower within 30 days of default and implement a resolution plan, or provide more.
- Listed companies must disclose loan defaults to exchanges under SEBI (LODR); a rating downgrade to “D” is a public signal.
- Auditors must report going-concern uncertainty (SA 570 / Ind AS 1).
Frequently asked questions
What do Shankara Building Products Limited's financial-health indicators show?
As of 2026-10-09, Shankara Building Products Limited's public financial data places it in the 'Weak' band with a distress score of 50/100, driven by market-implied default probability >20%, thin interest coverage and very high leverage. This is a statistical screen of reported numbers — it does not mean the company is insolvent, has defaulted or will enter insolvency proceedings.
What is Shankara Building Products Limited's financial distress score?
50/100 ('Weak'). Ohlson O-score -0.08 (model 1-year failure probability 48%). Merton distance-to-default -0.47 σ (model default probability 68.2%).
What works in Shankara Building Products Limited's favour?
High insider/promoter ownership (71%) aligns management with survival.
How are shareholders treated if a company enters insolvency?
Under the IBC the Committee of Creditors controls the resolution; the §53 waterfall pays secured creditors and workers first and equity last. In most resolution plans existing shareholders are wiped out or left with a token stake, and the company may be delisted.
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Methodology
Score = capped sum of rule-based red flags across seven dimensions (liquidity, solvency, profitability, cash flow, sales trend, market signal, news). Ohlson O-score (1980) gives an accounting-based 1-year failure probability; Merton distance-to-default (Bharath & Shumway 2008) gives a market-implied probability. Financial institutions use a capital-based rule set. Recalculated every trading day from the latest filings, prices and news.