Alps Industries Q2 FY26: Losses Deepen as Operations Remain Dormant

With a market capitalisation of just ₹8.00 crores and a negative book value per share of ₹234.09, Alps Industries represents one of the most distressed situations in India's garments sector. The company, which once manufactured home furnishings and architectural products under the 'Vista Levolor' brand, has been operationally dormant for several years, yet continues to incur substantial interest expenses that compound losses each quarter.

The quarterly loss of ₹17.10 crores in Q2 FY26 represents a sequential deterioration of 1.00% from Q1 FY26's loss of ₹16.93 crores, continuing an unbroken trend of quarterly losses. For the half-year period H1 FY26, accumulated losses reached ₹34.03 crores, significantly worse than the ₹31.59 crores loss in H1 FY25, representing a 7.72% year-on-year deterioration.

Financial Performance: A Debt Trap with No Revenue

The financial performance of Alps Industries in Q2 FY26 paints a grim picture of a company trapped in a debt spiral without any operational revenue to service its obligations. Net sales remained at absolute zero for the seventh consecutive quarter, whilst interest expenses climbed to ₹16.97 crores, up 7.75% year-on-year from ₹15.75 crores in Q2 FY25. This interest burden alone exceeds the company's entire market capitalisation, highlighting the severity of the debt overhang.

Operating profit before depreciation, interest, and tax (PBDIT) excluding other income stood at a negative ₹0.16 crores in Q2 FY26, representing the minimal administrative and employee costs the company continues to incur. Employee costs were ₹0.05 crores, marginally lower than the ₹0.07 crores in the year-ago period, suggesting skeletal staffing levels. Other income of ₹0.03 crores provided minimal relief, down sharply from ₹0.10 crores in Q2 FY25.

The profit before tax (PBT) deteriorated to a loss of ₹17.10 crores in Q2 FY26 from ₹15.77 crores in Q2 FY25, with the entire loss attributable to interest costs. Notably, the company has not paid any taxes for years given its loss-making status, with the tax rate remaining at zero. The earnings per share (EPS) for Q2 FY26 stood at a negative ₹4.37, the lowest on record, reflecting the deepening per-share losses.

Balance Sheet Distress: Negative Equity and Mounting Liabilities

The balance sheet of Alps Industries as of March 2025 reveals a company in severe financial distress. Shareholder funds stood at a negative ₹893.30 crores, deteriorating from negative ₹829.40 crores a year earlier. This negative equity position means that liabilities far exceed assets, rendering the company insolvent from a balance sheet perspective. The reserves and surplus deficit widened to negative ₹954.73 crores from negative ₹890.83 crores, reflecting years of accumulated losses.

Long-term debt remained elevated at ₹492.31 crores as of March 2025, up from ₹473.86 crores a year earlier, suggesting fresh borrowings or capitalisation of interest. Current liabilities stood at ₹415.41 crores, up from ₹360.70 crores, indicating growing short-term obligations. On the asset side, fixed assets remained static at ₹2.23 crores, whilst current assets were a meagre ₹10.56 crores, up from ₹1.29 crores, though still insufficient to meet current liabilities.

The company's debt-to-equity ratio is negative given the negative equity base, whilst the net debt-to-equity ratio averaged negative 0.99, technically classifying Alps Industries as a net cash company—though this metric is misleading given the overall insolvency. The return on equity (ROE) is not calculable given the negative book value, whilst return on capital employed (ROCE) averaged a deeply negative 348.43%, underscoring the destruction of capital.

Operational Paralysis: Five Years Without Sales

Alps Industries has not generated any sales revenue since FY23, when it recorded minimal sales of ₹17.00 crores, down 94.4% from ₹302.00 crores in FY22. This collapse in operations represents a complete cessation of business activity. For FY24, sales were a token ₹1.00 crore, and since then, quarterly sales have remained at absolute zero. The company's manufacturing facilities appear to be non-operational, with fixed assets remaining static at ₹2.23 crores for multiple years.

The five-year sales growth rate stands at negative 100.00%, reflecting the complete erosion of the business. Operating profit (PBDIT) excluding other income has been consistently negative, averaging negative ₹1.00 crore in FY24 and worsening in subsequent quarters. The company's operating margin excluding other income has been zero or negative across all periods, indicating no gross profit generation whatsoever.

Employee costs have been minimal, averaging ₹0.05 crores per quarter in recent periods, suggesting that the company maintains only essential administrative staff, likely to manage legal and regulatory compliance. The absence of depreciation charges in recent quarters indicates that assets are either fully depreciated or impaired, further evidence of the non-operational status of manufacturing facilities.

Industry Context: Garments Sector Challenges

The Indian garments and apparels sector has faced headwinds in recent years, including intense competition from imports, rising input costs, and shifts in consumer preferences. However, Alps Industries' predicament goes far beyond sector-level challenges. Whilst other players in the industry continue to operate and adapt, Alps has been unable to restart operations despite the passage of several years.

The company's historical business of manufacturing home furnishings, made-ups, and architectural products under the 'Vista Levolor' brand faced stiff competition even before operations ceased. The sector requires continuous investment in design, marketing, and distribution—areas where Alps appears to have fallen short. The company's inability to generate even minimal revenue suggests either complete loss of market position, closure of manufacturing facilities, or both.

In peer comparison, Alps Industries stands out for its negative book value and complete absence of operations. Whilst other micro-cap garment companies face challenges, most continue to generate revenue and maintain positive equity. Alps' negative P/BV ratio of negative 0.01 reflects the market's assessment that the company has virtually no recovery value for equity holders.

Valuation Analysis: A Risky Proposition

Valuation metrics for Alps Industries are either negative or not calculable, reflecting the company's distressed status. The price-to-earnings (P/E) ratio is not applicable given the sustained losses, whilst the price-to-book value (P/BV) ratio of negative 0.01 indicates that the stock trades at a fraction of its (negative) book value. The enterprise value to EBITDA (EV/EBITDA) ratio of negative 755.16 is meaningless in this context, as is the EV/EBIT ratio of negative 755.16.

The company's overall valuation grade is classified as "RISKY," a designation it has held since April 2023. With a market capitalisation of just ₹8.00 crores against long-term debt of ₹492.31 crores, the equity value is severely impaired. The 52-week trading range of ₹1.66 to ₹4.43 shows significant volatility, with the current price of ₹1.90 closer to the lower end, down 57.11% from the 52-week high.

No dividend has been paid since September 2008, when the company declared a ₹0.50 per share dividend—a distant memory for long-suffering shareholders. The dividend yield is not applicable, and the dividend payout ratio is zero. Fair value estimation is not feasible given the absence of earnings and the negative equity position. Any valuation exercise would need to focus on liquidation value of assets minus liabilities, which appears deeply negative.

Shareholding Pattern: Promoter Control Amidst Distress

Promoter holding in Alps Industries has remained static at 46.27% across the last five quarters, with no change in ownership structure. This stable promoter holding, despite the company's severe distress, suggests either an inability to exit or a strategic decision to retain control pending resolution. Notably, 46.27% of shares are pledged, indicating that promoters have borrowed against their holdings, likely to meet personal or business obligations.

Foreign institutional investor (FII) holding is zero, as is mutual fund holding, reflecting the complete absence of institutional interest in the stock. Insurance company holdings are also zero. Non-institutional holdings, which include retail investors and other entities, account for 77.79% of the shareholding, unchanged across quarters. The lack of institutional participation underscores the high-risk nature of the investment and the absence of any credible turnaround story.

The promoter group comprises multiple entities and individuals, with Pacific Texmark Private Limited holding the largest stake at 7.25%, followed by K K Agarwal at 2.93% and Coronation Spinning India Pvt Ltd at 1.79%. The fragmented promoter structure, combined with the pledging of shares, raises governance concerns and questions about the ability to execute any meaningful restructuring plan.

Stock Performance: Severe Underperformance Across All Timeframes

Alps Industries' stock performance has been dismal across virtually all timeframes, significantly underperforming both the Sensex and its sector peers. Over the past year, the stock has plummeted 55.40%, whilst the Sensex gained 9.48%, resulting in a negative alpha of 64.88 percentage points. This underperformance reflects the market's recognition of the company's deteriorating fundamentals and bleak prospects.

The year-to-date performance shows a loss of 39.68%, whilst the Sensex gained 8.36%, resulting in a negative alpha of 48.04 percentage points. Over three years, the stock is down 14.80%, whilst the Sensex surged 37.31%, a gap of 52.11 percentage points. The only bright spot is the five-year return of positive 95.88%, marginally ahead of the Sensex's 91.65% gain, though this likely reflects a higher base from a period when the company was still operational.

The stock's beta of 1.50 indicates high volatility relative to the market, classified as a high-beta stock. However, this high beta has not translated into outperformance; instead, it has amplified losses. The risk-adjusted return over one year is negative 1.09, with volatility at 50.62%—far exceeding the Sensex's 12.26% volatility. The Sharpe ratio is negative, indicating that the stock has delivered negative returns even after adjusting for its high risk.

Compared to its sector, Alps Industries has dramatically underperformed. The garments and apparels sector delivered a 3.96% return over the past year, whilst Alps Industries lost 55.40%, an underperformance of 59.36 percentage points. This stark divergence highlights that Alps' problems are company-specific rather than sector-wide, stemming from its operational collapse and debt burden.

Technical Analysis: Mildly Bearish Trend with Limited Support

From a technical perspective, Alps Industries is in a mildly bearish trend as of October 21, 2025, having shifted from a bearish trend. The stock trades below its 5-day, 20-day, 50-day, and 100-day moving averages, indicating weak momentum across all timeframes. The 200-day moving average is not available, but the consistent positioning below shorter-term averages suggests sustained downward pressure.

The MACD (Moving Average Convergence Divergence) indicator shows a mildly bullish signal on the weekly chart but remains bearish on the monthly chart, suggesting short-term buying interest that has not translated into a sustained trend reversal. The RSI (Relative Strength Index) shows no clear signal on either weekly or monthly charts, indicating a lack of strong directional momentum. Bollinger Bands are bearish on both weekly and monthly timeframes, suggesting the stock is trading near the lower band with limited upside potential.

Immediate support is at ₹1.66, the 52-week low, which is perilously close to the current price of ₹1.90. Immediate resistance is at ₹2.00, corresponding to the 20-day moving average area, with major resistance at ₹2.08 (100-day moving average). The strong resistance level is at ₹4.43, the 52-week high, which appears distant given current fundamentals. The Dow Theory shows no clear trend, whilst the On-Balance Volume (OBV) indicator is mildly bearish on the monthly chart, suggesting weak accumulation.

Investment Thesis: A Distressed Asset with Minimal Recovery Prospects

The investment thesis for Alps Industries is overwhelmingly negative across all key parameters. The proprietary score stands at just 9 out of 100, firmly in the "STRONG SELL" category, with the company rated as a high-risk proposition. The quality grade is "BELOW AVERAGE," reflecting poor long-term financial performance, whilst the financial trend is "NEGATIVE," with Q2 FY26 marking new lows in profitability metrics.

Valuation is classified as "RISKY," given the negative book value, sustained losses, and unsustainable debt burden. Technical indicators are "MILDLY BEARISH," with the stock trading below all major moving averages and showing limited signs of reversal. The combination of negative financial trends, poor quality metrics, risky valuation, and weak technicals paints a picture of a company in terminal decline without a clear path to recovery.

Outlook: Restructuring or Liquidation Appears Inevitable

The outlook for Alps Industries is bleak without immediate and drastic action. The company faces an unsustainable debt burden with no revenue generation capacity, making debt servicing impossible through operational means. The quarterly interest cost of ₹16.97 crores continues to accumulate, pushing the company deeper into negative equity each quarter. Without a comprehensive debt restructuring, sale of assets, or external capital infusion, the company appears headed towards insolvency proceedings or liquidation.

For any turnaround to materialise, Alps would need to restart operations, which would require significant capital investment in plant and machinery, working capital for raw materials, and marketing expenditure to rebuild market presence—all of which appear beyond the company's current financial capacity. The pledging of 46.27% of promoter shares suggests that promoters themselves are financially constrained, limiting their ability to inject fresh equity.

Investors should monitor any announcements regarding debt restructuring, asset sales, or strategic partnerships. However, given the prolonged operational paralysis and the scale of accumulated losses, the probability of a successful turnaround appears minimal. The company's listing status itself may come under scrutiny if the stock continues to trade at such low levels with minimal liquidity.