The ₹83 crore market capitalisation company, trading at ₹40.44 per share, faces a challenging environment with the stock down 17.82% over the past year, significantly underperforming both the Sensex (+4.62%) and its sector peers (-3.61%). The company's technical indicators remain mildly bearish, whilst its quality grade has slipped to "Below Average" based on long-term financial performance metrics.
Despite the quarterly profit recovery, APM Industries carries a proprietary Mojo score of just 23 out of 100, placing it firmly in "Strong Sell" territory. The rating reflects weak fundamental strength, persistent underperformance, and deteriorating operational trends that have plagued the company over recent years.
| Quarter | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 | Jun'24 | Mar'24 |
|---|---|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 67.54 | 72.35 | 56.67 | 79.00 | 84.24 | 74.09 | 62.52 |
| QoQ Growth | -6.65% | +27.67% | -28.27% | -6.22% | +13.70% | +18.51% | — |
| YoY Growth | -19.82% | -2.35% | -9.36% | — | — | — | — |
| Operating Profit (₹ Cr) | 2.88 | 0.93 | -0.52 | 1.78 | 2.51 | 0.74 | 1.12 |
| Operating Margin % | 4.26% | 1.29% | -0.92% | 2.25% | 2.98% | 1.00% | 1.79% |
| Net Profit (₹ Cr) | 1.06 | -0.62 | 0.67 | -0.32 | 0.02 | -0.98 | 0.77 |
| PAT Margin % | 1.57% | -0.86% | 1.18% | -0.41% | 0.02% | -1.32% | 1.23% |
Financial Performance: Margin Recovery Masks Top-Line Weakness
In Q2 FY26, APM Industries reported net sales of ₹67.54 crores, declining 6.65% sequentially from ₹72.35 crores in Q1 FY26. The year-on-year comparison paints an even bleaker picture, with revenues falling 19.82% from ₹84.24 crores in Q2 FY25. This marks a continuation of the revenue volatility that has characterised the company's recent performance, with sales oscillating between ₹56.67 crores and ₹84.24 crores over the past seven quarters.
The silver lining emerged in profitability metrics. Operating profit excluding other income surged to ₹2.88 crores in Q2 FY26, representing the highest quarterly figure in the recent period and translating to an operating margin of 4.26%—a substantial improvement from 1.29% in Q1 FY26 and 2.98% in Q2 FY25. This margin expansion suggests effective cost management, particularly as employee costs rose to ₹13.13 crores from ₹11.48 crores sequentially.
Net profit of ₹1.06 crores marked a dramatic turnaround from the ₹0.62 crore loss in Q1 FY26, yielding a PAT margin of 1.57%. However, the year-on-year comparison reveals the underlying fragility—net profit in Q2 FY25 stood at just ₹0.02 crores, indicating the company has been teetering on the edge of profitability for some time. Interest costs remained low at ₹0.06 crores, down from ₹0.61 crores a year ago, providing some relief to the bottom line.
Operational Challenges: Weak Returns and Declining Efficiency
The company's return metrics paint a concerning picture of capital efficiency. Average return on equity (ROE) stands at just 5.66% over the long term, whilst the latest ROE has deteriorated to a negative 0.15%. Average return on capital employed (ROCE) of 8.00% has similarly plummeted to negative 1.87% in the most recent period. These figures indicate that APM Industries is struggling to generate adequate returns for its shareholders and is currently destroying value rather than creating it.
The company's five-year sales growth of 5.49% appears modest but acceptable until one examines the operating profit trajectory. Five-year EBIT growth stands at a shocking negative 185.01%, revealing a business model under severe stress. This dramatic deterioration in operating profitability despite revenue growth suggests fundamental issues with cost structure, pricing power, or competitive positioning within the textile manufacturing sector.
Balance sheet metrics provide some comfort, with average debt to EBITDA at 1.40 times and net debt to equity at just 0.04, indicating conservative leverage. The company maintains no promoter pledging, which eliminates one potential red flag. However, institutional holdings stand at a negligible 0.03%, suggesting limited confidence from sophisticated investors in the company's prospects.
Critical Concern: Value Destruction
Latest ROE: -0.15% (destroying shareholder value)
Latest ROCE: -1.87% (negative returns on capital employed)
5-Year EBIT Growth: -185.01% (severe operational deterioration)
The company is currently generating negative returns on both equity and capital employed, indicating fundamental profitability challenges that extend beyond cyclical factors.
Sector Context: Underperformance in a Challenging Environment
APM Industries operates in the garments and apparels sector, which has faced headwinds from fluctuating raw material costs, competitive pressures, and evolving consumer preferences. The company's 17.82% decline over the past year significantly underperforms the sector average decline of 3.61%, suggesting company-specific challenges rather than purely sectoral issues.
The textile and apparel manufacturing sector in India has been grappling with intense competition from both domestic players and imports, particularly from Southeast Asian countries. Rising cotton and synthetic fibre prices have compressed margins for manufacturers, whilst demand volatility has made capacity planning challenging. APM Industries' operating margin of 4.26% in Q2 FY26, whilst improved sequentially, remains thin and vulnerable to input cost shocks.
The company's sales to capital employed ratio of 1.67 times indicates moderate asset turnover efficiency, but this must be viewed in context of the negative ROCE. The business appears to be generating revenue from its asset base but failing to convert this into profitable returns after accounting for the cost of capital employed.
| Company | Market Cap (₹ Cr) | P/E (TTM) | P/BV | ROE % | Debt/Equity |
|---|---|---|---|---|---|
| APM Industries | 83 | NA (Loss Making) | 0.50 | 5.66% | 0.04 |
| Acknit Industries | — | 10.60 | 1.06 | 11.52% | 0.67 |
| Nagreeka Exports | — | 34.11 | 0.60 | 2.91% | 1.04 |
| Sanrhea Technical | — | 17.79 | 3.35 | 23.40% | 0.53 |
| Shalimar Wires | — | 37.77 | 2.21 | 1.38% | 2.22 |
Peer Comparison: Lagging on Profitability and Returns
When benchmarked against sector peers, APM Industries' challenges become starkly evident. The company's average ROE of 5.66% falls below the peer group average, with Sanrhea Technical delivering a robust 23.40% and Acknit Industries achieving 11.52%. Even loss-making status prevents a meaningful P/E comparison, reflected in the "NA (Loss Making)" designation for APM's TTM P/E ratio.
The company's price-to-book value of 0.50 times represents a significant discount to book value, which could signal either an attractive entry point or a value trap. Given the negative latest ROE and deteriorating operational metrics, the market appears to be pricing in continued value destruction rather than anticipating a turnaround. Peers like Sanrhea Technical command a P/BV of 3.35 times, justified by superior ROE performance.
APM Industries does maintain a competitive advantage in leverage, with debt-to-equity of just 0.04 compared to peers ranging from 0.53 to 2.22. This conservative capital structure provides financial flexibility but hasn't translated into superior returns, suggesting operational rather than financial leverage issues constrain performance.
Valuation Analysis: Deep Discount Reflects Fundamental Concerns
APM Industries trades at a price-to-book value of 0.50 times, representing a 50% discount to stated book value per share of ₹72.23. Whilst this might appear attractive on the surface, the valuation must be contextualised against the company's negative return on equity and deteriorating profitability trends. The market's assessment appears rational—a company destroying value should trade below book value.
The company's valuation grade has deteriorated sharply over recent months, transitioning from "Attractive" in July 2024 to "Fair" and then "Very Expensive" by October 2024, before settling at the current "Risky" designation since February 2025. This volatility in valuation assessment reflects both price movements and changing fundamental performance, with the current "Risky" grade appropriate given execution uncertainties.
With an EV/EBITDA multiple of 19.36 times and a negative EV/EBIT of -29.84 times, traditional valuation metrics struggle to provide meaningful guidance. The negative EBIT multiple indicates operating losses, whilst the elevated EV/EBITDA suggests the market is pricing in significant depreciation charges that separate EBITDA from actual operating profit. An EV/Sales ratio of 0.31 times appears modest but offers little comfort without profitable operations.
Valuation Dashboard
Price to Book Value: 0.50x (50% discount to book)
P/E Ratio (TTM): NA (Loss Making)
EV/EBITDA: 19.36x
Mojo Score: 23/100 (Strong Sell)
Quality Grade: Below Average
Valuation Grade: Risky
Shareholding Pattern: Stable Promoter Base, Zero Institutional Interest
Promoter holding has remained rock-steady at 64.19% over the past five quarters, indicating unwavering commitment from the Rajgarhia family and associated entities. The promoter group is led by Rajendra Kumar Rajgarhia (17.92%), Faridabad Paper Mills Private Limited (12.89%), and Ajay Rajgarhia (10.63%), with no pledged shares—a positive signal eliminating concerns about financial distress at the promoter level.
However, institutional participation remains virtually non-existent. Foreign institutional investors (FII), mutual funds, and insurance companies collectively hold zero stake in the company. Other domestic institutional investors (DII) maintain a token 0.03% holding that has remained unchanged across quarters. This absence of institutional interest speaks volumes about professional investors' assessment of the company's prospects and governance quality.
The non-institutional shareholding stands at 35.78%, comprising primarily retail and high-net-worth individual investors. The lack of any sequential changes in shareholding pattern across all categories over five quarters suggests limited trading interest and poor liquidity, which could pose challenges for investors seeking to build or exit positions.
| Shareholding Category | Jun'25 | Mar'25 | Dec'24 | Sep'24 |
|---|---|---|---|---|
| Promoter Holding | 64.19% | 64.19% | 64.19% | 64.19% |
| FII Holding | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Fund Holding | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance Holdings | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII Holdings | 0.03% | 0.03% | 0.03% | 0.03% |
| Non-Institutional | 35.78% | 35.78% | 35.78% | 35.78% |
Stock Performance: Severe Underperformance Across All Timeframes
APM Industries' stock performance has been dismal across most timeframes. Trading at ₹40.44, the stock has declined 17.82% over the past year whilst the Sensex gained 4.62%, resulting in a negative alpha of 22.44 percentage points. The three-year performance is even more concerning, with the stock down 30.69% compared to the Sensex's 36.01% gain, representing a staggering 66.70 percentage point underperformance.
Recent momentum provides little solace. Whilst the stock has gained 4.39% over the past week and 11.25% over one month, these short-term bounces appear tactical rather than reflective of improving fundamentals. The stock trades 30.02% below its 52-week high of ₹57.79 but 30.45% above its 52-week low of ₹31.00, suggesting it occupies a middle ground with unclear directional conviction.
The stock's beta of 1.50 indicates high volatility relative to the market, with annual volatility of 40.40% compared to the Sensex's 12.39%. This elevated volatility, combined with negative returns, places APM Industries in the "high risk, low return" category—an unfavourable combination for investors. The risk-adjusted return of -0.44 over one year compares poorly to the Sensex's positive 0.37, indicating investors are being penalised rather than compensated for taking on additional risk.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 4.39% | -0.86% | +5.25% |
| 1 Month | 11.25% | 1.57% | +9.68% |
| 3 Months | 15.54% | 3.22% | +12.32% |
| 6 Months | 15.15% | 3.06% | +12.09% |
| Year to Date | -24.76% | 6.50% | -31.26% |
| 1 Year | -17.82% | 4.62% | -22.44% |
| 2 Years | -19.55% | 28.14% | -47.69% |
| 3 Years | -30.69% | 36.01% | -66.70% |
Investment Thesis: Multiple Red Flags Outweigh Tactical Positives
The investment thesis for APM Industries is fundamentally challenged by structural weaknesses that overshadow any cyclical recovery potential. The company's Mojo score of 23 out of 100 reflects poor performance across all four key parameters: valuation (Risky), quality (Below Average), financial trend (Positive in Q2 but deteriorating long-term), and technical trend (Mildly Bearish).
The positive financial trend designation for Q2 FY26 acknowledges the sequential improvement in profitability and margins. However, this must be weighed against the company's five-year EBIT growth of negative 185.01%, indicating a business in secular decline rather than cyclical trough. The Q2 recovery appears tactical rather than indicative of sustainable turnaround, particularly given the concurrent 19.82% year-on-year revenue decline.
Technical indicators remain mildly bearish, with the stock having transitioned through multiple trend changes over recent months. The current trend since September 18, 2025, suggests continued weakness, whilst moving averages present a mixed picture. The stock trades above all major moving averages (5-day through 200-day), but this positioning has not translated into sustained upward momentum.
"With negative ROE, deteriorating ROCE, and five-year operating profit decline of 185%, APM Industries faces fundamental profitability challenges that extend well beyond cyclical factors."
Key Strengths & Risk Factors
✓ Key Strengths
- Q2 Margin Recovery: Operating margin improved to 4.26% from 1.29% sequentially, demonstrating some cost management capability
- Conservative Balance Sheet: Debt-to-equity of 0.04 and no promoter pledging eliminate financial distress concerns
- Return to Profitability: Q2 FY26 net profit of ₹1.06 crores reversed Q1 loss, showing tactical improvement
- Stable Promoter Holding: 64.19% promoter stake with no pledging indicates long-term commitment
- Low Interest Burden: Interest costs declined to ₹0.06 crores from ₹0.61 crores year-on-year
⚠ Key Concerns
- Severe Revenue Decline: 19.82% YoY sales contraction in Q2 FY26 indicates weak demand environment
- Negative Return Metrics: Latest ROE of -0.15% and ROCE of -1.87% signal value destruction
- Deteriorating Long-Term Profitability: Five-year EBIT growth of -185.01% reveals structural challenges
- Zero Institutional Interest: No FII or mutual fund holdings reflect lack of professional investor confidence
- Weak Quality Grade: "Below Average" assessment based on long-term financial performance
- Persistent Underperformance: Stock down 30.69% over three years vs Sensex gain of 36.01%
- High Volatility: Beta of 1.50 and volatility of 40.40% without commensurate returns
Outlook: What Lies Ahead for APM Industries
Positive Catalysts to Monitor
- Sustained revenue stabilisation above ₹70 crores quarterly
- Operating margins consistently above 4% for multiple quarters
- Return to positive ROE and ROCE on sustainable basis
- Institutional investor participation signalling confidence
- Successful diversification into higher-margin product segments
Red Flags Requiring Attention
- Further sequential revenue declines in Q3 FY26
- Margin compression back towards 1-2% levels
- Return to quarterly losses in coming periods
- Continued absence of institutional investor interest
- Technical breakdown below ₹38 support levels
The Verdict: Avoid—Fundamental Challenges Outweigh Tactical Recovery
Score: 23/100
For Fresh Investors: Avoid initiating positions. The company's negative ROE, deteriorating ROCE, and five-year operating profit decline of 185% indicate structural profitability challenges that extend beyond cyclical factors. The Q2 margin recovery appears tactical rather than sustainable given concurrent revenue contraction of 19.82% year-on-year. Zero institutional participation and "Below Average" quality grade reflect fundamental concerns that warrant staying away.
For Existing Holders: Consider exiting positions on any strength. Whilst the Q2 return to profitability provides a tactical exit window, the underlying fundamentals remain challenged. The stock's severe underperformance (down 30.69% over three years vs Sensex gain of 36.01%) and persistent value destruction (negative ROE and ROCE) suggest limited recovery prospects. The absence of institutional interest and risky valuation grade indicate limited support for meaningful rerating.
Fair Value Estimate: ₹35-38 (10-15% downside risk from current levels of ₹40.44)
The company faces a challenging path ahead with weak demand dynamics, deteriorating operational efficiency, and structural profitability concerns. Investors should await multiple quarters of sustained improvement in both revenue growth and return metrics before reconsidering the investment case.
Note- ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
