Calcom Vision Q3 FY26: Margin Pressures Trigger Quarterly Loss Despite Revenue Growth

The Delhi-based Original Designer and Manufacturer (ODM) for electronics and consumer durables, incorporated in 1985, has been navigating a challenging operational environment. Whilst the company maintained its sales trajectory—crossing ₹55 crores for the first time in Q3 FY26—the collapse in operating margins from 7.77% in Q2 to just 3.46% in Q3 exposed underlying cost pressures. The PAT margin turned negative at -1.54%, compared to a healthy 4.21% in the preceding quarter, raising questions about the sustainability of the company's growth model.

Financial Performance: Margin Collapse Overshadows Revenue Gains

Calcom Vision's Q3 FY26 performance presents a study in contrasts. On the revenue front, the company delivered its strongest quarterly sales at ₹55.13 crores, representing sequential growth of 10.13% and year-on-year expansion of 23.44%. This marked the fourth consecutive quarter of double-digit QoQ growth, with the nine-month period (April-December 2025) recording cumulative sales of ₹150.27 crores—substantially ahead of the full-year FY25 figure of ₹157.00 crores.

However, the profitability picture deteriorated sharply. Operating profit (PBDIT excluding other income) collapsed to ₹1.91 crores in Q3, down from ₹3.89 crores in Q2—a sequential decline of 50.90%. The operating margin (excluding other income) compressed by 431 basis points quarter-on-quarter to 3.46%, the lowest level since Q2 FY25 when the company was still in its recovery phase. On a year-on-year basis, the margin contracted by 615 basis points from 9.61% in Q3 FY25.

The gross profit margin for Q3 FY26 stood at a meagre 0.45%, plummeting from 8.23% in Q2—a decline of 778 basis points. This dramatic compression suggests severe pricing pressure or escalating raw material costs that the company could not pass through to customers. Employee costs rose to ₹6.76 crores from ₹5.69 crores, representing 12.26% of sales compared to 11.37% in the previous quarter, indicating limited operating leverage despite higher volumes.

Operational Challenges: Interest Burden and Profitability Squeeze

Calcom Vision's operational efficiency metrics reveal mounting pressures. The company's interest expense increased marginally to ₹1.81 crores in Q3 from ₹1.73 crores in Q2, but the declining operating profit meant the interest coverage ratio deteriorated sharply to 1.06 times—the weakest level in recent quarters. This compares unfavourably to the average EBIT to interest coverage of 1.26 times, which already indicates limited financial flexibility.

Return on Equity (ROE) stood at 6.76%, significantly below industry standards and reflecting weak capital efficiency. Higher ROE values indicate better profitability and capital management, making this metric a key concern for investors evaluating Calcom Vision's ability to generate returns. The company's Return on Capital Employed (ROCE) of 8.44% similarly trails expectations for a manufacturing business, suggesting that the capital deployed is not generating adequate returns.

On the balance sheet front, the company's debt position has expanded. Long-term debt increased to ₹22.13 crores in FY25 from ₹19.11 crores in FY24, whilst current liabilities surged to ₹80.88 crores from ₹55.66 crores—driven primarily by trade payables rising to ₹35.71 crores from ₹22.69 crores. The debt-to-EBITDA ratio of 4.12 times indicates elevated leverage, particularly concerning given the margin pressures.

Industry Context: Electronics Sector Headwinds

The broader electronics and appliances sector has faced significant headwinds, with the industry recording a negative 21.19% return over the past year. Against this backdrop, Calcom Vision's one-year return of -2.89% represents relative outperformance of 18.30 percentage points, suggesting the company has managed to preserve shareholder value better than peers despite operational challenges.

The LED lighting and electronics manufacturing space remains highly competitive, with pricing power limited by the presence of larger, better-capitalised players. Raw material cost volatility—particularly for electronic components and metals—has pressured margins across the industry. Calcom Vision's ISO 9001:2015, SA 8000:2014, and ISO 14001:2015 certifications provide quality assurance but do not translate into pricing power in a commoditised market.

The company's long-term growth trajectory remains impressive, with five-year sales growth of 42.07% and EBIT growth of 63.71% demonstrating the business's ability to scale. However, the recent quarterly performance suggests that this growth may be coming at the cost of profitability, a trade-off that investors are questioning.

Peer Comparison: Valuation Premium Despite Weak Fundamentals

Calcom Vision trades at a P/E ratio of 26.51 times trailing earnings, significantly above the peer average of approximately 14 times (excluding loss-making Sharp India). This premium valuation appears difficult to justify given the company's ROE of 6.76%—the second-lowest in the peer group after Sharp India's zero return. Dolphin Kitchen, trading at a lower P/E of 11.94 times, delivers ROE of 22.47%, highlighting the valuation disconnect.

The price-to-book ratio of 1.79 times also exceeds the peer average of approximately 1.2 times, despite Calcom Vision's weaker return profile. Only Gothi Plascon commands a higher P/BV multiple at 3.69 times, but that company justifies it with superior ROE of 12.81%. The debt-to-equity ratio of 0.62 sits in the middle of the peer range, neither a strength nor a particular concern relative to competitors.

Valuation Analysis: Attractive Entry Point or Value Trap?

At the current price of ₹104.30, Calcom Vision trades 29.29% below its 52-week high of ₹147.50 and 45.77% above its 52-week low of ₹71.55. The stock's valuation grade stands at "Very Attractive," having been upgraded from "Attractive" on October 1, 2025. However, this assessment appears increasingly at odds with the deteriorating financial trend.

The enterprise value to EBITDA multiple of 12.52 times and EV to capital employed ratio of 1.49 times suggest the market is pricing in expectations of a margin recovery. The PEG ratio of 0.04 appears compelling on the surface, but this metric can be misleading when applied to companies with volatile earnings and uncertain growth sustainability.

The proprietary Mojo Score of 51/100 places Calcom Vision in "HOLD" territory, reflecting the mixed signals across valuation, quality, and financial trend parameters. Whilst the valuation appears attractive in isolation, the negative financial trend and average quality grade temper enthusiasm.

Shareholding Pattern: Stable Promoter Base, Limited Institutional Interest

The shareholding pattern reveals a stable promoter base at 64.32%, with no changes in the latest quarter. Key promoters include Prudent Infrastructures Private Limited (26.04%), Calcom Electronics Limited (14.46%), and Sushil Kumar Malik (12.81%). Importantly, there is no promoter pledging, eliminating one potential risk factor.

However, institutional participation remains limited. Foreign institutional investors hold just 7.28%, mutual funds a negligible 0.05%, and other domestic institutional investors 3.01%. The total institutional holding of 10.34% suggests limited confidence from sophisticated investors, who typically conduct rigorous due diligence before committing capital. The absence of insurance company holdings further underscores the lack of institutional endorsement.

Stock Performance: Underperforming Broader Indices

Calcom Vision's stock performance has deteriorated markedly across most timeframes. Over the past three months, the stock has declined 16.58%, underperforming the Sensex by 16.96 percentage points. The year-to-date loss of 13.26% compares unfavourably to the Sensex's decline of just 1.21%, indicating company-specific concerns beyond broader market weakness.

The technical picture shows the stock trading below all key moving averages—5-day, 20-day, 50-day, 100-day, and 200-day—a bearish configuration suggesting continued downward pressure. The current trend classification of "Mildly Bullish" appears optimistic given the price action, with the stock having recently turned from "Sideways" on February 9, 2026, at ₹110.80.

Volatility remains elevated at 58.20% on an annualised basis, significantly above the Sensex's 11.52%, reflecting the stock's high-risk profile. The beta of 1.37 indicates the stock moves 37% more than the broader market, amplifying both gains and losses. The risk-adjusted return of -0.05 over the past year, compared to the Sensex's 0.90, underscores the poor risk-reward trade-off.

Investment Thesis: Growth at the Expense of Profitability

Calcom Vision's investment case rests on three primary pillars: impressive long-term growth, attractive valuation multiples, and a stable promoter base with no pledging. The company's five-year sales CAGR of 42.07% and EBIT CAGR of 63.71% demonstrate its ability to scale operations and capture market share in the LED lighting and electronics space. The current valuation, with an EV to capital employed ratio of 1.49 times, appears reasonable for a business with this growth profile.

However, significant concerns temper this optimistic view. The negative financial trend in Q3 FY26, characterised by a quarterly loss despite revenue growth, raises questions about the quality and sustainability of expansion. The weak ROE of 6.76% and ROCE of 8.44% indicate poor capital efficiency—higher ROE values would signal better profitability and management effectiveness, making this a critical weakness. The company's interest coverage of just 1.06 times provides minimal cushion against further operational deterioration.

Outlook: Critical Monitoring Points Ahead

The next quarter's results will be critical in determining whether Q3's loss represents a temporary blip or the beginning of a more concerning trend. Investors should monitor the company's ability to restore operating margins to the 7-8% range achieved in Q2 FY26 and earlier quarters. The management's commentary on raw material costs, pricing power, and order book visibility will provide crucial insights into near-term prospects.