Eurotex Industries Q3 FY26: Losses Deepen as Revenue Collapses, Survival in Question

With revenues collapsing to a mere ₹0.02 crores in Q3 FY26—down 50% quarter-on-quarter—and operating margins plunging to an alarming -5500%, the company's operational viability appears increasingly questionable. The stock has responded accordingly, trading at ₹13.45 as of February 09, 2026, down 2.54% on the day and having lost 32.95% of its value year-to-date.

The results paint a picture of a company in severe operational and financial difficulty. Belonging to the Patodia Group and originally incorporated in February 1987 as a 100% Export Oriented Unit (EOU) manufacturing cotton yarn and knitted fabrics, Eurotex has seen its core business model effectively collapse. The company's inability to generate meaningful revenue whilst maintaining a substantial cost base has resulted in consistently negative cash flows and a balance sheet showing negative shareholder equity of ₹28.76 crores as of March 2025.

Financial Performance: A Complete Breakdown

The Q3 FY26 results reveal a company unable to sustain even minimal operations. Net sales of ₹0.02 crores represent an almost complete cessation of business activity, down from ₹0.04 crores in Q2 FY26 and a far cry from the ₹0.62 crores recorded in Q2 FY24. On a year-on-year basis, the comparison is meaningless given that Q3 FY25 saw zero revenue.

Operating losses before other income reached ₹1.10 crores in Q3 FY26, translating to an operating margin of -5500%—a metric that defies conventional business logic. Employee costs of ₹0.51 crores in the quarter, whilst down from ₹1.20 crores in Q3 FY25, remain wholly unsupportable given the revenue base. The company appears to be maintaining a skeletal workforce and infrastructure despite having no viable business operations.

Other income of ₹0.46 crores provided some relief in Q3 FY26, though this was dramatically lower than the ₹3.64 crores recorded in Q2 FY26, which had temporarily masked operational losses and produced a quarterly profit. The volatility in other income—ranging from ₹0.44 crores to ₹3.64 crores across recent quarters—suggests one-off asset sales or recoveries rather than sustainable income streams.

After accounting for interest costs of ₹0.61 crores and depreciation of ₹0.17 crores, the company reported a loss before tax of ₹1.43 crores in Q3 FY26. A tax credit of ₹0.39 crores reduced the final net loss to ₹1.03 crores, but this provides little comfort given the underlying operational deterioration.

Balance Sheet Distress: Negative Equity and Mounting Liabilities

Eurotex Industries' balance sheet as of March 2025 reveals a company in terminal decline. Shareholder equity stands at negative ₹28.76 crores, having deteriorated from negative ₹26.46 crores a year earlier and negative ₹19.56 crores in March 2023. With share capital of ₹8.74 crores offset by accumulated reserves and surplus of negative ₹37.50 crores, the company has completely eroded its equity base.

The company carries long-term debt of ₹5.00 crores, unchanged over recent years, whilst current liabilities have swelled to ₹49.83 crores as of March 2025. Trade payables of ₹2.28 crores and other current liabilities of ₹13.24 crores suggest ongoing operational obligations that the company appears unable to service through normal business activity.

The company's fixed assets have declined precipitously from ₹27.27 crores in March 2024 to ₹10.08 crores in March 2025, suggesting significant asset disposals. Investments have also fallen from ₹2.86 crores to ₹2.32 crores over the same period. These asset sales appear to be the primary source of the "other income" that has occasionally produced quarterly profits amidst otherwise catastrophic operational losses.

Cash Flow Crisis: Burning Through Remaining Resources

Eurotex's cash flow statement for FY25 reveals a company unable to generate cash from operations. Cash flow from operations was negative ₹1.00 crore for the year, reflecting the unsustainable gap between minimal revenues and ongoing costs. The company has relied on cash inflows from investing activities—₹3.00 crores in FY25, likely from asset sales—to partially offset operational cash burns.

Cash flow from financing activities was negative ₹2.00 crores in FY25, suggesting some debt repayment or other financing outflows. The overall cash position remains at effectively zero, as it has for the past five years, indicating the company is operating on a hand-to-mouth basis with no liquidity buffer.

Profitability Metrics: A Company in Structural Decline

The company's profitability metrics paint an unambiguous picture of failure. Return on Capital Employed (ROCE) averaged negative 58.70% over recent years, with the latest reading at negative 78.18%—indicating that the company destroys value with every rupee of capital employed. Return on Equity (ROE) is effectively meaningless given the negative book value, though the data shows 0.0% on average.

Five-year sales growth stands at negative 53.35%, reflecting the collapse of the company's core textile export business. Whilst five-year EBIT growth is listed at 10.76%, this is misleading given that EBIT has been consistently negative in absolute terms; the metric merely reflects slightly smaller losses in recent years compared to the catastrophic losses of earlier periods.

Industry Context: Garments Sector Challenges Compound Company-Specific Woes

The Indian garments and apparel sector has faced headwinds in recent years, including global demand volatility, rising input costs, and intense competition from other low-cost manufacturing hubs. However, Eurotex's problems extend far beyond sector-wide challenges. Whilst the broader Garments & Apparels sector showed a one-year return of negative 2.38%, Eurotex managed a positive 5.00% return over the same period—though this primarily reflects the stock's extreme volatility and low base rather than any fundamental improvement.

The company's original business model as a 100% EOU focused on exports to developed markets in the UK, Switzerland, Germany, Italy, and Japan has proven unsustainable. The complete collapse in revenue suggests that the company has lost its agency and selling arrangements with these international buyers, leaving it with no viable distribution channel for whatever limited production capacity remains.

Peer Comparison: Last Among Equals

Comparing Eurotex Industries to its peers in the garments and apparel sector highlights the company's dire relative position. Whilst most peers also face challenges, none exhibit the same degree of financial distress.

Eurotex ranks last amongst its peer group by market capitalisation at just ₹12.00 crores. Its negative book value of -0.43x places it amongst the weakest in the group, with only Mid India Industries showing a more negative P/BV ratio. The company's ROE of 0.0% is amongst the poorest in the sector, though several peers are similarly challenged. The debt-to-equity ratio of -1.29 reflects the negative equity base rather than any strength in capital structure.

Valuation Analysis: A Value Trap, Not a Value Opportunity

At first glance, Eurotex's P/E ratio of 5.69x might appear attractive compared to the industry average P/E of 22x. However, this represents a classic value trap. The low P/E multiple reflects the market's accurate assessment that the company's recent quarterly profit was an aberration driven by other income rather than sustainable operations, and that future losses are all but certain.

The company's Price-to-Book Value of -0.43x is meaningless in the traditional sense, as it reflects negative shareholder equity. The negative book value of ₹-33.71 per share indicates that the company's liabilities exceed its assets, making any discussion of intrinsic value moot. The stock is trading at ₹13.45, representing a premium to negative book value only because the market assigns some residual hope value to potential asset recoveries or a miraculous turnaround.

Enterprise value metrics are similarly distorted. An EV/EBITDA of -10.18x and EV/EBIT of -7.60x reflect negative operating profits. The EV/Sales ratio of 47.15x is extraordinarily high, but this is purely a function of the minuscule revenue base rather than any premium valuation.

The company's valuation assessment is categorised as "RISKY" by analytical frameworks, a designation it has held since April 2023 with brief interruptions. This reflects the fundamental uncertainty around the company's ability to continue as a going concern and the high probability of total equity value destruction.

Shareholding Pattern: Promoter Commitment Amidst Collapse

One of the few stable elements in Eurotex's otherwise chaotic picture is its shareholding pattern. Promoter holding has remained rock-solid at 70.99% across the last five quarters, with no sequential changes. The Patodia Group entities—led by Patodia Syntex Limited (43.37%) and PBM Polytex Limited (25.51%)—have maintained their stake despite the company's ongoing losses.

This unwavering promoter commitment could be interpreted in two ways. Optimistically, it suggests that the promoters see some path to recovery or value realisation that is not apparent in the public financials. More cynically, it may simply reflect that the shares have become worthless and there is no buyer for the promoters to exit to, even if they wished to do so.

Institutional participation is virtually non-existent, with FII holding at 0.00%, mutual fund holding at a token 0.01%, and insurance holdings also at 0.00%. This complete absence of institutional interest speaks volumes about professional investors' assessment of the company's prospects. The 28.99% public shareholding represents retail investors, many of whom may be trapped in a position that has become illiquid and effectively worthless.

Stock Performance: Volatility Without Direction

Eurotex Industries' stock performance over various time horizons reveals extreme volatility without any sustainable upward trajectory. The stock currently trades at ₹13.45, down 2.54% on the day and 32.95% year-to-date. Over the past week, it has declined 3.72%, and over the past month, it has plummeted 21.85%.

The three-month return of negative 42.47% reflects the market's growing recognition of the company's deteriorating fundamentals. The stock has underperformed the Sensex by 43.49% over this period, with negative alpha across virtually all timeframes. The one-year return of 5.00% appears positive but significantly underperforms the Sensex's 7.97% gain and the sector's negative 2.38% return.

Over longer periods, the picture is even grimmer. The 10-year return of negative 49.72% compares catastrophically to the Sensex's 249.97% gain over the same period, representing an alpha of negative 299.69%. The stock's volatility of 78.99% over the past year places it in the "HIGH RISK" category, with a beta of 1.50 indicating it is 50% more volatile than the broader market.

The stock currently trades near its 52-week low of ₹11.92, having fallen 45.35% from its 52-week high of ₹24.61. All moving averages—5-day (₹13.93), 20-day (₹17.54), 50-day (₹16.27), and 100-day (₹15.56)—are above the current price, indicating a clear downtrend across all timeframes.

Technical Analysis: Mildly Bearish with Deteriorating Momentum

From a technical perspective, Eurotex Industries exhibits a "MILDLY BEARISH" trend as of February 09, 2026, having shifted from "Mildly Bullish" on the same day. The technical indicator summary shows bearish signals across most metrics, with MACD bearish on both weekly and monthly timeframes, RSI bearish weekly, and Bollinger Bands bearish on both timeframes.

The stock faces immediate support at ₹11.92 (the 52-week low), with immediate resistance at ₹17.54 (the 20-day moving average area). Major resistance sits at ₹15.56 (100-day moving average), with strong resistance at the 52-week high of ₹24.61. The lack of a 200-day moving average in the data suggests insufficient trading history or extreme volatility that makes this metric unreliable.

Delivery volumes have shown a 152.22% increase over the trailing one month compared to the previous month, with the most recent trading session showing delivery volume of 2,010 shares representing 70.43% of total volume. This elevated delivery percentage could indicate some retail accumulation, though the low absolute volumes (225 shares traded on February 09) suggest extremely poor liquidity.

Investment Thesis: Multiple Red Flags, No Green Shoots

The investment thesis for Eurotex Industries is unambiguously negative across all parameters. The company's Mojo Score of 17 out of 100 places it firmly in the "STRONG SELL" category, with the recommendation to "strongly consider selling" and "exit recommended."

The four-dots Mojo analysis reveals:

1. Near-Term Drivers: MIXED - The quarterly financial trend is classified as "Flat," though this understates the severity of Q3 FY26's deterioration. Technical indicators are "Mildly Bearish," pointing to continued downward price pressure.

2. Quality: BELOW AVERAGE - The company's quality grade reflects its weak long-term financial performance, with negative ROCE of -58.70%, zero ROE, and five-year sales growth of -53.35%.

3. Valuation: RISKY - The valuation assessment categorises the stock as "RISKY," reflecting the fundamental uncertainty around the company's survival and the high probability of total equity value destruction.

4. Overall Assessment: MIXED - Whilst technically classified as "mixed signals," the reality is uniformly negative across all meaningful parameters.

Key Strengths & Risk Factors

Outlook: What to Watch