The stock, trading at ₹44.50 following a modest 1.44% single-day gain, has lost 32.68% over the past year, significantly underperforming both the Sensex (+7.97%) and the broader industrial manufacturing sector (+14.76%). With 93.69% promoter holding by the President of India and virtually no institutional interest (5.61% DII holdings, zero FII or mutual fund participation), HMT remains a cautionary tale of government-owned enterprise decline. The company's proprietary Mojo Score stands at a dismal 3 out of 100, firmly in "STRONG SELL" territory, reflecting the dire fundamental and technical situation.
Quarterly Trend: A Pattern of Persistent Deterioration
| Quarter | Net Sales (₹ Cr) | QoQ Growth | YoY Growth | Net Loss (₹ Cr) | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3) | 20.83 | -19.36% | -28.64% | -27.24 | -111.04% |
| Sep'25 (Q2) | 25.83 | +5.21% | -37.89% | -39.08 | -145.10% |
| Jun'25 (Q1) | 24.55 | -38.29% | -22.68% | -27.77 | -85.66% |
| Mar'25 (Q4) | 39.78 | +36.28% | — | -35.74 | -162.12% |
| Dec'24 (Q3) | 29.19 | -29.81% | — | -51.28 | -57.45% |
| Sep'24 (Q2) | 41.59 | +30.99% | — | -27.09 | -55.16% |
| Jun'24 (Q1) | 31.75 | — | — | -28.94 | -66.55% |
Financial Performance: Catastrophic Deterioration Across All Metrics
HMT's Q3 FY26 results reveal a company in terminal decline. Net sales of ₹20.83 crores represent not only a 28.64% year-on-year collapse but also a 19.36% sequential decline from Q2 FY26's already-weak ₹25.83 crores. This marks the lowest quarterly revenue figure in the company's recent history, underscoring the complete erosion of its manufacturing and commercial capabilities.
Operating performance has deteriorated beyond recognition. Operating profit before depreciation, interest, tax, and other income (PBDIT excluding OI) plunged to a staggering loss of ₹23.13 crores in Q3 FY26, translating to an operating margin of -111.04%. This compares catastrophically to -57.45% in the year-ago quarter, representing a margin contraction of 53.59 percentage points. The company is burning more than one rupee for every rupee it generates in sales—a fundamentally unsustainable business model.
Employee costs of ₹16.65 crores consumed 79.93% of total sales in Q3 FY26, down from ₹17.97 crores (61.56% of sales) in Q3 FY25, but the absolute burden remains crippling given the revenue base. Interest expenses of ₹17.68 crores further drain resources, exceeding quarterly sales by ₹0.85 crores. Net losses of ₹27.24 crores in Q3 FY26 translate to a PAT margin of -130.77%, compared to -175.68% in the year-ago period—a marginal improvement that provides no comfort given the absolute deterioration.
On a nine-month basis for FY2026 (April-December 2025), cumulative revenue stands at ₹71.21 crores, down 29.70% from ₹101.28 crores in the corresponding period of FY2025. Cumulative net losses for the nine-month period reached ₹94.09 crores, representing a 23.87% increase in absolute loss magnitude compared to ₹75.97 crores in 9M FY25. The trajectory suggests full-year FY26 losses could exceed ₹140 crores, surpassing FY25's ₹143 crores loss.
Operational Collapse: When a Business Model Ceases to Function
HMT's operational metrics paint a picture of a company that has lost all semblance of commercial viability. The core issue extends beyond cyclical weakness or temporary setbacks—this is structural failure. The company's inability to generate positive operating cash flow (₹-46 crores in FY25) while servicing interest obligations of ₹69 crores annually creates an impossible arithmetic. With fixed assets of just ₹30.28 crores as of March 2025, the productive capacity of the enterprise has effectively been hollowed out.
Balance sheet metrics confirm the severity. Shareholder equity stands at negative ₹1,897.90 crores as of March 2025, having deteriorated from negative ₹1,752.03 crores a year earlier. The company's book value per share of ₹-53.37 means shareholders' claims are worthless from an accounting perspective. Current liabilities of ₹2,287.97 crores dwarf current assets of ₹475.48 crores, creating a working capital deficit of ₹1,812.49 crores—a liquidity crisis that would have triggered insolvency proceedings for any private sector entity.
Critical Red Flag: Negative Shareholder Equity
HMT's negative equity of ₹1,897.90 crores represents accumulated losses that have completely wiped out the company's capital base. With book value per share at ₹-53.37, the company is technically insolvent. The only reason HMT continues operations is government ownership—no private creditor or investor would support this capital structure. This represents one of the most severe financial distress situations in India's listed universe.
The quality of earnings—or rather, the magnitude of losses—deserves scrutiny. Other income of ₹15.25 crores in Q3 FY26 provided the only positive contribution, likely comprising interest on deposits or government grants. Without this non-operating income, operating losses would have reached ₹42.49 crores in the quarter. This dependency on other income to partially offset operational bleeding highlights the complete absence of core business profitability.
Five-Year Decline: A Company in Terminal Trajectory
Annual data reveals the long-term deterioration pattern. Revenue has contracted from ₹260 crores in FY20 to ₹142 crores in FY25—a 45.38% decline over five years, representing a compound annual decline rate of 10.59%. More alarmingly, operating losses (PBDIT excluding other income) have exploded from ₹38 crores in FY20 to ₹125 crores in FY25, a 228.95% increase in absolute loss magnitude. Operating margin excluding other income has collapsed from -14.6% in FY20 to -88.0% in FY25.
The company's five-year EBIT growth rate of -161.74% captures the accelerating deterioration in operational performance. Employee costs have declined from ₹119 crores in FY20 to ₹62 crores in FY25, but this reduction has failed to stem losses as revenue has fallen even faster. Interest expenses have remained stubbornly high at ₹69 crores in FY25, creating a fixed burden that the shrinking revenue base cannot support.
| Year | Net Sales (₹ Cr) | YoY Growth | Net Loss (₹ Cr) | Operating Margin (Excl OI) | Interest (₹ Cr) |
|---|---|---|---|---|---|
| FY25 | 142.00 | -12.90% | -143.00 | -88.0% | 69.00 |
| FY24 | 163.00 | -19.70% | -130.00 | -67.5% | 68.00 |
| FY23 | 203.00 | +16.00% | -124.00 | -45.8% | 69.00 |
| FY22 | 175.00 | -13.80% | -145.00 | -61.1% | 74.00 |
| FY21 | 203.00 | -21.90% | -112.00 | -34.0% | 83.00 |
| FY20 | 260.00 | — | -67.00 | -14.6% | 65.00 |
Industry Context: A Relic in a Thriving Sector
The industrial manufacturing sector has delivered robust 14.76% returns over the past year, buoyed by government infrastructure spending, manufacturing incentives under PLI schemes, and strong domestic demand. Yet HMT has lost 32.68% during the same period, underperforming its sector by a staggering 47.44 percentage points. This divergence underscores that HMT's problems are company-specific, not sector-related.
While peers like Disa India (17.33% ROE), Honda India (10.49% ROE), and Salasar Techno (9.05% ROE) maintain profitable operations with positive returns on equity, HMT reports a 0.0% ROE—a mathematical impossibility for value creation given the negative equity base. The company's business model, once centred on machine tools, watches, tractors, and printing machinery, has become obsolete in the face of modern competition and technological advancement.
The Government Ownership Paradox
HMT's 93.69% promoter holding by the President of India represents both its lifeline and its curse. Government ownership has prevented liquidation despite years of mounting losses, but it has also insulated management from market discipline. With zero FII holdings, zero mutual fund interest, and minimal 5.61% DII participation, institutional investors have completely abandoned the stock. The absence of market oversight has allowed the deterioration to continue unchecked, with no credible turnaround plan in sight.
Peer Comparison: A League of Its Own (In the Wrong Direction)
| Company | P/E (TTM) | Return on Equity | Debt to Equity | Price to Book | Div Yield |
|---|---|---|---|---|---|
| HMT | NA (Loss Making) | 0.0% | -0.42 | -0.80x | NA |
| Honda India | 30.27x | 10.49% | -0.63 | 2.66x | 5.81% |
| Indian Hume Pipe | 19.82x | 7.98% | -0.12 | 1.50x | 1.48% |
| Disa India | 32.91x | 17.33% | -0.77 | 6.98x | 1.50% |
| Salasar Techno | 40.71x | 9.05% | 0.38 | 1.89x | NA |
| DEE Development | 17.53x | 5.88% | 0.58 | 1.77x | NA |
The peer comparison reveals HMT's complete isolation from normal market dynamics. While peers trade at P/E multiples ranging from 17.53x to 40.71x with positive ROEs averaging around 10%, HMT cannot be valued on earnings (loss-making) or book value (negative equity). Its price-to-book ratio of -0.80x is a mathematical artefact rather than a valuation metric. Peers maintain healthy balance sheets with moderate leverage or net cash positions, whereas HMT's capital structure is beyond repair without massive government recapitalisation.
Valuation Analysis: When Traditional Metrics Break Down
Traditional valuation frameworks become meaningless when applied to HMT. The company's P/E ratio is listed as "NA (Loss Making)"—it has generated losses for years with no path to profitability. Price-to-book of -0.80x reflects negative shareholder equity, rendering the metric useless for investment decisions. EV/EBITDA of -17.17x and EV/EBIT of -16.32x are negative because the company generates negative operating profits.
The only somewhat relevant metric is EV/Sales at 20.10x, but even this is misleading. With an enterprise value of approximately ₹2,854 crores (market cap plus net debt) and trailing twelve-month sales of ₹142 crores, the multiple suggests the market values each rupee of sales at ₹20.10. However, given that every rupee of sales generates losses rather than profits, this valuation makes no economic sense. The stock trades purely on speculation or residual government ownership value, not on any fundamental business worth.
The company's overall valuation assessment is classified as "RISKY"—an understatement given the fundamentals. With the stock trading at ₹44.50 against a 52-week high of ₹75.45 and a 52-week low of ₹41.00, current levels represent just 8.54% above the yearly low. The stock has lost 41.02% from its peak, but even at these depressed levels, there is no compelling value proposition given the absence of a credible turnaround path.
Shareholding Pattern: Government Dominance, Market Abandonment
| Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | Dec'24 |
|---|---|---|---|---|---|
| Promoter | 93.69% | 93.69% | 93.69% | 93.69% | 93.69% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 5.61% | 5.61% | 5.61% | 5.61% | 5.61% |
| Non-Institutional | 0.70% | 0.70% | 0.70% | 0.70% | 0.70% |
The shareholding pattern has remained completely static over the past five quarters, with the President of India maintaining 93.69% ownership (split between two holdings of 56.83% and 36.85%). This unwavering government control reflects policy decisions rather than commercial considerations. The complete absence of FII, mutual fund, and insurance company holdings signals institutional investors' unanimous rejection of the stock.
The minimal 5.61% DII holding and 0.70% non-institutional participation suggest that even domestic retail investors have largely abandoned the stock. With no promoter pledging (unsurprising given government ownership), there is no immediate catalyst for forced selling, but also no market-driven accountability mechanism. The static shareholding pattern indicates that HMT exists in a state of suspended animation—neither truly alive as a commercial enterprise nor formally wound down.
Stock Performance: Consistent Underperformance Across All Timeframes
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +0.70% | +2.94% | -2.24% |
| 1 Month | -3.47% | +0.59% | -4.06% |
| 3 Months | -19.38% | +1.02% | -20.40% |
| 6 Months | -21.92% | +5.27% | -27.19% |
| YTD (FY26) | -5.66% | -1.36% | -4.30% |
| 1 Year | -32.68% | +7.97% | -40.65% |
| 2 Years | -34.78% | +17.42% | -52.20% |
| 3 Years | +40.82% | +38.25% | +2.57% |
| 5 Years | +64.21% | +63.78% | +0.43% |
| 10 Years | +3.49% | +249.97% | -246.48% |
HMT's stock performance across timeframes reveals systematic wealth destruction. Over the past year, the stock has lost 32.68% whilst the Sensex gained 7.97%, generating negative alpha of 40.65 percentage points. The three-month decline of 19.38% and six-month loss of 21.92% reflect accelerating deterioration following the weak quarterly results.
The risk-adjusted return of -0.88 over one year, combined with volatility of 37.32%, places HMT in the "HIGH RISK LOW RETURN" category—the worst possible quadrant for investors. Beta of 1.35 indicates the stock is 35% more volatile than the market, amplifying downside during market corrections without providing corresponding upside during rallies. The 10-year return of just 3.49% versus the Sensex's 249.97% gain represents a staggering underperformance of 246.48 percentage points, highlighting the long-term value destruction.
Technical Analysis: Bearish Across All Indicators
Technical analysis confirms the fundamental deterioration. The stock's overall trend is classified as "BEARISH" as of January 5, 2026, having shifted from "Mildly Bearish." The stock trades below all key moving averages: 5-day (₹44.04), 20-day (₹44.03), 50-day (₹46.49), 100-day (₹51.93), and 200-day (₹55.51). This complete breakdown below all moving averages indicates strong selling pressure and absence of buying support.
Weekly and monthly MACD readings are both bearish, as are KST indicators across timeframes. Bollinger Bands show "Mildly Bearish" signals on both weekly and monthly charts, suggesting continued downward drift. With immediate support at the 52-week low of ₹41.00 just 7.87% below current levels, further downside appears likely absent any fundamental catalyst. Immediate resistance at the 20-day moving average area of ₹44.03 and major resistance at ₹51.93 (100-day MA) create formidable barriers to any recovery attempt.
Investment Thesis: No Credible Path to Value Creation
HMT's investment thesis—or lack thereof—centres on the absence of any credible turnaround strategy. The company's Mojo Score of 3 out of 100 reflects "STRONG SELL" status across all four key parameters: Valuation (RISKY), Quality Grade (BELOW AVERAGE), Financial Trend (NEGATIVE), and Technical Trend (BEARISH). This unanimous negative assessment leaves no aspect of the investment case intact.
The company's quality assessment highlights fundamental weaknesses: five-year sales growth of -10.59%, five-year EBIT growth of -161.74%, average ROCE of 11.88% (meaningless given negative capital employed), and average ROE of 0.0% (impossible given negative book value). With institutional holdings at just 5.61%, professional investors have rendered their verdict through complete avoidance.
Limited Positives
- Zero promoter pledging due to government ownership eliminates forced selling risk
- Government backing prevents immediate bankruptcy despite insolvency
- Other income of ₹15.25 crores in Q3 provides minimal cash cushion
- Net debt-to-equity of -0.42 technically shows "net cash" (though capital structure is destroyed)
Critical Concerns
- Negative shareholder equity of ₹1,897.90 crores—technical insolvency
- Book value per share of ₹-53.37 means equity holders have no residual value
- Operating margin of -111.04% in Q3 FY26—unsustainable loss generation
- Revenue decline of 28.64% YoY in Q3 FY26—accelerating business erosion
- Interest expense of ₹17.68 crores exceeds quarterly sales of ₹20.83 crores
- Zero institutional investor interest (FII, MF, insurance all at 0%)
- Bearish technical trend with stock below all major moving averages
- Five-year sales CAGR of -10.59% and EBIT growth of -161.74%
- No credible turnaround plan or management guidance provided
- Working capital deficit of ₹1,812.49 crores creates liquidity crisis
Outlook: What Lies Ahead for HMT
Unlikely Positive Catalysts
- Government recapitalisation or debt write-off (policy decision required)
- Strategic divestment to private player with turnaround expertise
- Asset monetisation of land holdings or surplus properties
- Radical business model restructuring with new management
Probable Negative Developments
- Continued quarterly losses exceeding ₹25-30 crores per quarter
- Further revenue erosion as remaining business lines become unviable
- Potential delisting or suspension if financial distress worsens
- Regulatory scrutiny over continued listing despite negative equity
- Complete institutional abandonment if government signals no support
The forward outlook for HMT is overwhelmingly negative. Absent a government-led restructuring involving massive capital infusion, debt forgiveness, and strategic redirection, the company will continue its downward spiral. The Q3 FY26 results represent not a cyclical low but a continuation of structural decline that has persisted for years. With no organic path to profitability, no institutional support, and no management guidance suggesting a turnaround, investors face only downside risk.
Monitoring points for existing holders include: quarterly revenue trends (any stabilisation above ₹30 crores would be notable), government policy announcements regarding PSU restructuring, potential asset sales or land monetisation, and any change in institutional holdings. However, none of these factors currently show signs of improvement, and the probability of positive surprises remains negligible.
The Verdict: Avoid at All Costs
Score: 3/100
For Fresh Investors: Absolutely avoid. HMT represents one of the worst risk-reward propositions in India's listed universe. With negative shareholder equity of ₹1,897.90 crores, operating margins of -111.04%, and no credible turnaround path, there is no investment case. The stock trades purely on speculation or residual government ownership value, not on any fundamental business worth. Capital deployed here faces near-certain permanent impairment.
For Existing Holders: Exit immediately at any available price. The Q3 FY26 results confirm that deterioration is accelerating, not stabilising. With the stock down 32.68% over one year and trading just 8.54% above its 52-week low of ₹41.00, further downside appears inevitable. Government ownership provides no protection against continued value destruction. Every day of continued holding represents opportunity cost relative to profitable alternatives in the industrial manufacturing sector.
Fair Value Estimate: Not applicable. Traditional valuation metrics break down when applied to a company with negative equity, negative operating profits, and no path to profitability. The current price of ₹44.50 reflects speculation rather than intrinsic value. Based on liquidation analysis, shareholder recovery would likely be zero given liabilities exceed assets by ₹1,897.90 crores.
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. The analysis presented reflects conditions as of February 09, 2026, and circumstances may change materially. Past performance is not indicative of future results.
