The quarter-on-quarter profit collapse of 111.28% represents a swing from profitability to loss, whilst the year-on-year comparison shows a 144.00% improvement—though this merely reflects a narrower loss compared to the ₹0.25 crores deficit in Q3 FY25. The stock closed at ₹231.00 on February 12, 2026, down 3.97% on the day and trading 39.53% below its 52-week high of ₹382.00.
Indian Card Clothing Company Ltd. operates primarily in the card clothing segment, providing essential components for textile spinning machinery. Founded in 1955 as a joint venture with British partners, the company has witnessed a prolonged period of operational challenges, with its core manufacturing business generating consistent losses for multiple consecutive quarters.
Financial Performance: Core Business Remains Unprofitable
The Q3 FY26 results reveal a troubling pattern of deteriorating operational health. Net sales declined 2.98% sequentially to ₹10.41 crores from ₹10.73 crores in Q2 FY26, marking the second consecutive quarter of revenue contraction. On a year-on-year basis, sales fell 1.42% from ₹10.56 crores in Q3 FY25, continuing a multi-year trend of revenue erosion.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Operating Profit (₹ Cr) | Margin % | Net Profit (₹ Cr) | YoY Change |
|---|---|---|---|---|---|---|
| Dec'25 | 10.41 | -2.98% | -3.33 | -31.99% | -0.61 | +144.00% |
| Sep'25 | 10.73 | +11.19% | -3.35 | -31.22% | 5.41 | -30.73% |
| Jun'25 | 9.65 | -5.58% | -2.86 | -29.64% | 2.29 | -96.57% |
| Mar'25 | 10.22 | -3.22% | -3.62 | -35.42% | 17.48 | — |
| Dec'24 | 10.56 | -5.97% | -3.31 | -31.34% | -0.25 | — |
| Sep'24 | 11.23 | +12.08% | -2.44 | -21.73% | 7.81 | — |
The most alarming aspect of the quarterly performance remains the persistent operating losses. Excluding other income, the company posted an operating loss (PBDIT) of ₹3.33 crores in Q3 FY26, translating to a negative operating margin of 31.99%. This marks the sixth consecutive quarter of operating losses, with the core business unable to generate positive cash flows from its manufacturing operations.
Employee costs surged to ₹5.47 crores in Q3 FY26 from ₹5.28 crores in Q2 FY26, representing 52.55% of net sales—an unsustainably high proportion that underscores severe operational inefficiency. Interest costs remained modest at ₹0.22 crores, whilst depreciation stood at ₹1.23 crores, reflecting limited capital intensity.
Other Income Dependency: Masking Operational Weakness
The company's survival hinges almost entirely on other income, which contributed ₹4.12 crores in Q3 FY26. However, this represents a dramatic 63.79% sequential decline from ₹11.38 crores in Q2 FY26 and an 8.24% year-on-year decrease from ₹4.49 crores in Q3 FY25. The volatility in other income—which appears to stem from investment gains and real estate activities—creates an unsustainable earnings pattern that obscures the fundamental weakness of the core card clothing business.
Critical Operating Concern
Six Consecutive Quarters of Operating Losses: Indian Card Clothing has posted negative operating profits (excluding other income) for six straight quarters from Jun'24 to Dec'25, with margins ranging from -21.73% to -41.92%. The core manufacturing business remains structurally unprofitable, with employee costs alone exceeding 50% of sales revenue.
On a full-year basis, FY25 showed net sales of ₹42.00 crores, down 23.60% from ₹55.00 crores in FY24, continuing a troubling five-year compound annual decline of 4.09%. Despite posting a reported net profit of ₹91.00 crores in FY25 (inflated by exceptional gains), operating losses excluding other income stood at ₹13.00 crores, yielding a negative operating margin of 31.00%.
Balance Sheet Quality: Strong but Underutilised
Paradoxically, Indian Card Clothing maintains a robust balance sheet that contrasts sharply with its operational struggles. Shareholder funds stood at ₹338.25 crores as of March 2025, comprising equity capital of ₹5.94 crores and reserves of ₹332.31 crores. The company is essentially debt-free, with long-term debt of merely ₹0.03 crores, resulting in a net debt-to-equity ratio of -0.25—indicating a net cash position.
Current assets totalled ₹103.01 crores against current liabilities of ₹29.88 crores, providing a comfortable current ratio of 3.45. Cash and cash equivalents stood at ₹40.00 crores as of March 2025, though this had declined from ₹182.00 crores in March 2022, reflecting substantial cash burn over recent years. Investments aggregated ₹218.75 crores, up from ₹160.13 crores in the previous year, suggesting the company is channelling resources into financial assets rather than revitalising its manufacturing operations.
Fixed assets declined marginally to ₹23.66 crores from ₹24.51 crores, indicating minimal capital expenditure on modernising production facilities. The book value per share stands at ₹569.35, significantly above the current market price of ₹231.00, implying the stock trades at a price-to-book ratio of 0.41—a steep discount that reflects investor scepticism about the company's ability to generate returns from its substantial net worth.
Profitability Metrics: Weak Returns on Capital
Return on equity (ROE) averaged a mere 2.97% over recent periods, far below the 15% threshold typically expected by equity investors. The latest ROE stood at 4.49%, marginally improved but still inadequate. Return on capital employed (ROCE) painted an even bleaker picture at -4.50% on average and -6.93% for the latest period, confirming that the company destroys value rather than creates it.
Profitability Analysis
With an average ROE of 2.97% and negative ROCE of -4.50%, Indian Card Clothing demonstrates an inability to generate adequate returns on the substantial capital base of ₹338.25 crores. The company's sales-to-capital-employed ratio of 0.29 indicates severe underutilisation of assets, with every rupee of capital generating less than 30 paise in annual revenue.
The EBIT-to-interest coverage ratio averaged -4.19, reflecting negative operating earnings that cannot service even minimal debt obligations. Whilst the company benefits from negligible debt, the inability to generate positive EBIT from operations represents a fundamental business model challenge.
Peer Comparison: Lagging on All Fronts
Within the garments and apparels sector, Indian Card Clothing significantly underperforms peers across key metrics. The company's ROE of 2.97% trails competitors such as Premco Global (12.04%), Lorenzini Apparels (18.93%), and BSL (11.05%). The price-to-book ratio of 0.41 stands well below peers like Lorenzini Apparels (3.03), Weizmann (2.30), and Premco Global (1.34), reflecting market recognition of the company's value-destruction trajectory.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity | Div Yield % |
|---|---|---|---|---|---|
| Indian Card Clothing | 9.18 | 0.41 | 2.97% | -0.25 | — |
| Premco Global | 14.34 | 1.34 | 12.04% | -0.16 | 9.78% |
| Lorenzini Apparels | NA (Loss Making) | 3.03 | 18.93% | -0.09 | — |
| BSL | 40.29 | 1.22 | 11.05% | 3.66 | 0.56% |
| Weizmann | NA (Loss Making) | 2.30 | 7.85% | 0.07 | 0.59% |
The P/E ratio of 9.18 appears superficially attractive compared to BSL's 40.29, but this reflects low earnings quality rather than genuine value. Peers with negative P/E ratios are loss-making, placing Indian Card Clothing in similarly distressed company despite technically reporting a profit for FY25 (driven predominantly by other income and exceptional items).
Valuation Analysis: Discount Reflects Fundamental Concerns
Trading at ₹231.00 with a market capitalisation of ₹137.24 crores, Indian Card Clothing's valuation metrics suggest significant investor caution. The P/E ratio of 9.18 times trailing twelve-month earnings appears modest, but earnings quality remains questionable given the dependence on volatile other income. The price-to-book ratio of 0.41 implies the market values the company's assets at less than half their stated book value, reflecting doubts about asset productivity and earnings potential.
The enterprise value to EBITDA multiple of -4.20 and EV to EBIT of -3.07 are meaningless metrics given persistent negative operating earnings. The EV-to-sales ratio of 1.34 suggests the market values the entire business at approximately 1.3 times annual revenue—a relatively low multiple that accounts for the company's operational challenges.
The stock's valuation grade stands at "Risky," a classification it has maintained since 2021 with brief interruptions. This assessment reflects the combination of weak fundamentals, volatile earnings, and uncertain business outlook. The current price of ₹231.00 represents a 39.53% decline from the 52-week high of ₹382.00, though it trades 7.44% above the 52-week low of ₹215.00.
Shareholding Pattern: Stable Promoter Base, Minimal Institutional Interest
The shareholding structure reveals a stable promoter base but negligible institutional participation. Promoter holding remained steady at 67.33% across the last five quarters, with Multi-act Industrial Enterprises Limited holding the entire promoter stake. Critically, there is zero promoter pledging, indicating financial stability at the promoter level despite operational challenges.
| Quarter | Promoter % | FII % | MF % | Insurance % | Other DII % | Non-Inst % |
|---|---|---|---|---|---|---|
| Dec'25 | 67.33% | 0.00% | 0.00% | 0.00% | 0.03% | 32.64% |
| Sep'25 | 67.33% | 0.01% | 0.00% | 0.00% | 0.03% | 32.63% |
| Jun'25 | 67.33% | 0.14% | 0.00% | 0.00% | 0.03% | 32.50% |
| Mar'25 | 67.33% | 0.14% | 0.00% | 0.00% | 0.03% | 32.50% |
| Dec'24 | 67.33% | 0.22% | 0.00% | 0.00% | 0.03% | 32.42% |
Foreign institutional investor (FII) holding declined from 0.22% in December 2024 to effectively zero by December 2025, signalling a complete exit by international investors. Mutual fund and insurance company holdings remain at zero, whilst other domestic institutional investors (DII) maintain a token 0.03% stake. The total institutional holding of 0.03% represents one of the lowest levels in the listed universe, underscoring the lack of institutional confidence in the company's prospects.
Non-institutional holdings increased marginally from 32.42% to 32.64% over the year, suggesting some retail investor accumulation at lower price levels, though this likely reflects value-trap dynamics rather than informed conviction.
Stock Performance: Persistent Underperformance Across Timeframes
The stock's price performance reflects the underlying business deterioration, with negative returns across most timeframes and substantial underperformance versus the benchmark Sensex. Over the past year, Indian Card Clothing declined 19.85% whilst the Sensex gained 10.11%, resulting in a negative alpha of 29.96 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -1.41% | 0.67% | -2.08% |
| 1 Month | -1.28% | -0.01% | -1.27% |
| 3 Months | -12.17% | -0.71% | -11.46% |
| 6 Months | -23.47% | 4.53% | -28.00% |
| Year-to-Date | -5.50% | -1.58% | -3.92% |
| 1 Year | -19.85% | 10.11% | -29.96% |
| 2 Years | -20.58% | 18.01% | -38.59% |
| 3 Years | 9.95% | 38.21% | -28.26% |
The six-month return of -23.47% versus Sensex's +4.53% demonstrates accelerating underperformance, whilst the three-month decline of 12.17% confirms the negative momentum. The stock's beta of 1.50 indicates high volatility—it moves 50% more than the market—yet this volatility has not translated into upside, resulting in a classification of "High Risk Low Return."
The risk-adjusted return of -0.43 over the past year, compared to the Sensex's positive 0.88, highlights the poor risk-reward profile. With volatility of 46.32% (four times the Sensex's 11.44%), investors face substantial downside risk without commensurate return potential. The stock trades below all key moving averages—5-day (₹237.42), 20-day (₹230.39), 50-day (₹238.37), 100-day (₹249.96), and 200-day (₹277.40)—confirming a sustained bearish technical trend.
Technical Analysis: Bearish Momentum Persists
The technical picture remains decidedly negative, with the overall trend classified as "Mildly Bearish" as of February 9, 2026. Multiple technical indicators flash warning signals: the MACD shows mildly bullish on weekly charts but bearish on monthly timeframes, whilst Bollinger Bands indicate mildly bearish conditions across both periods. The relative strength index (RSI) provides no clear directional signal, suggesting the stock is neither oversold nor overbought—merely drifting lower.
Key technical levels provide limited support. The immediate support sits at ₹215.00 (the 52-week low), merely 6.93% below current levels, offering minimal downside cushion. Resistance emerges at ₹230.39 (20-day moving average), ₹249.96 (100-day moving average), and ₹277.40 (200-day moving average), with the 52-week high of ₹382.00 representing a distant target requiring a 65.37% rally.
Delivery volumes averaged 2.05 thousand shares over the trailing month, with 70.79% of trades resulting in delivery—indicating some genuine investor interest rather than purely speculative activity. However, the one-month delivery volume declined 3.0% compared to the previous month, suggesting waning conviction even amongst delivery-based buyers.
Investment Thesis: Quality Concerns Override Asset Value
The investment case for Indian Card Clothing rests on a precarious foundation. Whilst the company possesses a strong balance sheet with ₹338.25 crores in shareholder funds, zero debt, and ₹40.00 crores in cash, these assets generate inadequate returns. The quality grade of "Below Average" reflects persistent operating losses, negative ROCE, and anaemic ROE—fundamental weaknesses that overshadow the balance sheet strength.
The financial trend turned negative in December 2025, driven by the quarterly loss, lowest-ever inventory turnover ratio of 3.68 times, declining cash balances, and deteriorating debtors turnover of 3.97 times. The five-year sales growth of -4.09% and five-year EBIT growth of -202.45% confirm a business in structural decline rather than temporary difficulty.
Key Strengths & Risk Factors
Key Strengths ✓
- Debt-Free Balance Sheet: Zero long-term debt with net cash position provides financial flexibility and eliminates solvency risk.
- Substantial Net Worth: Shareholder funds of ₹338.25 crores and book value of ₹569.35 per share provide significant asset backing.
- Zero Promoter Pledging: Stable 67.33% promoter holding with no pledged shares indicates promoter confidence and financial stability.
- Cash Reserves: ₹40.00 crores in cash and ₹218.75 crores in investments provide liquidity cushion.
- Low Valuation: P/BV of 0.41 offers potential value if operations can be turned around.
Key Concerns ⚠
- Persistent Operating Losses: Six consecutive quarters of negative operating profits with margins of -32% indicate fundamental business model failure.
- Revenue Decline: Five-year sales CAGR of -4.09% and continued quarterly contraction signal market share loss and demand weakness.
- Weak Profitability: ROE of 2.97% and negative ROCE of -4.50% demonstrate value destruction rather than creation.
- Other Income Dependency: Profitability relies entirely on volatile other income rather than core operations.
- High Employee Costs: Employee expenses at 52% of sales indicate severe operational inefficiency.
- Zero Institutional Interest: FII and MF holdings at zero reflect lack of professional investor confidence.
- Negative Financial Trend: Latest quarterly results show deteriorating metrics across multiple parameters.
Outlook: What to Watch
Positive Catalysts
- Operational restructuring programme to reduce employee costs below 40% of sales
- New product development or market expansion to arrest revenue decline
- Strategic asset monetisation to unlock balance sheet value
- Margin improvement initiatives targeting break-even operations
- Return to positive quarterly operating profit (excluding other income)
Red Flags
- Further quarterly revenue decline below ₹10.00 crores
- Operating margins deteriorating beyond -35%
- Cash burn exceeding ₹10.00 crores per quarter
- Employee cost ratio rising above 55% of sales
- Complete FII exit followed by DII divestment
- Stock breaking below 52-week low of ₹215.00
The immediate outlook hinges on management's ability to arrest operating losses and stabilise revenue. Without a credible turnaround plan addressing cost structure and market positioning, the company faces continued value erosion despite its strong balance sheet. The Q4 FY26 results (January-March 2026) will be critical in determining whether the Q3 loss represents a temporary setback or an accelerating deterioration.
The Verdict: Avoid Despite Asset Backing
Score: 9/100
For Fresh Investors: Avoid initiating positions. Whilst the stock trades at 0.41 times book value and maintains a debt-free balance sheet, six consecutive quarters of operating losses, negative ROCE of -4.50%, and a deteriorating financial trend present unacceptable risk. The 2.97% ROE fails to justify equity investment, and the absence of institutional participation signals professional scepticism about turnaround prospects.
For Existing Holders: Consider exiting on any technical bounce towards ₹250-260 levels. The persistent operating losses, declining revenue trajectory, and negative financial trend suggest limited near-term recovery potential. Whilst the substantial net worth provides downside protection, the inability to generate returns on this capital base makes continued holding inadvisable. The company requires a comprehensive operational restructuring that remains absent from current management communication.
Fair Value Estimate: ₹180-200 (22-13% downside from current levels), reflecting 0.32-0.35 times book value—a valuation appropriate for a company destroying shareholder value through persistent operating losses.
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. Past performance does not guarantee future results, and all investments carry risk of loss.
