The quarterly performance underscores the severe operational challenges facing this loss-making entity. Net sales plummeted 29.90% quarter-on-quarter to ₹0.68 crores from ₹0.97 crores in Q1 FY26, whilst year-on-year revenues collapsed 56.13% from ₹1.55 crores in Q2 FY25. The company's operating profit before depreciation, interest, and tax (PBDIT) excluding other income stood at a negative ₹0.34 crores, translating to a deeply negative operating margin of 50.0%. This represents a deterioration from the negative 26.8% margin in the previous quarter.
Iykot Hitech's financial trajectory reflects a company in severe distress. The business, which manufactures plastic moulded components for white goods, automobiles, and entertainment electronics from its facility in Chennai, has been unable to generate sustainable revenues or profitability. The company's promoters, led by the Dugar family with a 74.09% stake, have maintained stable shareholding, whilst institutional participation remains negligible at just 0.07%.
| Quarter | Jun'25 | Mar'25 | Dec'24 | Sep'24 | Jun'24 | Mar'24 | Dec'23 |
|---|---|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 0.68 | 0.97 | 0.77 | 1.72 | 1.55 | 0.07 | 0.41 |
| QoQ Growth | -29.90% | +25.97% | -55.23% | +10.97% | +2114.29% | -82.93% | — |
| Net Profit (₹ Cr) | -0.35 | -0.27 | -0.15 | -0.07 | -0.56 | -0.78 | -0.42 |
| Operating Margin | -50.0% | -26.8% | -12.99% | -1.74% | -33.55% | -1014.29% | -90.24% |
| PAT Margin | -51.47% | -27.84% | -19.48% | -4.07% | -36.13% | -1114.29% | -102.44% |
Financial Performance: Revenue Collapse Drives Margin Deterioration
The quarter-on-quarter revenue contraction of 29.90% to ₹0.68 crores represents a concerning acceleration of Iykot Hitech's downward trajectory. Compared to the same quarter last year, revenues have more than halved, declining 56.13% from ₹1.55 crores. This dramatic erosion suggests either severe market share losses, client attrition, or fundamental challenges in the company's core markets of white goods and automotive components.
Operating losses deepened substantially in Q2 FY26. The operating profit before depreciation, interest, and tax (PBDIT) excluding other income stood at negative ₹0.34 crores, compared to negative ₹0.26 crores in the previous quarter. The operating margin deteriorated sharply to negative 50.0% from negative 26.8% in Q1 FY26, indicating that the company is losing 50 paise on every rupee of sales before accounting for financing costs and depreciation. Employee costs of ₹0.11 crores remained relatively stable, but the fixed cost base proved unsustainable given the collapsing revenue base.
The profit after tax (PAT) margin stood at negative 51.47% in Q2 FY26, a significant deterioration from the negative 27.84% margin in Q1 FY26. Interest costs remained negligible at nil, whilst depreciation charges of ₹0.02 crores were modest. The tax line showed no material impact given the loss-making status. The quality of losses has worsened, with the company burning through cash at an accelerating rate relative to its revenue base.
Operational Challenges: Structural Weaknesses Persist
Iykot Hitech's operational metrics paint a picture of a business struggling with fundamental viability issues. The company's return on equity (ROE) averaged a paltry 0.65% over recent periods, indicating virtually no value creation for shareholders. More alarmingly, the latest ROE stands at a deeply negative 69.94%, reflecting the erosion of shareholder capital through sustained losses. Return on capital employed (ROCE) averaged negative 15.01%, with the latest figure at a catastrophic negative 119.41%, underscoring the company's inability to generate returns on the capital invested in the business.
The balance sheet, whilst relatively unencumbered by debt, has deteriorated sharply. Shareholder funds stood at ₹1.20 crores as of March 2024, down from ₹3.19 crores in March 2023 and ₹4.32 crores in March 2022. This erosion reflects the cumulative impact of sustained losses. The company's reserves and surplus turned negative at ₹1.84 crores in March 2024, compared to a positive ₹0.15 crores in March 2023. Current assets of ₹2.43 crores exceeded current liabilities of ₹2.39 crores by a slim margin, providing minimal working capital cushion.
Critical Operational Red Flags
Negative ROCE of 119.41%: The company is destroying capital at an alarming rate, with returns on capital employed deeply negative. This reflects fundamental business model challenges and unsustainable cost structures relative to revenue generation capability.
Shareholder Funds Erosion: Shareholder equity has collapsed from ₹4.32 crores in March 2022 to ₹1.20 crores in March 2024, a 72% decline driven by cumulative losses. The reserves and surplus account has turned negative, indicating accumulated losses now exceed paid-up capital.
Fixed assets stood at ₹1.12 crores as of March 2024, down from ₹1.41 crores the previous year, suggesting minimal capital investment and ongoing depreciation of the asset base. The company has no long-term debt, which eliminates solvency concerns but also reflects the likely inability to access credit markets given its financial condition. Sales to capital employed averaged 1.88 times, indicating relatively efficient asset utilisation, but this metric is rendered meaningless given the negative profitability.
Industry Context: Micro-Cap Manufacturer Faces Existential Crisis
Operating in the competitive industrial manufacturing sector, specifically in plastic moulded components for white goods, automobiles, and entertainment electronics, Iykot Hitech faces intense competition from larger, better-capitalised players. The company's micro-cap status (₹11.00 crores market capitalisation) and loss-making profile limit its ability to invest in technology upgrades, capacity expansion, or customer acquisition initiatives that might reverse its fortunes.
The broader industrial manufacturing sector has experienced mixed conditions, with automotive component suppliers facing headwinds from electric vehicle transitions and changing customer preferences. White goods manufacturers have also grappled with margin pressures from raw material inflation and intense competition. Iykot Hitech's dramatic revenue decline of 56.13% year-on-year suggests the company is losing clients or facing order cancellations, possibly due to quality issues, delivery failures, or clients consolidating their supplier bases towards more reliable partners.
Sector Positioning: Bottom Quartile Performance
Iykot Hitech's financial metrics place it at the bottom of the industrial manufacturing peer group. With negative operating margins exceeding 50% and a return on equity of just 0.65% (versus peer averages in the 3-6% range), the company is a clear underperformer. The 5-year sales growth of negative 7.01% and 5-year EBIT growth of negative 15.93% underscore a multi-year pattern of decline rather than a temporary setback.
Peer Comparison: Valuation Disconnect from Fundamentals
A comparison with industrial manufacturing peers reveals Iykot Hitech's precarious position. The company's price-to-book value ratio of 9.59 times appears grossly inflated given its loss-making status and deteriorating fundamentals. This compares to peer averages of 1.5-3.0 times for profitable companies in the sector. The disconnect suggests either speculative trading activity in the thinly-traded micro-cap stock or a failure of the market to fully price in the company's distress.
| Company | P/E Ratio | P/BV Ratio | ROE (%) | Debt/Equity |
|---|---|---|---|---|
| Iykot Hitech | NA (Loss Making) | 9.59x | 0.65% | 0.11 |
| Shivagrico Impl. | 41.58x | 1.80x | 3.91% | 1.99 |
| Rajasthan Cylind | NA (Loss Making) | 0.82x | 0.0% | -0.07 |
| Galaxy Agrico | NA (Loss Making) | 3.33x | 6.03% | 0.39 |
Amongst its peer group, Iykot Hitech ranks poorly on virtually every metric. Its ROE of 0.65% is the second-lowest in the group, whilst its price-to-book ratio of 9.59 times is by far the highest, suggesting severe overvaluation. The company's debt-to-equity ratio of 0.11 is amongst the lowest, which ordinarily would be viewed positively, but in this context merely reflects the company's inability to access credit markets rather than prudent financial management.
Valuation Analysis: Risky Asset Trading at Unjustifiable Premium
Iykot Hitech's valuation metrics are deeply concerning. With a price-to-earnings ratio classified as "NA (Loss Making)", the stock cannot be valued on earnings multiples. The price-to-book value ratio of 9.59 times implies the market is valuing the company at nearly ten times its net asset value of ₹0.85 per share, despite the company destroying shareholder value through sustained losses. The enterprise value to EBITDA multiple of negative 11.65 times reflects the negative EBITDA generation, rendering traditional valuation frameworks meaningless.
The company's proprietary Mojo Score of 3 out of 100 places it in the "STRONG SELL" category, reflecting the confluence of negative factors: bearish technical trend, negative financial trend, below-average quality grade, and risky valuation assessment. The valuation grade has oscillated between "Risky" and "Does Not Qualify" over recent months, with the current "Risky" designation highlighting the speculative nature of the stock. At a market capitalisation of ₹11.00 crores and trading at ₹11.31 per share, the stock trades 39.65% below its 52-week high of ₹18.74 but 10.88% above its 52-week low of ₹10.20.
Shareholding Pattern: Promoter Stability Amidst Institutional Absence
The shareholding pattern reveals a promoter-dominated structure with negligible institutional participation. Promoter holding has remained stable at 74.09% over the past five quarters, with no sequential changes since December 2024. The Dugar family, led by Padam Dugar (24%), P Annjana Dugar (20%), Likhitta Dugar (12%), and Antariksh Dugar (9.15%), controls the majority stake alongside Electronics Corporation of Tamil Nadu Ltd (7.8%). The stability of promoter holding suggests commitment to the business, though the sustained losses raise questions about the viability of this commitment.
| Quarter | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 |
|---|---|---|---|---|---|
| Promoter | 74.09% | 74.09% | 74.09% | 74.09% | 74.11% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| MF | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 0.07% | 0.07% | 0.07% | 0.07% | 0.07% |
| Non-Institutional | 25.84% | 25.84% | 25.84% | 25.84% | 25.83% |
Foreign institutional investors (FIIs), mutual funds, and insurance companies have zero exposure to the stock, reflecting the lack of institutional confidence in the company's prospects. Other domestic institutional investors (DIIs) hold a negligible 0.07% stake, unchanged over recent quarters. The non-institutional shareholding of 25.84% likely comprises retail investors and possibly some speculative traders attracted by the micro-cap status and volatility. The absence of institutional participation is a significant red flag, as professional investors typically avoid loss-making micro-caps with deteriorating fundamentals.
Stock Performance: Short-Term Bounce Masks Long-Term Decline
Iykot Hitech's stock performance reflects extreme volatility characteristic of thinly-traded micro-cap securities. The stock gained 4.92% on November 7, 2025, closing at ₹11.31, and has delivered a 6.00% return over the past week, outperforming the Sensex by 6.86 percentage points. However, this short-term bounce masks a concerning longer-term pattern. Over three months, the stock has declined 13.80%, underperforming the Sensex by 17.02 percentage points. The six-month return of negative 28.10% represents a 31.16 percentage point underperformance versus the benchmark.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | +4.92% | -0.11% | +5.03% |
| 1 Week | +6.00% | -0.86% | +6.86% |
| 3 Months | -13.80% | +3.22% | -17.02% |
| 6 Months | -28.10% | +3.06% | -31.16% |
| 2 Years | +21.80% | +28.14% | -6.34% |
| 3 Years | +53.49% | +36.01% | +17.48% |
| 5 Years | +414.65% | +98.64% | +316.01% |
On a longer-term basis, the stock has delivered exceptional returns, with a five-year gain of 414.65% representing a 316.01 percentage point outperformance versus the Sensex. However, this historical performance appears disconnected from current fundamentals and likely reflects the low base effect from extremely depressed levels five years ago. The stock currently trades in a bearish technical trend, having changed to "Bearish" from "Mildly Bearish" on November 7, 2025. All moving averages (5-day, 20-day, 50-day) are above the current price, indicating downward momentum.
Investment Thesis: Multiple Red Flags Outweigh Any Positives
The investment thesis for Iykot Hitech is overwhelmingly negative across all four key dimensions of the Mojo framework. The valuation assessment is "Risky", reflecting the disconnect between the 9.59 times price-to-book ratio and the loss-making, deteriorating fundamentals. The quality grade is "Below Average", driven by negative 5-year sales growth of 7.01%, negative 5-year EBIT growth of 15.93%, and deeply negative return ratios. The financial trend is classified as "Negative", with quarterly profit before tax, PBDIT, and PAT all at multi-quarter lows. The technical trend is "Bearish", with the stock trading below all key moving averages and multiple technical indicators flashing sell signals.
Key Strengths & Risk Factors
KEY STRENGTHS
- Debt-Free Balance Sheet: No long-term debt provides financial flexibility, though this reflects inability to access credit rather than prudent management
- Stable Promoter Holding: 74.09% promoter stake unchanged over recent quarters suggests commitment, though this may reflect lack of exit options
- No Pledging: Zero promoter pledging eliminates one source of financial distress risk
- Established Operations: Factory facility in Chennai with history dating to 1991 provides operational infrastructure
KEY CONCERNS
- Sustained Losses: Net loss of ₹0.35 crores in Q2 FY26, with negative operating margins of 50%, indicating fundamental business model issues
- Revenue Collapse: Sales declined 56.13% YoY to ₹0.68 crores, suggesting severe market share losses or client attrition
- Capital Destruction: ROE of negative 69.94% and ROCE of negative 119.41% reflect systematic destruction of shareholder value
- Shareholder Equity Erosion: Shareholder funds collapsed 72% from ₹4.32 crores (Mar'22) to ₹1.20 crores (Mar'24)
- Zero Institutional Participation: No FII, MF, or insurance holdings signals lack of professional investor confidence
- Negative Financial Trend: Quarterly metrics at multi-quarter lows with no signs of stabilisation
- Valuation Disconnect: P/BV of 9.59x unjustifiable for a loss-making entity with deteriorating fundamentals
Outlook: Monitoring Points for Further Deterioration
POSITIVE CATALYSTS (Highly Unlikely)
- Turnaround in quarterly revenue trajectory with return to positive growth
- Achievement of positive operating margins through cost restructuring
- Capital infusion or strategic partnership announcement
- Major client wins or order book expansion
RED FLAGS TO MONITOR
- Further sequential revenue declines below ₹0.50 crores per quarter
- Operating margins deteriorating beyond negative 60%
- Shareholder funds declining below ₹1.00 crore, approaching technical insolvency
- Promoter stake reduction or pledging initiation
- Working capital deterioration with current liabilities exceeding current assets
"With operating margins of negative 50%, return on equity of negative 69.94%, and shareholder funds eroding at an alarming rate, Iykot Hitech exemplifies a micro-cap value trap where any semblance of valuation discipline has been abandoned."
The Verdict: Avoid This Distressed Micro-Cap
Score: 3/100
For Fresh Investors: Avoid completely. The company exhibits all the hallmarks of a distressed micro-cap with no visible path to profitability. The 9.59 times price-to-book valuation for a loss-making entity with negative 69.94% ROE and collapsing revenues represents an egregious mispricing. Capital preservation should take absolute priority over speculative positions in fundamentally broken businesses.
For Existing Holders: Exit at the earliest opportunity, accepting current market prices rather than hoping for a recovery that appears structurally implausible. The sequential deterioration in operating margins from negative 26.8% to negative 50%, combined with 56.13% year-on-year revenue decline, suggests accelerating distress rather than stabilisation. The erosion of shareholder funds from ₹4.32 crores to ₹1.20 crores over two years indicates the company is consuming capital at an unsustainable rate.
Fair Value Estimate: ₹2.50 per share (78% downside from current price of ₹11.31), based on distressed book value of ₹0.85 per share with a 3x multiple reflecting speculative liquidity premium for a micro-cap. Even this estimate may prove optimistic if losses continue at the current trajectory.
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.
