With a market capitalisation of merely ₹48.75 crores and the stock trading at ₹60.81, Keerthi Industries finds itself in a precarious financial position. The company's net sales plummeted 29.31% quarter-on-quarter to ₹15.89 crores in Q3 FY26, marking the lowest quarterly revenue in recent periods. Year-on-year, the revenue contraction was even more pronounced at 36.03%, reflecting severe demand challenges and operational inefficiencies that have plagued the business throughout FY26.
The deteriorating financial performance has pushed the stock down 25.59% over the past year, significantly underperforming both the Sensex (up 9.02%) and the cement sector (up 9.87%). The company's proprietary Mojo Score stands at a dismal 9 out of 100, firmly placing it in "STRONG SELL" territory with recommendations for existing shareholders to consider exiting positions.
Financial Performance: A Spiral of Deteriorating Metrics
The Q3 FY26 results paint a grim picture of operational distress. Net sales of ₹15.89 crores represent not just a sequential decline of 29.31% from Q2 FY26's ₹22.48 crores, but also mark the lowest quarterly revenue recorded in recent history. The year-on-year comparison is equally troubling, with sales down 36.03% from ₹24.84 crores in Q3 FY25. This consistent revenue erosion across both sequential and annual periods signals deep-rooted structural challenges rather than temporary cyclical pressures.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Operating Margin | Net Loss (₹ Cr) | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3) | 15.89 | -29.31% | -27.31% | -5.19 | -32.66% |
| Sep'25 (Q2) | 22.48 | -26.49% | -15.52% | -5.31 | -23.62% |
| Jun'25 (Q1) | 30.58 | +33.54% | 0.59% | -2.84 | -9.29% |
| Mar'25 (Q4) | 22.90 | -7.81% | -9.91% | -3.98 | -17.38% |
| Dec'24 (Q3) | 24.84 | +12.25% | -24.84% | -9.34 | -37.60% |
| Sep'24 (Q2) | 22.13 | -40.94% | -38.59% | -5.84 | -26.39% |
| Jun'24 (Q1) | 37.47 | — | -9.29% | -5.48 | -14.63% |
Operating margins have collapsed to deeply negative territory at -27.31% in Q3 FY26, significantly worse than the -15.52% recorded in Q2 FY26. The operating loss before other income stood at ₹4.34 crores, reflecting fundamental issues with cost management and pricing power. Even after accounting for other income of ₹1.10 crores, the company posted an operating loss of ₹3.24 crores. After interest costs of ₹1.30 crores and depreciation of ₹2.34 crores, the loss before tax ballooned to ₹6.88 crores.
The PAT margin deteriorated to -32.66% in Q3 FY26 from -23.62% in the previous quarter, indicating that losses are accelerating as a percentage of revenue. The tax credit of ₹1.69 crores (effective rate of 24.56%) provided some relief, but was insufficient to prevent the net loss from reaching ₹5.19 crores. While this represents a marginal 2.26% sequential improvement from Q2 FY26's loss of ₹5.31 crores, the year-on-year comparison shows a 44.44% improvement from Q3 FY25's devastating loss of ₹9.34 crores.
Critical Operational Concerns
Revenue Collapse: Net sales have plunged to the lowest quarterly level at ₹15.89 crores, down from ₹37.47 crores in Jun'24, representing a 57.59% decline over just six quarters. This severe contraction points to fundamental demand issues, loss of market share, or operational capacity constraints that management has been unable to address effectively.
Margin Destruction: Operating margins at -27.31% indicate the company is burning cash on every unit sold, with costs far exceeding realisations. This is not a temporary pricing pressure but a structural profitability crisis that threatens the company's viability.
Balance Sheet Stress: Rising Leverage Amid Shrinking Equity
The company's balance sheet has deteriorated significantly over the past year, with shareholder funds declining to ₹40.73 crores in Mar'25 from ₹63.61 crores in Mar'24, representing a 35.98% erosion in equity capital. This decline is directly attributable to accumulated losses of ₹22.00 crores in FY25, which wiped out reserves and surplus. The reserves dropped from ₹55.59 crores to ₹32.71 crores, whilst share capital remained constant at ₹8.02 crores.
More concerning is the rising debt burden. Long-term debt increased to ₹41.98 crores in Mar'25 from ₹44.72 crores in Mar'24, though this represents a marginal decline of 6.13%. However, when viewed against the shrinking equity base, the debt-to-equity ratio has deteriorated to 1.68 times as of H1 FY26, marking the highest leverage in the company's recent history. Current liabilities surged 30.58% to ₹83.65 crores, driven primarily by a 69.52% increase in trade payables to ₹47.55 crores, suggesting potential liquidity pressures and delayed vendor payments.
Liquidity Crisis Warning
Cash and cash equivalents have plummeted to ₹0.80 crores in H1 FY26, the lowest level on record. With current assets of just ₹38.19 crores against current liabilities of ₹83.65 crores, the current ratio stands at a concerning 0.46 times, indicating severe working capital stress. The company's ability to meet short-term obligations is questionable, and the ballooning trade payables suggest vendors are bearing the brunt of the cash crunch.
Fixed assets declined to ₹100.87 crores in Mar'25 from ₹114.44 crores in Mar'24, reflecting depreciation charges of ₹12.00 crores for the year with minimal capital expenditure. The company generated positive operating cash flow of ₹15.00 crores in FY24, primarily from working capital improvements, but this was insufficient to cover investing activities and debt servicing requirements. The closing cash position stood at effectively zero, highlighting the precarious liquidity situation.
Profitability Metrics: Weak Returns and Negative Capital Efficiency
Return on Equity (ROE) has collapsed to -63.57% for the latest period, reflecting the severe losses relative to the eroding shareholder base. The average ROE over recent years stands at just 5.88%, indicating chronically weak profitability even during better periods. Return on Capital Employed (ROCE) is equally dismal at -25.71% for the latest period, with an average of -2.26%, demonstrating the company's inability to generate adequate returns on the capital invested in the business.
The EBIT to interest coverage ratio averages a troubling -0.31 times, meaning the company is not generating sufficient operating profits to cover even its interest obligations. This negative coverage has persisted over multiple periods, raising serious questions about debt sustainability. The five-year sales growth rate stands at -10.04% annually, whilst EBIT growth has collapsed at a staggering -215.16% compound annual rate, underscoring the magnitude of the operational deterioration.
| Metric | Latest | Average | Assessment |
|---|---|---|---|
| ROE | -63.57% | 5.88% | Severely Weak |
| ROCE | -25.71% | -2.26% | Negative Returns |
| EBIT/Interest | — | -0.31x | Unable to Service Debt |
| 5Y Sales Growth | — | -10.04% | Declining Revenue Base |
| 5Y EBIT Growth | — | -215.16% | Profit Destruction |
The company's quality assessment has been downgraded to "Below Average" since November 2025, reflecting the sustained deterioration in financial performance and fundamental strength. With operating losses persisting across multiple quarters and weak long-term fundamentals, Keerthi Industries fails to meet basic quality thresholds expected of investable companies. The institutional holding stands at a negligible 0.04%, indicating virtually no confidence from professional investors.
Industry Context: Struggling in a Recovering Cement Market
The broader cement and cement products sector has delivered positive returns of 9.87% over the past year, supported by infrastructure spending and housing demand. However, Keerthi Industries has dramatically underperformed, posting a negative return of 25.59% over the same period, resulting in a sector underperformance of 35.46 percentage points. This divergence suggests company-specific issues rather than industry-wide headwinds.
The cement sector has generally benefited from government infrastructure projects and urban housing demand, with larger players reporting stable to improving margins. Keerthi Industries' severe underperformance indicates the company has been unable to capitalise on these favourable industry dynamics, likely due to its limited scale (297,000 tonnes annual capacity), regional concentration in Telangana, and operational inefficiencies.
Peer Comparison: Lagging Across All Metrics
A comparison with peers in the cement and cement products sector reveals Keerthi Industries' relative weakness across key financial metrics. Whilst the company's ROE of 5.88% (average) is not the worst in the peer group, it significantly lags behind Shri Keshav's 16.40%. The debt-to-equity ratio of 1.66 times is amongst the highest in the group, exceeded only by Shri Keshav at 2.34 times, indicating elevated financial leverage.
| Company | P/E (TTM) | ROE % | Debt/Equity | P/BV | Div Yield |
|---|---|---|---|---|---|
| Keerthi Industries | NA (Loss Making) | 5.88% | 1.66 | 1.48 | NA |
| Shri Keshav | 29,071.17 | 16.40% | 2.34 | 2.91 | NA |
| Kanoria Energy | NA (Loss Making) | 8.59% | 1.22 | 1.54 | 0.29% |
| Barak Valley | 5,038.08 | 4.27% | 0.28 | 0.80 | NA |
| Kakatiya Cement | NA (Loss Making) | 0.85% | -0.24 | 0.47 | 2.57% |
The Price-to-Book Value ratio of 1.48 times appears relatively reasonable compared to Shri Keshav's 2.91 times, but this metric is misleading given the ongoing erosion of book value through sustained losses. As losses continue to accumulate, the book value will further decline, potentially pushing the P/BV ratio higher unless the stock price falls proportionately. The inability to generate positive P/E ratios (currently loss-making) places Keerthi Industries alongside weaker peers in the sector.
With a market capitalisation of just ₹48.75 crores, Keerthi Industries ranks sixth amongst its peer group, reflecting its micro-cap status and limited institutional interest. The lack of dividend payments (last dividend of ₹1.50 per share paid in September 2022) contrasts with some peers who maintain dividend distributions despite challenges, further highlighting the company's financial distress.
Valuation Analysis: Risky Despite Apparent Discount
The current valuation of Keerthi Industries is classified as "Risky" by proprietary models, having been downgraded from "Fair" in February 2023. At a Price-to-Book Value of 1.48 times, the stock might appear to trade at a discount to its book value-adjusted peers, but this metric becomes meaningless when the underlying book value is rapidly eroding due to sustained losses. The company's inability to generate positive earnings renders traditional P/E-based valuation frameworks inapplicable.
The Enterprise Value to EBITDA multiple stands at -9.55 times, a negative figure that reflects the company's negative EBITDA generation. Similarly, EV/EBIT at -4.59 times and EV/Sales at 0.97 times paint a picture of a business trading below its revenue but generating substantial operating losses. The EV/Capital Employed ratio of 1.18 times suggests the market values the business close to its invested capital, but this fails to account for the capital's inability to generate positive returns.
The stock has declined 30.90% from its 52-week high of ₹88.00, currently trading at ₹60.81, whilst sitting 16.49% above its 52-week low of ₹52.20. This positioning suggests the stock has found some technical support near recent lows, but fundamental deterioration continues unabated. The valuation grade history shows a consistent downgrade pattern from "Attractive" in late 2022 to "Fair" in early 2023, and finally to "Risky" by February 2023, where it has remained.
Shareholding Pattern: Promoter Reduction Raises Concerns
The shareholding pattern reveals a notable reduction in promoter holding from 74.92% in Mar'25 to 67.18% in Jun'25, representing a 7.74 percentage point decline in a single quarter. This reduction has remained stable through Q2 and Q3 FY26, but the timing of the sale during a period of severe financial distress raises questions about promoter confidence in the business turnaround. The corresponding increase in non-institutional holdings from 25.04% to 32.77% suggests retail investors may have absorbed shares offloaded by promoters.
| Quarter | Promoter % | Change | FII % | MF % | Other DII % | Non-Inst % |
|---|---|---|---|---|---|---|
| Dec'25 | 67.18% | 0.00% | 0.00% | 0.00% | 0.04% | 32.77% |
| Sep'25 | 67.18% | 0.00% | 0.00% | 0.00% | 0.04% | 32.77% |
| Jun'25 | 67.18% | -7.74% | 0.00% | 0.00% | 0.04% | 32.77% |
| Mar'25 | 74.92% | 0.00% | 0.00% | 0.00% | 0.04% | 25.04% |
| Dec'24 | 74.92% | — | 0.00% | 0.00% | 0.04% | 25.04% |
The complete absence of Foreign Institutional Investor (FII) holdings and negligible Mutual Fund presence (0.00%) reflects the company's micro-cap status and lack of institutional appeal. Other Domestic Institutional Investors (DII) hold a mere 0.04%, indicating virtually no professional investor interest. This ownership structure leaves the stock vulnerable to liquidity issues and price volatility, with trading dominated by retail participants.
Promoter pledging data is not available, but given the financial stress and declining promoter stake, any material pledging would represent an additional red flag for investors. The promoter group is led by Seshagiri Rao Jasti (38.44%) and Triveni Jasti (27.38%), who collectively control the majority stake but have reduced their combined holding during the company's most challenging period.
Stock Performance: Severe Underperformance Across All Timeframes
The stock's price performance has been uniformly negative across virtually all timeframes, reflecting sustained fundamental deterioration and investor exodus. Over the past year, Keerthi Industries has declined 25.59%, dramatically underperforming the Sensex's 9.02% gain, resulting in a negative alpha of 34.61 percentage points. The three-year performance is even more dire, with the stock down 57.04% against the Sensex's 35.02% gain, producing a staggering negative alpha of 92.06 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +7.44% | -1.52% | +8.96% |
| 1 Month | -4.61% | -0.93% | -3.68% |
| 3 Months | -12.95% | -2.09% | -10.86% |
| 6 Months | -17.82% | +2.72% | -20.54% |
| YTD | -14.89% | -2.85% | -12.04% |
| 1 Year | -25.59% | +9.02% | -34.61% |
| 2 Years | -54.62% | +14.31% | -68.93% |
| 3 Years | -57.04% | +35.02% | -92.06% |
| 5 Years | -47.44% | +58.90% | -106.34% |
The only bright spot is the one-week return of +7.44%, which outperformed the Sensex's -1.52% decline, generating a positive alpha of 8.96 percentage points. However, this recent uptick appears to be a technical bounce rather than a fundamental reversal, as the stock continues to trade below all major moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), indicating persistent downward pressure.
Risk-adjusted returns paint an even grimmer picture. The stock's one-year risk-adjusted return stands at -0.34, with volatility of 76.13%, placing it firmly in the "HIGH RISK LOW RETURN" category. The negative Sharpe ratio indicates investors are not being compensated for the substantial risk undertaken. With a beta of 1.50, the stock is classified as high beta, meaning it tends to amplify market movements, making it particularly vulnerable during market downturns.
Technical Analysis: Mildly Bearish with Multiple Resistance Levels
The technical picture remains challenging, with the overall trend classified as "Mildly Bearish" as of February 13, 2026. This represents a marginal improvement from the "Bearish" classification that persisted through much of October 2025, but the stock continues to face significant technical headwinds. The MACD indicator shows bearish signals on both weekly and monthly timeframes, whilst RSI provides no clear directional signal, suggesting weak momentum.
Bollinger Bands indicate "Mildly Bearish" conditions on both weekly and monthly charts, suggesting the stock is trading in the lower half of its recent range without significant buying interest. The Dow Theory classification of "Mildly Bearish" on weekly charts and "No Trend" on monthly charts reflects the lack of a clear upward trajectory. The KST indicator shows bearish signals on weekly charts but "Mildly Bullish" on monthly timeframes, creating mixed signals that suggest consolidation rather than a definitive trend.
The stock trades at ₹60.81, well below all key moving averages. The 5-day MA stands at ₹58.57, the 20-day MA at ₹60.22, the 50-day MA at ₹64.97, the 100-day MA at ₹67.86, and the 200-day MA at ₹71.05. This positioning below all moving averages is a classic bearish configuration, indicating sustained selling pressure. Immediate support lies at the 52-week low of ₹52.20, whilst resistance is clustered at ₹60.22 (20 DMA), ₹67.86 (100 DMA), and ₹71.05 (200 DMA), with major resistance at the 52-week high of ₹88.00.
Investment Thesis: Fundamental Weakness Across All Parameters
The investment thesis for Keerthi Industries is unequivocally negative across all four key parameters of the proprietary Mojo framework. The valuation is classified as "Risky," reflecting the danger of value traps where apparent discounts mask deteriorating fundamentals. The quality grade is "Below Average," based on weak long-term financial performance, negative profitability metrics, and high leverage. The financial trend is "Negative," driven by collapsing revenues, mounting losses, and deteriorating balance sheet metrics. Finally, the technical trend is "Mildly Bearish," with the stock trading below all major moving averages and facing multiple resistance levels.
The overall Mojo Score of 9 out of 100 places the stock firmly in "STRONG SELL" territory, with the scoring model recommending investors strongly consider selling and exiting positions. The score has remained in the "Strong Sell" or "Sell" range since early 2023, reflecting sustained fundamental weakness that has only intensified over time. The combination of operating losses, negative cash flows, high leverage, and eroding equity creates a toxic mix that threatens shareholder value.
Key Strengths and Risk Factors
Limited Positives
- Sequential Loss Reduction: Q3 FY26 loss of ₹5.19 crores represents a marginal 2.26% improvement from Q2 FY26's ₹5.31 crores, suggesting losses may be stabilising at current depressed levels.
- Year-on-Year Improvement: Despite remaining deeply negative, the Q3 FY26 loss shows 44.44% improvement from Q3 FY25's devastating ₹9.34 crore loss, indicating some progress from the worst period.
- Operating Cash Generation: FY24 saw positive operating cash flow of ₹15.00 crores, demonstrating the business can generate cash from operations when working capital is optimised.
- Stable Promoter Holding: After the Q1 FY26 reduction, promoter holding has stabilised at 67.18% for the past three quarters, suggesting no further immediate dilution.
Critical Risk Factors
- Severe Revenue Decline: Net sales collapsed 36.03% YoY to ₹15.89 crores in Q3 FY26, the lowest quarterly revenue in recent history, indicating fundamental demand or operational issues.
- Deeply Negative Margins: Operating margin of -27.31% means the company loses money on every unit sold, with costs far exceeding realisations—an unsustainable business model.
- Eroding Equity Base: Shareholder funds declined 35.98% to ₹40.73 crores in FY25, with accumulated losses wiping out reserves and threatening the viability of the equity cushion.
- Liquidity Crisis: Cash reserves depleted to ₹0.80 crores with current ratio of 0.46 times, raising serious questions about the company's ability to meet short-term obligations.
- Debt Sustainability Concerns: Debt-to-equity ratio of 1.68 times with negative EBIT-to-interest coverage of -0.31x indicates the company cannot service debt from operations.
- Promoter Stake Reduction: 7.74 percentage point decline in promoter holding during a crisis period raises concerns about management confidence in turnaround prospects.
- Zero Institutional Interest: Complete absence of FII and MF holdings (0.00%) with negligible DII presence (0.04%) reflects professional investors' lack of confidence.
Outlook: Critical Monitoring Points for Investors
Positive Catalysts (Unlikely)
- Revenue Stabilisation: Quarterly sales stabilising above ₹25 crores would signal demand recovery, though current trajectory suggests continued decline.
- Margin Improvement: Operating margins returning to positive territory (above 0%) would indicate cost control success, but requires dramatic operational restructuring.
- Capital Infusion: Fresh equity capital or strategic investor entry could address liquidity concerns and provide runway for turnaround efforts.
- Debt Restructuring: Successful negotiation with lenders to restructure debt terms could alleviate immediate solvency pressures and buy time for recovery.
Critical Red Flags
- Further Revenue Decline: Sales falling below ₹15 crores quarterly would signal accelerating business deterioration and potential operational shutdown risk.
- Margin Deterioration: Operating margins worsening beyond -30% would indicate complete loss of pricing power and cost control, threatening viability.
- Cash Depletion: Cash reserves falling to zero or requiring emergency funding would trigger immediate solvency concerns and potential default risk.
- Additional Promoter Selling: Further reduction in promoter stake below 60% would signal management abandonment and loss of control, devastating investor confidence.
- Debt Default: Any missed interest or principal payments would trigger lender action, potential asset seizure, and likely insolvency proceedings.
The Verdict: Exit Whilst Liquidity Permits
Score: 9/100
For Fresh Investors: Avoid completely. The company faces an existential crisis with mounting losses, depleted cash reserves, and deteriorating operations. The risk of permanent capital loss is extremely high, and no credible turnaround catalyst is visible.
For Existing Holders: Exit positions immediately whilst liquidity permits. The stock trades at ₹60.81 with minimal trading volumes, making exits challenging. Any further deterioration in fundamentals or liquidity could trap remaining shareholders. The 7.74% promoter stake reduction during the crisis period is a clear warning signal.
Fair Value Estimate: Not applicable. With negative earnings, eroding book value, and questionable business viability, traditional valuation frameworks break down. The stock's intrinsic value is highly uncertain and likely significantly below current market price. Potential downside to ₹40-45 (35-40% decline) if losses persist.
Rationale: Keerthi Industries exhibits all the hallmarks of a distressed business facing potential insolvency. Operating margins of -27.31%, cash reserves of ₹0.80 crores, debt-to-equity of 1.68 times, and inability to service debt from operations create a perfect storm of financial distress. The company requires immediate and drastic operational restructuring, fresh capital infusion, or strategic intervention to survive. Without visible catalysts for improvement, the risk-reward profile is overwhelmingly negative.
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 is not indicative of future results, and all investments carry risk of loss.
