The September 2025 quarter represents a concerning deterioration in operational performance for Kisan Mouldings. The company's operating profit before depreciation, interest, and tax (excluding other income) slipped into negative territory at -₹1.33 crores, the lowest level recorded in the past 12 quarters. This marks a stark contrast to the company's brief recovery period between June and December 2024, when operating margins had improved to the 2.56%-6.77% range.
The company's return on equity of 1.65% significantly trails the plastic products sector average, indicating suboptimal capital efficiency. Whilst the five-year average ROE stands at a modest 0.33%, the current reading suggests limited improvement in profitability metrics despite management's restructuring efforts over recent years.
| Metric | Sep'25 | Jun'25 | Mar'25 | Dec'24 | Sep'24 |
|---|---|---|---|---|---|
| Net Sales (₹ Cr) | 47.45 | 61.49 | 83.30 | 70.32 | 51.47 |
| QoQ Growth | -22.83% | -26.18% | +18.46% | +36.62% | -24.60% |
| YoY Growth | -7.81% | -9.92% | +40.05% | +6.24% | -16.06% |
| Operating Profit (₹ Cr) | -1.33 | 2.00 | 2.46 | 2.23 | 1.32 |
| Operating Margin % | -2.80% | 3.25% | 2.95% | 3.17% | 2.56% |
| Net Profit (₹ Cr) | -0.57 | 0.06 | 0.50 | 0.39 | -0.49 |
| PAT Margin % | -1.20% | 0.10% | 0.60% | 0.55% | -0.95% |
Financial Performance: Revenue Volatility Undermines Margin Recovery
Kisan Mouldings' Q2 FY26 results expose persistent challenges in maintaining consistent revenue generation. Net sales of ₹47.45 crores represent the lowest quarterly figure in recent periods, declining 22.83% from the previous quarter's ₹61.49 crores. The year-on-year comparison reveals a 7.81% contraction, with the company unable to match the ₹51.47 crores achieved in September 2024.
The operating profit margin (excluding other income) deteriorated sharply to -2.80% in Q2 FY26, falling from 3.25% in the preceding quarter. This represents the weakest operational performance in the past 12 quarters, surpassing even the challenging periods of late 2023 and early 2024 when the company struggled with profitability. Employee costs remained elevated at ₹6.19 crores, constituting 13.05% of revenue compared to 11.19% in the previous quarter, indicating reduced operating leverage.
The company's profit after tax margin compressed to -1.20%, down from a marginal 0.10% in Q1 FY26. Interest expenses increased to ₹0.83 crores from ₹0.68 crores sequentially, reflecting higher working capital requirements amidst declining sales. Depreciation charges of ₹1.41 crores remained relatively stable, though they now represent a significantly larger proportion of the reduced revenue base.
Operational Challenges: Capital Efficiency Remains Constrained
The company's return on equity of 1.65% highlights significant challenges in generating adequate returns on shareholder capital. With shareholder funds standing at ₹205.80 crores as of March 2025, the minimal ROE suggests that the company's asset base is not being deployed efficiently. The five-year average ROE of 0.33% underscores the persistent nature of these profitability constraints, with the company struggling to consistently earn above its cost of capital.
Kisan Mouldings maintains a debt-to-equity ratio of 0.83, indicating moderate leverage levels. Total debt stands at ₹32 crores with net debt at ₹24 crores, providing some financial flexibility. However, the interest coverage ratio of 0.87x remains concerning, as operating profits barely cover interest obligations. This leaves limited cushion for earnings volatility and constrains the company's ability to service debt comfortably during periods of operational weakness.
The company's balance sheet shows fixed assets of ₹146.69 crores as of March 2025, up from ₹141.36 crores a year earlier, suggesting continued capital investment. Current assets stood at ₹124.85 crores against current liabilities of ₹100.45 crores, providing a current ratio of approximately 1.24x. Trade payables of ₹49.44 crores and other current liabilities of ₹9.95 crores indicate manageable short-term obligations, though working capital management requires attention given the revenue volatility.
⚠️ Critical Operational Concerns
Weakest Quarterly Performance: Q2 FY26 operating profit of -₹1.33 crores marks the lowest level in 12 quarters, with operating margin at -2.80% indicating fundamental operational stress.
Interest Coverage Pressure: With an interest coverage ratio of just 0.87x, the company generates insufficient operating profit to comfortably service its debt obligations, raising sustainability concerns.
Capital Efficiency Gap: ROE of 1.65% significantly trails sector peers, with the company generating minimal returns on its ₹205.80 crores shareholder base.
Sector Context: Underperforming in a Challenging Environment
The plastic products sector has faced headwinds over the past year, with the sector index declining 76.79% over 12 months. However, Kisan Mouldings' one-year return of -42.97% demonstrates relative outperformance against this severely distressed sector backdrop, suggesting the stock has held up better than many peers despite its operational challenges.
Within the plastic products industry, Kisan Mouldings operates in a highly fragmented market characterised by intense competition and pricing pressures. The company's market capitalisation of ₹398 crores positions it as a micro-cap player, ranking 38th out of 122 companies in the sector. This limited scale constrains competitive advantages and bargaining power with suppliers and customers.
The broader manufacturing environment has been marked by volatile raw material costs and demand uncertainty. Plastic resin prices, a key input cost, have experienced fluctuations that impact margin predictability. Additionally, the shift towards sustainable and recyclable materials is reshaping industry dynamics, requiring capital investments that smaller players like Kisan Mouldings may struggle to finance whilst maintaining profitability.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity | Div Yield % |
|---|---|---|---|---|---|
| Kisan Mouldings | NA (Loss Making) | 1.93 | 1.65 | 0.11 | 0.00 |
| Dhabriya Polyfab | 20.77 | 4.14 | 18.03 | 0.46 | 0.18 |
| Shish Industries | 38.52 | 3.29 | 8.62 | 0.32 | 0.00 |
| Premier Polyfilm | 17.41 | 3.86 | 22.16 | -0.12 | 0.35 |
| Bhavik Enterprises | 51.90 | 3.01 | 5.79 | -0.27 | 0.00 |
The peer comparison reveals Kisan Mouldings trading at a significant discount on price-to-book value (1.93x versus a peer average of approximately 3.6x), which could suggest either attractive valuation or fundamental concerns. The company's ROE of 1.65% substantially trails peers such as Dhabriya Polyfab (18.03%) and Premier Polyfilm (22.16%), indicating a competitive disadvantage in capital efficiency. Whilst Kisan maintains lower leverage than some peers, the absence of dividend payments reflects the company's inability to generate consistent distributable profits.
Valuation Analysis: Expensive Multiples Despite Operational Weakness
Despite the company's operational challenges, Kisan Mouldings trades at elevated valuation multiples that appear disconnected from underlying fundamentals. The price-to-earnings ratio cannot be meaningfully calculated due to the company's loss-making status on a trailing twelve-month basis. The enterprise value-to-EBITDA multiple of 52.46x appears exceptionally high, particularly given the negative operating margins in the most recent quarter.
The stock's price-to-book value of 1.93x, whilst lower than sector peers, still represents a premium to the company's book value of ₹13.11 per share. This valuation appears difficult to justify given the ROE of just 1.65% and persistent profitability challenges. The company's valuation grade has fluctuated between "Fair" and "Expensive" in recent months, currently classified as "Expensive" since September 2025 at ₹35.52.
The stock's PEG ratio of 8.42x suggests the market is pricing in growth expectations that appear optimistic relative to recent performance. With five-year sales CAGR of 5.93% and inconsistent profitability, the current valuation multiples embed assumptions of significant operational improvement that management has yet to demonstrate convincingly.
Shareholding Pattern: Promoter Stake Increases Amidst Decline
Promoter holding in Kisan Mouldings increased to 70.67% in September 2025, maintaining the level from June 2025 after a 1.00% sequential increase in that quarter. The promoters had raised their stake from 65.65% in September 2024 to 69.67% by March 2025, demonstrating continued commitment despite the company's operational challenges. Apollo Pipes Limited holds the largest stake at 58.60%, with Polson Traders LLP contributing 3.04%.
Foreign institutional investor (FII) holdings remain minimal at 0.54%, unchanged over the past five quarters, whilst mutual funds, insurance companies, and other domestic institutional investors maintain zero exposure to the stock. The absence of institutional interest reflects concerns about the company's scale, liquidity, and operational consistency.
Non-institutional shareholding declined to 28.79% in September 2025 from 33.81% a year earlier, as retail and non-institutional investors reduced exposure. The number of non-institutional shareholders increased marginally to 13,716 from 13,200, suggesting some retail interest despite the stock's poor performance. Notably, promoters have not pledged any shares, indicating financial stability at the promoter level.
| Category | Sep'25 | Jun'25 | Mar'25 | Dec'24 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 70.67% | 70.67% | 69.67% | 65.65% | Stable |
| FII | 0.54% | 0.54% | 0.54% | 0.54% | Stable |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | Nil |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | Nil |
| Non-Institutional | 28.79% | 28.79% | 29.79% | 33.81% | Declining |
Stock Performance: Severe Underperformance Across Timeframes
Kisan Mouldings' stock has experienced a dramatic decline over the past year, falling 42.97% compared to the Sensex's 6.77% gain, resulting in negative alpha of -49.74%. The stock currently trades at ₹33.25, just 2.31% above its 52-week low of ₹32.50 and a staggering 51.64% below its 52-week high of ₹68.76 achieved earlier in the fiscal year.
The stock's year-to-date performance shows a decline of 39.63% against the Sensex's 8.50% advance, underperforming by 48.13 percentage points. Short-term momentum remains weak, with the stock declining 1.19% over the past week and 1.89% over one month, whilst the broader market posted gains. The three-month and six-month returns of -12.52% and -29.41% respectively highlight sustained selling pressure.
However, longer-term performance metrics present a contrasting picture. The stock has delivered impressive returns of 129.15% over two years and 186.39% over three years, significantly outperforming the Sensex during these periods. The five-year return of 198.47% versus the Sensex's 109.22% demonstrates that patient investors have been rewarded despite recent volatility. This dichotomy suggests the stock experienced a significant rally that has since reversed sharply.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -1.19% | +0.49% | -1.68% |
| 1 Month | -1.89% | +5.41% | -7.30% |
| 3 Months | -12.52% | +4.07% | -16.59% |
| 6 Months | -29.41% | +7.03% | -36.44% |
| YTD | -39.63% | +8.50% | -48.13% |
| 1 Year | -42.97% | +6.77% | -49.74% |
| 2 Years | +129.15% | +32.92% | +96.23% |
| 3 Years | +186.39% | +41.87% | +144.52% |
The stock trades below all key moving averages, with the current price of ₹33.25 sitting below the 5-day (₹33.87), 20-day (₹34.21), 50-day (₹35.59), 100-day (₹37.64), and 200-day (₹41.71) moving averages. This technical configuration confirms the bearish trend that emerged in September 2025. The stock's beta of 1.50 indicates high volatility, with movements typically 50% larger than the broader market.
Investment Thesis: Structural Challenges Overshadow Valuation Discount
Kisan Mouldings presents a challenging investment proposition characterised by persistent operational difficulties that overshadow any apparent valuation attractions. The company's proprietary score of 9 out of 100 with a "Strong Sell" rating reflects fundamental concerns about profitability sustainability, competitive positioning, and execution capability.
The quality assessment classifies the company as "Below Average," a designation it has maintained for 13 consecutive quarters since June 2022. The financial trend turned "Flat" in June 2025, indicating stagnation after a brief positive period. Technical indicators remain firmly bearish, with the stock in a confirmed downtrend since September 2025 and trading below all major moving averages.
The valuation framework presents a paradox: whilst the price-to-book ratio of 1.93x appears moderate and the stock trades near 52-week lows, the company's inability to generate consistent profits and its elevated EV/EBITDA multiple of 52.46x suggest the market is pricing in a recovery that remains elusive. The PEG ratio of 8.42x indicates the stock is expensive relative to its growth profile, particularly concerning given the recent operational setbacks.
KEY STRENGTHS
- Five-year sales CAGR of 5.93% demonstrates long-term growth trajectory
- Promoter holding increased to 70.67%, showing management confidence
- Zero promoter pledging indicates financial stability at ownership level
- Moderate debt-to-equity ratio of 0.83 provides financial flexibility
- Strong multi-year returns (186.39% over 3 years) for patient investors
- Relative outperformance versus severely distressed sector (-42.97% vs -76.79%)
- Trading near 52-week low potentially offers entry point for turnaround believers
KEY CONCERNS
- Q2 FY26 operating margin of -2.80% marks 12-quarter low
- Revenue volatility with 22.83% QoQ decline in latest quarter
- ROE of 1.65% significantly trails sector peers (14%+ average)
- Interest coverage ratio of 0.87x indicates inadequate profit cushion
- Zero institutional investor interest reflects confidence gap
- Elevated valuation multiples (EV/EBITDA 52.46x) despite operational weakness
- Bearish technical trend with stock below all moving averages
- High beta of 1.50 amplifies downside volatility in weak markets
Outlook: Critical Monitoring Points for Potential Turnaround
The path forward for Kisan Mouldings requires demonstrable improvement across multiple operational dimensions. Investors should closely monitor quarterly results for evidence of revenue stabilisation and margin recovery. The company's ability to return to positive operating margins consistently will be crucial in rebuilding investor confidence.
Management's capital allocation decisions warrant scrutiny, particularly regarding working capital efficiency and capacity utilisation. The company's sales-to-capital-employed ratio of 1.44x suggests room for improvement in asset productivity. Any strategic initiatives to enhance operational efficiency, diversify the product portfolio, or improve customer concentration could serve as positive catalysts.
The broader sector environment and raw material cost trends will significantly influence near-term performance. Stabilisation in plastic resin prices and improved demand visibility in key end-user industries could provide tailwinds. However, the company's micro-cap status and limited institutional following mean that any positive developments may take time to be reflected in the stock price.
POSITIVE CATALYSTS
- Return to positive operating margins for consecutive quarters
- Revenue stabilisation above ₹60 crores quarterly run-rate
- Improvement in ROE towards double-digit levels
- Interest coverage ratio improving above 1.5x
- Institutional investor entry signalling confidence
RED FLAGS TO WATCH
- Further deterioration in operating margins below -5%
- Sustained quarterly revenue below ₹45 crores
- Increase in debt levels or deteriorating interest coverage
- Promoter stake reduction or emergence of pledging
- Loss of key customers or market share erosion
"With operating margins in negative territory, ROE at just 1.65%, and persistent profitability challenges, Kisan Mouldings requires fundamental operational improvement before investment consideration."
The Verdict: Avoid Until Operational Turnaround Materialises
Score: 9/100
For Fresh Investors: Avoid initiating positions. The company's negative operating margins, weak ROE of 1.65%, and persistent profitability challenges present significant risks. The elevated valuation multiples (EV/EBITDA 52.46x, PEG 8.42x) are unjustified given operational performance. Wait for at least two consecutive quarters of positive operating margins and revenue stabilisation above ₹60 crores before considering entry.
For Existing Holders: Consider reducing exposure on any technical bounce towards ₹37-40 levels. The stock's bearish technical trend, absence of institutional support, and deteriorating fundamentals suggest limited near-term upside. Those with longer investment horizons may hold small positions whilst closely monitoring quarterly results for turnaround evidence, but should maintain strict position sizing given the high-risk profile.
Fair Value Estimate: ₹25-28 (18-25% downside from current levels) based on 1.5x P/BV and assuming modest improvement to 3-5% ROE over the next 12-18 months.
⚠️ 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.
