The Gujarat-based company, originally established in March 1992 to manufacture twisted polyester filament yarn and micro filament yarn, has witnessed a dramatic decline from its operational heyday. With facilities at GIDC Estate Ankleshwar designed for 500 tonnes per annum capacity and 5 lakh metres of grey fabric production, the company's current dormant status represents a stark departure from its founding vision. The stock has declined 11.01% over the past year, significantly underperforming the Sensex's 4.62% gain by 15.63 percentage points, whilst also lagging the broader Garments & Apparels sector by 7.40 percentage points.
Financial Performance: Virtual Standstill in Operations
Kush Industries' financial performance for the most recent periods reflects a company in operational hibernation. For FY2025, the company reported nil net sales, zero operating profit, and nil profit after tax. This pattern has persisted across multiple years, with sporadic instances of minimal activity. In FY2024, the company recorded a profit before tax of ₹2.00 crores, though this appears to have been driven by extraordinary items rather than core operations. Similarly, FY2022 saw profit before tax of ₹2.00 crores on sales of ₹3.00 crores, representing the most recent period of substantive operational activity.
| Period | Net Sales (₹ Cr) | PBT (₹ Cr) | PAT (₹ Cr) |
|---|---|---|---|
| FY2025 | 0.00 | 0.00 | 0.00 |
| FY2024 | 0.00 | 2.00 | 2.00 |
| FY2023 | 0.00 | 0.00 | 0.00 |
| FY2022 | 3.00 | 2.00 | 2.00 |
| FY2021 | 0.00 | 0.00 | 0.00 |
| FY2020 | 0.00 | 1.00 | 1.00 |
The quarterly data from March 2016 and March 2015 provides historical context, showing sales of ₹0.07 crores and ₹0.10 crores respectively, both accompanied by deeply negative operating margins of -176.0% and -239.18%. These figures underscore the structural challenges that have plagued the company's operations for nearly a decade. The company's five-year sales growth stands at -6.36%, reflecting the sustained operational decline.
Critical Financial Deterioration
The company's shareholder funds have deteriorated from ₹-7.27 crores in FY2024 to ₹-7.25 crores in FY2025, maintaining deeply negative equity. With reserves and surplus at ₹-22.09 crores against share capital of ₹14.85 crores, accumulated losses have completely eroded shareholder wealth. Current liabilities of ₹9.56 crores against current assets of merely ₹2.05 crores create a severely distressed working capital position.
Balance Sheet Concerns: Negative Net Worth and Liquidity Pressures
The balance sheet reveals a company struggling with fundamental solvency issues. As of March 2025, Kush Industries reported negative shareholder funds of ₹7.25 crores, comprising share capital of ₹14.85 crores offset by reserves and surplus of ₹-22.09 crores. This negative net worth position has persisted and worsened over multiple years, with shareholder funds declining from ₹-11.63 crores in FY2020 to the current level.
Fixed assets have dwindled to merely ₹0.10 crores, down from ₹0.92 crores in FY2020, suggesting minimal maintenance capital expenditure and potential asset obsolescence. Investments stand at ₹0.16 crores, whilst current assets of ₹2.05 crores are vastly outweighed by current liabilities of ₹9.56 crores. This creates a severe liquidity mismatch, with the company technically insolvent on a balance sheet basis. Trade payables of ₹0.11 crores represent one of the few liabilities, suggesting minimal operational activity.
Cash Flow Analysis: Minimal Operating Activity
The cash flow statement for FY2025 shows zero cash flow from operations, zero from investing activities, and ₹-2.00 crores from financing activities. Closing cash stood at nil, down from ₹3.00 crores in FY2024. This pattern of cash depletion without corresponding operational activity raises serious questions about the company's ability to resume meaningful business operations or service its obligations.
Profitability Metrics: Deeply Negative Returns
Return metrics paint a dismal picture of capital efficiency. The company's average Return on Capital Employed (ROCE) stands at -12.93%, whilst the latest ROCE is -12.40%, indicating that the company destroys value rather than creating it. Return on Equity (ROE) is effectively unmeasurable given the negative book value, classified as "Negative BV" in the latest period. These metrics underscore the fundamental challenge facing any potential turnaround effort.
The company's EBIT growth over five years stands at 9.72%, though this figure lacks meaningful context given the minimal absolute levels of profitability and the sporadic nature of earnings. Interest coverage, measured by EBIT to Interest, averages 0.0 times, though this reflects minimal debt rather than strong coverage. The company maintains a net cash position with a debt-to-equity ratio of -1.17, though this is more a function of negative equity than prudent financial management.
Valuation Analysis: Risky Classification Warranted
Kush Industries carries a "RISKY" valuation classification, a designation it has held since April 25, 2023. The company's P/E ratio is classified as "NA (Loss Making)" given the absence of positive trailing twelve-month earnings. The Price-to-Book ratio of -1.69x reflects the negative book value, an unusual situation that signals severe financial distress. EV/EBITDA and EV/EBIT multiples both stand at -20.65x, whilst EV/Capital Employed is 17.07x.
| Valuation Metric | Value | Interpretation |
|---|---|---|
| P/E Ratio (TTM) | NA (Loss Making) | No earnings to value |
| Price to Book | -1.69x | Negative equity |
| EV/EBITDA | -20.65x | Distressed valuation |
| Dividend Yield | NA | No dividends |
The stock trades 40.78% below its 52-week high of ₹13.51 and 21.21% above its 52-week low of ₹6.60. This trading range reflects episodic speculative interest rather than fundamental value discovery. With no dividend yield and a dividend payout ratio of 0.0, the company provides no income return to shareholders.
Peer Comparison: Bottom Quartile Performance
Within the Garments & Apparels sector, Kush Industries ranks at the bottom of its peer group across virtually all metrics. Compared to peers such as Sri Nachammai Cotton Mills, Mid India Industries, and others, Kush Industries exhibits the weakest operational profile. The company's ROE of 0.0% compares unfavourably to peers averaging around 1%, whilst its negative price-to-book ratio of -1.69x contrasts sharply with peer averages near 0.1x.
| Company | P/E (TTM) | ROE % | Debt/Equity | P/BV |
|---|---|---|---|---|
| Kush Industries | NA (Loss Making) | 0.0% | -1.17 | -1.69x |
| Sri Nachammai Cotton | NA (Loss Making) | 4.78% | 2.83 | 0.92x |
| Mid India Industries | 1,282.81 | 0.0% | 0.01 | -2.85x |
| GTN Textiles | NA (Loss Making) | 0.0% | 4.22 | 1.63x |
| Globale Tessile | NA (Loss Making) | 2.13% | 0.33 | 1.21x |
With a market capitalisation of ₹12.00 crores, Kush Industries ranks sixth amongst its peer group, reflecting its micro-cap status and limited institutional interest. The company's institutional holding stands at merely 2.68%, with no FII or mutual fund participation, underscoring the lack of professional investor confidence in the business.
Shareholding Pattern: Stable Promoter Base Amidst Stagnation
The shareholding pattern reveals a stable promoter holding of 58.01% as of September 2025, unchanged from the previous three quarters. This followed a 0.90 percentage point increase in December 2024 from 57.11%. Key promoters include Prashant Virani (8.29%), Jay Virani (8.20%), Rasilaben Virani (8.12%), and Kiranben M. Patel (7.73%), amongst others. Notably, there is zero promoter pledging, which at least removes one layer of financial risk.
| Quarter | Promoter % | FII % | MF % | Other DII % | Non-Inst % |
|---|---|---|---|---|---|
| Sep'25 | 58.01% | 0.00% | 0.00% | 2.68% | 39.31% |
| Jun'25 | 58.01% | 0.00% | 0.00% | 2.78% | 39.21% |
| Mar'25 | 58.01% | 0.00% | 0.00% | 2.78% | 39.21% |
| Dec'24 | 58.01% | 0.00% | 0.00% | 2.78% | 39.21% |
| Sep'24 | 57.11% | 0.00% | 0.00% | 2.78% | 40.11% |
Other Domestic Institutional Investors (DII) hold 2.68%, down marginally from 2.78% in the previous quarter. Non-institutional holdings stand at 39.31%, up slightly from 39.21%. The complete absence of Foreign Institutional Investors (FIIs) and Mutual Funds signals that professional investors have steered clear of this distressed situation. The stable promoter holding, whilst preventing hostile takeovers, also suggests limited options for strategic restructuring or asset monetisation.
Stock Performance: Volatile Decline with Episodic Rallies
Kush Industries' stock performance reflects the speculative nature of distressed micro-cap equities. Over the past year, the stock has declined 11.01%, underperforming the Sensex by 15.63 percentage points. The Garments & Apparels sector returned -3.61% over the same period, meaning Kush Industries underperformed its sector by 7.40 percentage points. Short-term performance shows marginal gains of 0.25% over one week and 0.38% over one month, though these pale against broader market strength.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 0.25% | -0.86% | +1.11% |
| 1 Month | 0.38% | 1.57% | -1.19% |
| 3 Month | -5.99% | 3.22% | -9.21% |
| 6 Month | -6.98% | 3.06% | -10.04% |
| YTD | -19.60% | 6.50% | -26.10% |
| 1 Year | -11.01% | 4.62% | -15.63% |
| 2 Years | 37.93% | 28.14% | +9.79% |
| 3 Years | 5.26% | 36.01% | -30.75% |
Longer-term returns reveal episodic speculative rallies. The two-year return of 37.93% outperformed the Sensex by 9.79 percentage points, whilst the five-year return of 1,255.93% vastly exceeded the Sensex's 98.64% gain. However, these historical returns reflect speculative trading in a dormant company rather than fundamental value creation. The stock's beta of 1.50 indicates high volatility, whilst the volatility measure of 52.67% confirms the speculative, high-risk nature of the security.
Technical Analysis: Bearish Trend Across All Timeframes
Technical indicators uniformly signal bearish sentiment. The overall technical trend is classified as "BEARISH" as of August 12, 2025, when it changed from "Mildly Bearish" at ₹8.51. Weekly MACD readings are bearish, monthly MACD shows mildly bearish, and Bollinger Bands indicate mildly bearish on both weekly and monthly timeframes. Moving averages present a bearish picture, with the stock trading below its 5-day (₹7.96), 20-day (₹8.05), 50-day (₹8.23), 100-day (₹8.61), and 200-day (₹8.85) moving averages.
Immediate support rests at ₹6.60, the 52-week low, whilst immediate resistance lies at ₹8.05 around the 20-day moving average area. Major resistance stands at ₹8.61 (100-day moving average), with strong resistance at ₹8.85 (200-day moving average). The 52-week high of ₹13.51 represents a far resistance level, 68.88% above current prices. Recent delivery volumes show an 84.17% increase versus the five-day average, though on minimal absolute volumes of 7,670 shares, suggesting sporadic retail interest rather than institutional accumulation.
Quality Assessment: Below Average with Structural Concerns
Kush Industries carries a "BELOW AVERAGE" quality grade, a classification it has held since August 2025. Prior to January 2022, the company was classified as "Does Not Qualify," reflecting its prolonged operational difficulties. The quality assessment highlights several concerning factors: five-year sales growth of -6.36%, weak average ROCE of -12.93%, and average ROE of 0.0%. The company's EBIT to interest coverage averages 0.0 times, though this reflects minimal debt rather than operational strength.
"With negative shareholder equity, dormant operations, and a decade-long operational decline, Kush Industries represents a capital destruction vehicle rather than an investment opportunity."
Positive factors include zero promoter pledging and the company's net cash position (debt-to-equity of -1.17), though the latter is more a consequence of negative equity than prudent financial management. Institutional holdings of merely 2.68% underscore the lack of professional investor confidence. The tax ratio is classified as "Tax Ratio is Negative%," reflecting the company's loss-making status. The dividend payout ratio of 0.0 indicates no returns to shareholders through income.
Financial Trend: Flat Performance Masking Deeper Issues
The short-term financial trend as of September 2025 is classified as "FLAT," though this characterisation masks the underlying reality of virtually dormant operations. The trend history shows a pattern of shifting between "Flat" and "Positive" classifications over recent years, with the most recent "Positive" classification in September 2023 giving way to "Flat" in December 2023. Key negative factors include PBDIT (Quarterly) at its lowest level of ₹-0.05 crores.
This "Flat" classification, whilst technically accurate given minimal operational changes, fails to capture the fundamental challenge facing the company: the absence of meaningful business activity and the continued erosion of shareholder value through accumulated losses. The company's inability to generate positive operating cash flows or demonstrate a credible path to operational revival represents the core investment risk.
Key Strengths
✓ Zero Promoter Pledging: No encumbrance on promoter shares removes one layer of financial risk.
✓ Net Cash Position: Debt-to-equity of -1.17 indicates no external debt burden, though this reflects negative equity.
✓ Stable Promoter Holding: 58.01% promoter stake provides governance stability and prevents hostile takeovers.
✓ Historical Asset Base: Established manufacturing facilities at GIDC Ankleshwar, though currently underutilised.
Key Concerns
⚠️ Negative Shareholder Equity: Book value of ₹-4.88 per share reflects accumulated losses exceeding share capital.
⚠️ Dormant Operations: Nil sales in recent years indicate complete operational standstill.
⚠️ Severe Liquidity Mismatch: Current liabilities of ₹9.56 crores against current assets of ₹2.05 crores.
⚠️ No Institutional Interest: Zero FII and mutual fund holdings signal lack of professional investor confidence.
⚠️ Negative Returns: ROCE of -12.93% and unmeasurable ROE indicate value destruction.
⚠️ Technical Weakness: Bearish trend with stock below all key moving averages.
⚠️ No Revenue Visibility: Absence of disclosed turnaround plans or operational revival strategies.
Outlook: What to Monitor
Potential Positive Catalysts
Asset Monetisation: Sale of land/facilities at GIDC Ankleshwar could unlock value for creditors.
Strategic Restructuring: Debt restructuring or capital infusion could stabilise the balance sheet.
Operational Revival: Resumption of manufacturing activities with new management or partners.
Regulatory Resolution: NCLT or insolvency proceedings could provide clarity on asset distribution.
Critical Red Flags
Further Equity Erosion: Continued losses deepening negative net worth below current ₹-7.25 crores.
Liquidity Crisis: Inability to meet current liabilities leading to default or insolvency proceedings.
Asset Obsolescence: Further decline in fixed asset values or loss of manufacturing licences.
Promoter Exit: Reduction in promoter holding signalling loss of confidence in revival prospects.
Delisting Risk: Failure to meet minimum listing requirements on stock exchanges.
The Verdict: Avoid This Distressed Situation
Score: 12/100
For Fresh Investors: Avoid entirely. With negative shareholder equity of ₹7.25 crores, dormant operations generating nil revenue, and no credible turnaround plan, Kush Industries represents a high-risk situation with minimal upside potential. The company's decade-long operational decline, severe liquidity mismatch, and complete absence of institutional investor interest underscore the fundamental challenges facing any revival effort.
For Existing Holders: Consider exiting at current levels to preserve remaining capital. The stock's classification as "STRONG SELL" with a Mojo score of merely 12/100 reflects the severe fundamental deterioration. With the stock trading in a bearish technical trend below all key moving averages and showing no signs of operational revival, continued holding exposes investors to further value erosion. The negative book value and dormant business model offer no margin of safety.
Fair Value Estimate: Not applicable. Traditional valuation methodologies are inappropriate for a company with negative equity and dormant operations. Any residual value would likely accrue to creditors through asset liquidation rather than equity holders.
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.
