The stock traded at ₹13.00 on February 16, 2026, down 42.17% from its 52-week high of ₹22.48, as investors continued to exit amidst deteriorating fundamentals. With an overall Mojo score of just 12 out of 100 and a "Strong Sell" rating, the company faces mounting challenges across revenue generation, profitability, and balance sheet quality.
The December quarter results underscore a company in severe financial distress. Lime Chemicals, which manufactures calcium carbonate for applications in toothpaste, pharmaceuticals, PVC products, and other industrial segments, has witnessed its revenue base erode dramatically over the past year. The 41.15% year-on-year revenue decline in Q3 FY26 represents the third consecutive quarter of sharp contractions, following declines of 38.66% in Q2 FY26 and 39.14% in Q1 FY26.
Quarterly Performance Trend: Accelerating Deterioration
| Quarter | Revenue (₹ Cr) | QoQ Change | YoY Change | Net Profit (₹ Cr) | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 | 1.53 | +4.79% | -41.15% | -0.08 | -5.88% |
| Sep'25 | 1.46 | -21.08% | -38.66% | -0.16 | -10.96% |
| Jun'25 | 1.85 | +12.80% | -39.14% | 0.03 | -8.65% |
| Mar'25 | 1.64 | -36.92% | — | 0.06 | -15.24% |
| Dec'24 | 2.60 | +9.24% | — | 0.06 | 1.54% |
| Sep'24 | 2.38 | -21.71% | — | -0.05 | -2.94% |
| Jun'24 | 3.04 | — | — | 0.15 | 4.28% |
The quarterly trend reveals a business in structural decline. Revenue has collapsed from ₹3.04 crores in June 2024 to ₹1.53 crores in December 2025, representing a 49.67% decline over just six quarters. Operating margins have swung wildly between positive and deeply negative territory, indicating severe operational instability and inability to maintain cost discipline.
Financial Performance: Operating Losses Persist
In Q3 FY26, Lime Chemicals posted net sales of ₹1.53 crores, a marginal 4.79% sequential improvement from Q2 FY26's ₹1.46 crores. However, this modest quarter-on-quarter recovery does little to offset the dramatic 41.15% year-on-year decline from ₹2.60 crores in Q3 FY25. The company's inability to maintain its revenue base reflects either severe demand challenges in its calcium carbonate markets or significant competitive pressures that have eroded its market position.
Operating profit before depreciation, interest, tax and other income (PBDIT excluding OI) stood at negative ₹0.09 crores in Q3 FY26, translating to an operating margin of -5.88%. Whilst this represents an improvement from Q2 FY26's -10.96% margin, it marks the sixth consecutive quarter of negative or barely positive operating performance. The company's gross profit margin deteriorated to -3.92% in Q3 FY26 from 3.08% in the year-ago quarter, indicating that even basic manufacturing economics have turned unfavourable.
↓ 41.15% YoY
The company reported a net loss of ₹0.08 crores in Q3 FY26, representing a PAT margin of -5.23%. This marks an improvement from the ₹0.16 crores loss in Q2 FY26 but remains deeply concerning given the year-ago quarter posted a profit of ₹0.06 crores. Employee costs remained relatively stable at ₹0.18 crores, unchanged from the previous quarter, suggesting the company has not undertaken significant workforce reductions despite the revenue collapse.
Critical Operational Warning
Revenue Erosion: The company's quarterly revenue has declined 49.67% from ₹3.04 crores in June 2024 to ₹1.53 crores in December 2025, indicating severe market share loss or demand destruction in calcium carbonate markets.
Margin Collapse: Operating margins have turned negative in five of the last seven quarters, with the company unable to cover even basic operating expenses from sales revenue.
Loss-Making Operations: With two consecutive quarters of losses and negative operating cash generation, the company's business model appears fundamentally broken at current revenue levels.
Balance Sheet Quality: Mounting Leverage Concerns
Lime Chemicals' balance sheet reveals a company with severely constrained financial flexibility. As of March 2025, shareholder funds stood at just ₹1.94 crores, comprising share capital of ₹6.50 crores offset by accumulated losses reflected in negative reserves of ₹4.56 crores. The company's net worth has improved marginally from ₹1.74 crores in March 2024, but remains precariously thin for a manufacturing operation.
The company carries long-term debt of ₹0.10 crores and current liabilities of ₹7.80 crores, resulting in a debt-to-equity ratio of 2.67 times. This high leverage ratio, combined with operating losses, creates significant financial stress. Trade payables stood at ₹2.43 crores as of March 2025, down from ₹2.97 crores a year earlier, suggesting the company may be delaying payments to suppliers to manage cash flow constraints.
On the asset side, fixed assets totalled ₹5.75 crores, representing the bulk of the company's asset base. Current assets of ₹3.58 crores have declined from ₹4.21 crores in March 2024, indicating working capital pressures. The company holds minimal investments of ₹0.11 crores, providing no financial cushion to weather the current operational storm.
Return on Capital Employed: Deeply Negative
Lime Chemicals' average return on capital employed (ROCE) stands at -27.85%, reflecting the company's inability to generate positive returns from its invested capital base. The latest ROCE of -9.23% shows marginal improvement but remains deeply negative, indicating that every rupee of capital employed is destroying rather than creating value. With return on equity (ROE) at 0.0%, the company is delivering no returns whatsoever to its equity shareholders, making it one of the weakest performers in the commodity chemicals sector.
Industry Context: Underperformance Against Sector Recovery
The commodity chemicals sector delivered a robust 16.49% return over the past year, benefiting from improved demand conditions and stabilising raw material costs. However, Lime Chemicals has dramatically underperformed this sectoral trend, posting a 38.10% decline over the same period. This 54.59 percentage point underperformance versus the sector benchmark highlights company-specific challenges that extend beyond cyclical industry headwinds.
The broader calcium carbonate market in India has witnessed consolidation, with larger players investing in capacity expansion and product quality improvements. Lime Chemicals' inability to maintain revenue levels suggests it may be losing market share to better-capitalised competitors who can offer superior product quality, technical support, and pricing flexibility. The company's micro-cap status and limited financial resources constrain its ability to invest in technology upgrades or expand its customer base.
| Company | P/E (TTM) | P/BV | ROE | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Lime Chemicals | NA (Loss Making) | 4.55x | 0.0% | 2.67x | — |
| Emmessar Biotech | 41.82x | 1.72x | 17.56% | -0.92x | — |
| Alchemist Corp. | NA (Loss Making) | 0.86x | 0.91% | 0.04x | — |
| Link Pharma Chem | NA (Loss Making) | 1.02x | 4.94% | 0.50x | — |
| Advance Petroch. | 323.33x | 3.20x | 12.82% | 2.51x | — |
| Bhagawati Oxygen | 71.37x | 2.47x | 0.0% | -0.09x | — |
Lime Chemicals' peer comparison reveals concerning valuation anomalies. Despite posting zero return on equity and operating losses, the company trades at a price-to-book value of 4.55 times, significantly higher than peers like Emmessar Biotech (1.72x) and Advance Petrochemicals (3.20x), both of which generate positive ROEs above 12%. This valuation disconnect suggests the stock price has not yet fully adjusted to reflect the company's deteriorating fundamentals, presenting significant downside risk.
Valuation Analysis: Overvalued Despite Losses
At the current market price of ₹13.00, Lime Chemicals trades at a price-to-book value of 4.55 times, representing a substantial premium to its book value of ₹2.99 per share. This valuation appears unjustifiable given the company's loss-making operations, negative return on equity, and deteriorating revenue trajectory. The stock's EV/EBITDA multiple of -13.01 times reflects negative EBITDA generation, making traditional valuation metrics meaningless.
The company's enterprise value to sales ratio of 1.72 times appears elevated for a business with shrinking revenues and negative margins. With no dividend payments since 2006 and zero dividend yield, investors receive no income whilst waiting for a turnaround that shows no signs of materialising. The stock's valuation grade of "Risky" accurately reflects the fundamental challenges facing the business.
The stock has declined 42.17% from its 52-week high of ₹22.48, yet remains 16.59% above its 52-week low of ₹11.15. Given the accelerating fundamental deterioration, further downside towards the 52-week low appears likely unless the company can demonstrate a credible path to profitability restoration. With the stock trading below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), technical indicators reinforce the bearish fundamental outlook.
Shareholding Pattern: Institutional Exodus
| Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 29.27% | 29.27% | 29.27% | 29.27% | Flat |
| FII | 2.35% | 2.35% | 2.35% | 3.07% | Flat |
| Mutual Funds | 0.05% | 0.05% | 0.05% | 0.05% | Flat |
| Non-Institutional | 68.33% | 68.33% | 68.33% | 67.60% | Flat |
The shareholding pattern reveals minimal institutional interest in Lime Chemicals. Promoter holding remains stable at 29.27%, indicating no change in management's stake despite the operational challenges. However, the low promoter holding of less than 30% raises questions about management's commitment and confidence in the business turnaround.
Foreign institutional investors hold just 2.35% of the company, having reduced their stake from 6.04% in December 2024 to 3.07% by March 2025, and maintaining that lower level through December 2025. This institutional exodus reflects sophisticated investors' assessment of the company's deteriorating prospects. Mutual fund holding stands at a negligible 0.05%, whilst insurance companies have zero exposure, indicating a complete lack of institutional conviction.
The dominant non-institutional holding of 68.33% suggests the shareholder base comprises primarily retail investors who may lack the resources or sophistication to properly assess the company's financial distress. This shareholder composition creates risk of sharp price volatility if retail investors begin exiting en masse.
Stock Performance: Severe Underperformance Across All Timeframes
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -3.35% | -0.94% | -2.41% |
| 1 Month | +4.00% | -0.35% | +4.35% |
| 3 Months | -13.16% | -1.52% | -11.64% |
| 6 Months | -10.96% | +3.32% | -14.28% |
| YTD | -4.13% | -2.28% | -1.85% |
| 1 Year | -38.10% | +9.66% | -47.76% |
| 2 Years | -56.58% | +14.98% | -71.56% |
| 3 Years | -38.68% | +35.81% | -74.49% |
Lime Chemicals has delivered catastrophic returns across all meaningful timeframes, destroying shareholder wealth consistently. The stock has declined 38.10% over the past year whilst the Sensex gained 9.66%, resulting in negative alpha of 47.76 percentage points. Over two years, the stock has collapsed 56.58% compared to the Sensex's 14.98% gain, representing 71.56 percentage points of underperformance.
The three-year performance shows a 38.68% decline versus the Sensex's 35.81% gain, translating to 74.49 percentage points of negative alpha. Even the modest one-month gain of 4.00% appears to be a technical bounce rather than a sustainable reversal, as the stock remains in a confirmed bearish trend that began in October 2025.
The stock's beta of 1.50 indicates it is 50% more volatile than the broader market, amplifying both gains and losses. However, with consistently negative returns, this high beta has worked entirely against investors. The stock's risk-adjusted return of -0.54 over the past year, combined with volatility of 70.72%, places it firmly in the "high risk, low return" category—the worst possible quadrant for investors.
Investment Thesis: Multiple Red Flags Signal Distress
The Mojo 4 Dots analysis reveals uniformly negative signals across all parameters. The company's valuation grade of "Risky" reflects the unjustifiable premium at which the stock trades despite loss-making operations. Quality grade of "Below Average" captures the weak long-term financial performance, with five-year sales growth of -21.92% and EBIT growth of -45.07%. The financial trend classification of "Flat" masks underlying deterioration, as the company has posted losses in recent quarters. Finally, the bearish technical trend that began in October 2025 shows no signs of reversal.
Key Strengths & Risk Factors
Key Strengths
- No Promoter Pledging: Zero pledged shares indicate promoters have not leveraged their holdings, though this is offset by low overall promoter stake of 29.27%.
- Established Operations: Company incorporated in 1970 with over five decades of manufacturing experience in calcium carbonate segment.
- Debt Reduction: Long-term debt reduced to just ₹0.10 crores, indicating some deleveraging despite operational challenges.
- Minimal Interest Burden: Near-zero interest costs in recent quarters reduce fixed financial obligations.
- Sequential Margin Improvement: Operating margin improved from -10.96% in Q2 FY26 to -5.88% in Q3 FY26, though still deeply negative.
Key Concerns
- Revenue Collapse: 41.15% year-on-year revenue decline in Q3 FY26, with sales falling from ₹3.04 crores to ₹1.53 crores over six quarters.
- Persistent Operating Losses: Negative operating margins in five of last seven quarters indicate broken business model at current revenue levels.
- Zero Return on Equity: 0.0% ROE demonstrates complete inability to generate returns for shareholders from invested capital.
- High Leverage: Debt-to-equity ratio of 2.67 times creates financial stress amidst operating losses and negative cash generation.
- Institutional Exodus: FII holding declined from 6.04% to 2.35%, with minimal mutual fund or insurance company interest.
- Negative Five-Year Growth: Sales growth of -21.92% and EBIT growth of -45.07% over five years reflect structural decline.
- Working Capital Pressures: Current assets declined from ₹4.21 crores to ₹3.58 crores, indicating liquidity constraints.
Outlook: What to Watch
Potential Positive Catalysts
- Return to positive operating margins for three consecutive quarters
- Revenue stabilisation above ₹2.50 crores quarterly run rate
- New customer acquisitions or product line diversification announcements
- Capacity utilisation improvement or cost restructuring initiatives
Critical Red Flags
- Further revenue declines below ₹1.50 crores quarterly
- Additional quarters of operating losses or margin deterioration
- Increase in debt levels or trade payable delays
- Promoter stake reduction or additional institutional selling
- Working capital crisis or inability to fund operations
The path forward for Lime Chemicals requires immediate and decisive action to arrest the revenue decline and restore operating profitability. The company needs to demonstrate at least two consecutive quarters of positive operating margins and revenue stabilisation above ₹2.50 crores quarterly to rebuild investor confidence. Without such tangible improvements, the stock faces continued downward pressure as fundamentals deteriorate further.
The Verdict: Exit Recommended
Score: 12/100
For Fresh Investors: Avoid completely. The company exhibits multiple red flags including persistent operating losses, collapsing revenues, zero return on equity, and overvalued stock price. No credible turnaround catalyst is visible, and the risk of further value destruction remains extremely high.
For Existing Holders: Exit positions at current levels to limit further losses. With the stock down 38.10% over the past year and fundamentals continuing to deteriorate, holding on represents catching a falling knife. The 42.17% decline from 52-week highs may extend further towards the ₹11.15 support level or below if Q4 FY26 results show continued weakness.
Fair Value Estimate: ₹8.00-9.00 (38-31% downside from current levels), reflecting book value discount appropriate for a loss-making entity with negative return on capital.
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.
