The financial results paint a concerning picture of a company that has effectively ceased meaningful business operations. With zero net sales across all reported quarters in FY26, Modella Woollens continues to incur employee costs of ₹0.02 crores per quarter whilst generating negligible other income. The company's operating profit before depreciation, interest, and tax (PBDIT) excluding other income stood at ₹-0.07 crores in Q3 FY26, marginally better than the ₹-0.09 crores loss recorded in Q2 FY26, but reflecting no fundamental improvement in the business.
The trajectory of losses, whilst small in absolute terms, represents a significant drain on the already negative shareholder equity. The company's balance sheet as of March 2025 showed shareholder funds of ₹-0.33 crores, comprising share capital of ₹0.91 crores and reserves & surplus of ₹-1.24 crores. This negative net worth situation has persisted and worsened over recent years, with shareholder funds deteriorating from ₹-0.16 crores in March 2024 to the current deeply negative position.
Financial Performance: A Pattern of Dormancy
The quarterly trend data reveals an unbroken pattern of operational inactivity. Across the last seven quarters from June 2024 through December 2025, Modella Woollens has recorded zero net sales in every single quarter. The company's quarterly losses have ranged between ₹0.01 crores and ₹0.09 crores, with Q2 FY26 representing the worst performance at ₹-0.09 crores, followed by a marginal improvement to ₹-0.04 crores in Q3 FY26.
| Quarter | Net Sales (₹ Cr) | Employee Cost (₹ Cr) | Other Income (₹ Cr) | Net Loss (₹ Cr) |
|---|---|---|---|---|
| Dec'25 | 0.00 | 0.02 | 0.03 | -0.04 |
| Sep'25 | 0.00 | 0.02 | 0.00 | -0.09 |
| Jun'25 | 0.00 | 0.02 | 0.03 | -0.03 |
| Mar'25 | 0.00 | 0.02 | 0.01 | -0.05 |
| Dec'24 | 0.00 | 0.02 | 0.00 | -0.06 |
| Sep'24 | 0.00 | 0.02 | 0.05 | -0.01 |
| Jun'24 | 0.00 | 0.02 | 0.00 | -0.05 |
The only variable element in the company's financials is other income, which has fluctuated between zero and ₹0.05 crores across quarters. In Q3 FY26, other income of ₹0.03 crores partially offset the operational losses, resulting in the reported net loss of ₹0.04 crores. However, this sporadic other income provides no sustainable foundation for the business and appears to be the only factor preventing even larger quarterly losses.
The absence of any depreciation or interest charges indicates that the company maintains minimal fixed assets and operates without debt financing for operations. Current assets stood at ₹0.19 crores as of March 2025, down from ₹0.37 crores in March 2024, suggesting a steady depletion of liquid resources. Current liabilities of ₹0.56 crores, comprising trade payables of ₹0.02 crores and other current liabilities of ₹0.54 crores, exceed current assets, further highlighting the precarious financial position.
Critical Financial Alert
Negative Net Worth: With shareholder equity at ₹-0.33 crores and book value per share at ₹-3.66, the company's liabilities exceed its assets. This represents complete erosion of shareholder capital and raises serious questions about the company's ability to continue as a going concern. The negative book value has worsened from ₹-0.16 crores in March 2024, indicating an accelerating deterioration in financial health.
Operational Reality: A Shell Company
The fundamental issue facing Modella Woollens is the complete absence of operational activity. The company's history reveals a business that sold its core wool combing operations in 1993 and remained largely dormant until attempting to restart trading activities in 2010-11. However, even this revival has failed to materialise into any meaningful revenue generation, with the company reporting zero sales for at least the past seven consecutive quarters.
Employee costs remain the primary operational expense at ₹0.02 crores per quarter (₹0.08 crores annually), suggesting a skeletal staff maintaining the corporate structure. With no revenue to offset these costs and only sporadic other income, the company is effectively burning through whatever residual resources remain on the balance sheet. The cash flow statement for FY25 showed minimal cash generation from operations and negligible cash balances, indicating extremely limited financial flexibility.
The company's return on capital employed (ROCE) is reported at 21.44% on average, but this metric is meaningless in the context of a company with negative shareholder equity and zero revenue generation. Similarly, the return on equity (ROE) is reported at 0.0%, which understates the severity of the situation given the negative book value. In reality, the company is destroying shareholder value with each passing quarter.
Valuation Analysis: A Value Trap
The valuation metrics for Modella Woollens reflect its distressed status. With a price-to-earnings ratio marked as "NA (Loss Making)" due to consistent losses, the company trades solely on speculative hope rather than any fundamental value. The price-to-book value of -5.47x indicates the stock is trading at a significant premium to its negative book value of ₹-3.66 per share, which itself represents complete capital erosion.
At a market capitalisation of ₹5.00 crores and a current price of ₹60.10, the stock appears to be sustained only by extremely thin trading volumes—just 12 shares changed hands in the latest trading session with a weighted average price of ₹60.09. This illiquidity makes the stock price largely meaningless as a valuation indicator and exposes investors to extreme execution risk should they attempt to exit positions.
| Valuation Metric | Current Value | Assessment |
|---|---|---|
| P/E Ratio (TTM) | NA (Loss Making) | Not Applicable |
| Price to Book Value | -5.47x | Negative Book Value |
| Market Cap | ₹5.00 Cr | Micro Cap |
| Book Value per Share | ₹-3.66 | Capital Erosion |
| Dividend Yield | NA | No Dividends |
The overall valuation assessment is categorised as "RISKY," which significantly understates the actual risk profile. The company's valuation grade history shows it has oscillated between "Risky" and "Does Not Qualify" classifications over recent years, with the current "Risky" designation dating from April 2023. In reality, this is a distressed asset trading on hope rather than any discernible fundamental value.
Peer Comparison: Amongst the Weakest
Within the trading and distributors sector, Modella Woollens ranks amongst the weakest performers. A comparison with peer companies reveals the extent of underperformance:
| Company | P/E Ratio | ROE (%) | Debt to Equity | Price to Book |
|---|---|---|---|---|
| Modella Woollens | NA (Loss Making) | 0.0% | 0.10 | -5.47 |
| Sun Retail | 35.88 | 1.55% | 0.34 | 0.35 |
| Aravali Securities | NA (Loss Making) | 0.0% | -3.62 | -5.48 |
| Mukta Agriculture | NA (Loss Making) | 0.0% | 0.00 | 0.26 |
| Priya | NA (Loss Making) | 0.0% | -0.51 | -0.11 |
The peer comparison reveals that Modella Woollens is not alone in struggling within this sector—multiple companies are loss-making with negative or negligible returns on equity. However, Modella's negative price-to-book value of -5.47x places it amongst the most distressed, comparable only to Aravali Securities at -5.48x. With a market capitalisation of ₹5.00 crores, Modella ranks fifth amongst its peer group, reflecting its micro-cap status and limited investor interest.
Shareholding Pattern: Stable but Concerning
The shareholding pattern has remained remarkably stable over the past five quarters, with promoter holding constant at 46.17%. This stability, however, reflects neither confidence nor commitment—rather, it suggests the illiquidity of the stock makes it difficult for any shareholder category to materially alter positions.
| Shareholder Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | Dec'24 |
|---|---|---|---|---|---|
| Promoter Holding | 46.17% | 46.17% | 46.17% | 46.17% | 46.17% |
| Insurance Holdings | 16.03% | 16.03% | 16.03% | 16.75% | 16.75% |
| Other DII Holdings | 0.07% | 0.07% | 0.07% | 0.07% | 0.07% |
| Non-Institutional | 37.73% | 37.73% | 37.73% | 37.01% | 37.01% |
| FII Holding | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Fund Holding | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
Notably, insurance companies hold 16.03% of the equity, a relatively high proportion for such a distressed micro-cap stock. This holding declined marginally from 16.75% in March 2025 to 16.03% by June 2025 and has remained stable since. The complete absence of foreign institutional investor (FII) and mutual fund holdings reflects the lack of institutional confidence in the company's prospects. No promoter pledging is reported, though this provides little comfort given the negative net worth situation.
Stock Performance: Consistent Underperformance
The stock's price performance reflects the underlying business deterioration. Over the past year, Modella Woollens has declined 4.60% whilst the Sensex gained 6.66%, resulting in negative alpha of -11.26%. The underperformance becomes more pronounced over longer timeframes, with three-year returns of -26.71% compared to Sensex gains of 37.76%, representing a staggering -64.47% alpha.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 0.17% | 1.79% | -1.62% |
| 1 Month | -11.62% | -2.27% | -9.35% |
| 3 Months | -11.62% | 0.43% | -12.05% |
| 6 Months | -15.16% | 3.45% | -18.61% |
| YTD | -11.62% | -1.65% | -9.97% |
| 1 Year | -4.60% | 6.66% | -11.26% |
| 2 Years | -31.94% | 16.28% | -48.22% |
| 3 Years | -26.71% | 37.76% | -64.47% |
The stock trades below all its key moving averages—5-day (₹59.28), 20-day (₹64.67), 50-day (₹67.58), and 100-day (₹67.11)—indicating sustained downward pressure. The technical trend is classified as "SIDEWAYS" as of February 4, 2026, having changed from "Mildly Bullish" on the same day. With a beta of 1.50, the stock exhibits high volatility relative to the market, amplifying losses during market downturns whilst providing little upside during rallies.
The risk-adjusted return profile is deeply unfavourable, with a one-year risk-adjusted return of -0.09 and volatility of 52.62%—more than four times the Sensex volatility of 11.66%. This high volatility combined with negative returns places the stock firmly in the "HIGH RISK LOW RETURN" category, making it unsuitable for virtually any investment mandate.
Investment Thesis: A Distressed Asset
The proprietary Mojo Score of 23 out of 100 places Modella Woollens firmly in "STRONG SELL" territory, with the recommendation to "strongly consider selling" and that "exit is recommended." This assessment reflects the company's deteriorating fundamentals across all key parameters:
Valuation: Classified as "RISKY," the company trades at a negative price-to-book value with no earnings to justify any positive valuation multiple. The micro-cap market capitalisation of ₹5.00 crores reflects the market's severe scepticism about the company's prospects.
Quality Grade: Rated "BELOW AVERAGE," the company fails to qualify on management risk, growth, and capital structure parameters. With negative net worth and zero revenue generation, the quality assessment is, if anything, too generous.
Financial Trend: Classified as "FLAT," though this masks the underlying deterioration. Whilst the company is not generating revenue, it continues to burn cash through employee costs, resulting in steady erosion of the already negative equity base.
Technical Trend: Currently "SIDEWAYS" but with consistent underperformance across all timeframes. The stock trades below all moving averages and exhibits high volatility with a beta of 1.50, amplifying downside risk.
Key Strengths and Risk Factors
Key Strengths
- No Promoter Pledging: Zero pledged shares indicate promoters are not leveraging their holdings, though this provides limited comfort given the negative net worth
- Stable Shareholding: Promoter holding has remained constant at 46.17% over the past five quarters, suggesting no panic selling
- Low Debt Burden: Debt to equity ratio of 0.10 indicates minimal leverage, reducing bankruptcy risk in the immediate term
- Institutional Presence: Insurance holdings at 16.03% provide some institutional validation, though this has declined from 16.75%
Key Concerns
- Zero Revenue Generation: No sales recorded for at least seven consecutive quarters indicates complete operational dormancy
- Negative Net Worth: Shareholder equity of ₹-0.33 crores and book value per share of ₹-3.66 represents total capital erosion
- Persistent Losses: Quarterly losses ranging from ₹0.01 to ₹0.09 crores continue to deplete residual resources
- Extreme Illiquidity: Trading volume of just 12 shares in latest session makes position entry/exit extremely difficult
- No Growth Visibility: Zero sales growth over five years with no indication of business revival plans
- Micro-Cap Risks: Market capitalisation of ₹5.00 crores exposes investors to extreme volatility and potential delisting risks
- High Volatility: Beta of 1.50 and volatility of 52.62% amplify downside risks during market corrections
Outlook: What Lies Ahead
Positive Catalysts
- Potential business revival or new trading activities (no indication currently)
- Asset monetisation to improve balance sheet (limited assets available)
- Corporate restructuring or merger with viable entity (speculative)
- Cost reduction beyond current minimal levels (limited scope)
Red Flags to Monitor
- Further deterioration in net worth below current ₹-0.33 crores
- Continued absence of revenue generation in coming quarters
- Further decline in insurance holdings from current 16.03%
- Breach of listing requirements due to low market cap or negative net worth
- Increase in employee costs without corresponding revenue generation
- Depletion of remaining current assets below current ₹0.19 crores
The Verdict: A Clear Avoid for All Investors
Score: 23/100
For Fresh Investors: Avoid completely. With zero revenue generation, negative net worth of ₹-0.33 crores, and no discernible path to operational revival, Modella Woollens represents a value trap rather than a value opportunity. The extreme illiquidity, micro-cap status, and consistent quarterly losses make this unsuitable for any investment portfolio.
For Existing Holders: Exit at the earliest opportunity, accepting whatever price the illiquid market offers. The company's negative book value of ₹-3.66 per share indicates complete capital erosion, and continued quarterly losses are depleting the remaining resources. The absence of any business operations for multiple consecutive quarters raises serious questions about the company's viability as a going concern.
Fair Value Estimate: Not applicable—with negative shareholder equity and zero revenue generation, traditional valuation methods cannot be applied. The current market price of ₹60.10 appears to be sustained only by extreme illiquidity rather than any fundamental value.
Risk Assessment: Extreme risk across all parameters—operational, financial, liquidity, and market risk. The Mojo Score of 23/100 and "STRONG SELL" rating reflect the severe deterioration in fundamentals and absence of any positive catalysts for recovery.
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. The analysis presented is based on publicly available information as of February 04, 2026, and circumstances may change materially. Past performance is not indicative of future results. Investing in micro-cap stocks with negative net worth carries extreme risk of total capital loss.
