The stock has suffered severe punishment from investors, declining 42.58% over the past year to trade at ₹106.80 as of November 17, 2025, significantly underperforming the Sensex's 9.50% gain during the same period. With the shares currently trading 45.44% below their 52-week high of ₹195.75, the company faces mounting operational challenges that have raised serious questions about its business viability.
The quarter's performance represents the culmination of a troubling trend that has seen Mysore Petro's core operations deteriorate steadily over the past year. Sequential revenue declined 30.72% from Q1 FY26's ₹7.26 crores, whilst the operating loss before other income widened significantly to ₹1.57 crores from ₹0.67 crores in the previous quarter. This marks the company's weakest quarterly operating performance in recent memory, with the operating margin excluding other income collapsing to a deeply negative 31.21%.
Financial Performance: A Story of Collapsing Revenues and Mounting Losses
The Q2 FY26 results paint a grim picture of a company struggling with fundamental operational challenges. Net sales of ₹5.03 crores represent not just a 45.09% year-on-year decline but also a 30.72% quarter-on-quarter deterioration, marking the lowest quarterly revenue figure in the company's recent trading history. This collapse in top-line performance has been accompanied by a severe erosion of profitability metrics across the board.
| Quarter | Net Sales (₹ Cr) | QoQ Change | YoY Change | Operating Profit Excl OI (₹ Cr) | Operating Margin (%) |
|---|---|---|---|---|---|
| Sep'25 | 5.03 | -30.72% | -45.09% | -1.57 | -31.21% |
| Jun'25 | 7.26 | -2.42% | -47.73% | -0.67 | -9.23% |
| Mar'25 | 7.44 | +16.43% | -50.99% | -0.61 | -8.20% |
| Dec'24 | 6.39 | -30.24% | — | -1.20 | -18.78% |
| Sep'24 | 9.16 | -34.05% | — | -1.48 | -16.16% |
| Jun'24 | 13.89 | -8.50% | — | -4.54 | -32.69% |
| Mar'24 | 15.18 | — | — | -3.75 | -24.70% |
The operating profit excluding other income has been consistently negative for the past seven quarters, with Q2 FY26's loss of ₹1.57 crores representing the worst performance in this period. The company has been entirely dependent on other income to remain profitable, with other income of ₹1.75 crores in Q2 FY26 providing the only cushion against operational losses. This reliance on non-operating income to generate profits is a significant red flag, indicating that the core business is fundamentally unprofitable at current revenue levels.
The quality of earnings has deteriorated sharply, with the company reporting standalone net profit of ₹0.37 crores in Q2 FY26 compared to consolidated net profit of ₹0.10 crores, suggesting losses at subsidiary or associate levels. The half-yearly consolidated net profit for H1 FY26 stands at a negative ₹0.30 crores, representing a 46.68% decline from the previous period and confirming the negative financial trend identified by proprietary scoring systems.
Operational Challenges: A Business Model Under Severe Stress
Mysore Petro Chemicals operates in the petrochemical trading and manufacturing space, dealing in products such as Orthoxylene, Phthalic Anhydride, Maleic Anhydride, and Benzoic Acid. The company's manufacturing facilities at Raichur, Karnataka (12,000 tpa capacity for Phthalic Anhydride) and Taloja, Maharashtra (5,400 mt capacity for Maleic Anhydride) have been facing severe capacity utilisation challenges, as evidenced by the collapsing revenue figures.
Critical Operational Concerns
Operating Losses Persist: The company has reported negative operating profits (excluding other income) for seven consecutive quarters, with losses widening to ₹1.57 crores in Q2 FY26. This represents an operating margin of -31.21%, indicating severe pricing pressure or cost structure issues that management has been unable to address.
Revenue Collapse: Quarterly sales have declined from ₹15.18 crores in Mar'24 to just ₹5.03 crores in Sep'25, a staggering 66.87% drop over six quarters. This suggests either significant market share loss, plant shutdowns, or a fundamental shift in the company's business model.
The company's return on equity of 6.59% is significantly below acceptable standards for a manufacturing business, indicating poor capital efficiency. Whilst the average ROE calculation shows 6.59%, the latest ROE stands at 6.20%, suggesting marginal deterioration in profitability relative to shareholder equity. The company's return on capital employed (ROCE) is deeply negative at -3.26% on average and -4.50% for the latest period, confirming that the business is destroying value rather than creating it.
Despite these operational challenges, Mysore Petro maintains a debt-free balance sheet with negative net debt, which provides some financial flexibility. The company's shareholder funds stood at ₹220.69 crores as of March 2025, with investments of ₹242.77 crores providing a cushion. However, the erosion of these reserves through continued operating losses remains a significant concern.
The Other Income Dependency: Masking Core Business Weakness
One of the most troubling aspects of Mysore Petro's financial profile is its complete dependence on other income to generate any semblance of profitability. In Q2 FY26, other income of ₹1.75 crores was the only factor preventing a reported loss, as operating profit excluding other income stood at ₹1.57 crores negative. This pattern has persisted throughout FY25, where annual other income of ₹9.00 crores on sales of just ₹33.00 crores represented 27.27% of total revenue.
Other Income Analysis: A Critical Crutch
The company's other income has been remarkably volatile, ranging from ₹0.97 crores to ₹4.27 crores across recent quarters. This income likely stems from the company's substantial investment portfolio of ₹242.77 crores, which generates returns that mask the underlying operational losses. Whilst this provides short-term support, it raises questions about management's strategic direction and whether the company should consider transitioning to an investment holding company structure rather than continuing loss-making manufacturing operations.
The sustainability of this model is questionable. Investment income can be volatile and is subject to market conditions, whilst the core business continues to bleed cash. The company's 5-year EBIT growth of -210.90% starkly illustrates the deterioration in operating performance, making it one of the weakest performers in the broader miscellaneous sector.
Peer Comparison: Valuation Disconnect from Fundamentals
Despite its operational struggles, Mysore Petro trades at a P/E ratio of 8.47x, which appears superficially attractive compared to sector averages. However, this low multiple reflects market recognition of the company's fundamental challenges rather than representing a value opportunity. The company's price-to-book value of 0.32x suggests the market values the business at a significant discount to its net asset value, likely due to concerns about asset quality and earnings sustainability.
| Company | P/E Ratio (TTM) | Dividend Yield | ROE (%) | Debt to Equity | Price to Book |
|---|---|---|---|---|---|
| Mysore Petro | 8.47 | 1.87% | 6.59% | -0.08 | 0.32 |
| Sundaram Multi. | NA (Loss Making) | — | 2.10% | 0.13 | 1.03 |
| Alkosign | 20.96 | — | 3.43% | 0.40 | 2.37 |
| Pulz Electronics | 12.07 | — | — | — | — |
| Blue Pebble | 10.51 | — | — | — | — |
| Pentagon Rubber | 23.23 | — | — | — | — |
Mysore Petro's ROE of 6.59% ranks above Sundaram Multi. (2.10%) and Alkosign (3.43%) within its peer group, but this comparative advantage is meaningless given the absolute weakness of returns. The company's negative debt-to-equity ratio of -0.08 indicates a net cash position, which is a positive differentiator, but this advantage is being steadily eroded by ongoing operating losses.
Valuation Analysis: Value Trap Territory
Trading at ₹106.80, Mysore Petro's valuation metrics present a classic value trap scenario. The stock's P/E ratio of 8.47x and price-to-book of 0.32x might appear attractive on the surface, but these multiples reflect justified concerns about earnings quality and business sustainability. The company's proprietary valuation grade of "RISKY" accurately captures the disconnect between seemingly cheap multiples and deteriorating fundamentals.
The company's enterprise value to EBITDA of -12.82x and EV to EBIT of -11.77x are negative due to the company's net cash position exceeding its market capitalisation, combined with negative operating profits. This unusual situation occurs when the market values the operating business at zero or negative value, essentially pricing in the expectation that the company will continue destroying shareholder value through its operations.
The stock has declined 42.58% over the past year, underperforming the Sensex by 52.08 percentage points. Trading 45.44% below its 52-week high of ₹195.75, the shares have found support near the 52-week low of ₹101.30. However, with all major moving averages in bearish alignment and technical indicators uniformly negative, there is little evidence of stabilisation.
Shareholding Pattern: Stable Promoter Base Amid Institutional Absence
The company's shareholding pattern reveals a stable promoter base holding 72.99% of equity, unchanged over the past five quarters. This high promoter holding provides governance stability but also raises questions about why promoters have not increased their stake given the depressed valuations, which might suggest limited confidence in near-term recovery prospects.
| Quarter | Promoter (%) | FII (%) | Mutual Funds (%) | Insurance (%) | Other DII (%) |
|---|---|---|---|---|---|
| Sep'25 | 72.99% | 3.03% | 0.00% | 0.43% | 0.01% |
| Jun'25 | 72.99% | 3.03% | 0.00% | 0.43% | 0.01% |
| Mar'25 | 72.99% | 3.03% | 0.00% | 0.43% | 0.01% |
| Dec'24 | 72.99% | 3.03% | 0.00% | 0.43% | 0.01% |
| Sep'24 | 72.99% | 2.31% | 0.00% | 0.43% | 0.01% |
Institutional participation remains minimal, with total institutional holdings at just 3.47%. The complete absence of mutual fund investment is particularly telling, as professional fund managers have clearly avoided the stock despite its low valuations. The marginal FII holding of 3.03% increased slightly from 2.31% in September 2024, but this represents minimal interest from sophisticated investors.
The promoter group is led by Savita Investment Company Ltd. (17.55%), Vincent India Limited (17.22%), and Gembel Trade Enterprises Private Limited (11.68%), with no pledged shares—a positive indicator of financial stability at the promoter level. However, the lack of open market purchases by promoters or institutional accumulation suggests limited conviction in the company's turnaround prospects.
Stock Performance: Severe Underperformance Across All Timeframes
Mysore Petro's stock performance has been abysmal across virtually all meaningful timeframes, with the shares generating negative alpha against the Sensex in nine out of ten measured periods. The stock's one-year return of -42.58% compares unfavourably to the Sensex's 9.50% gain, resulting in a negative alpha of -52.08 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | +0.52% | +1.69% | -1.17% |
| 1 Month | -6.32% | +1.19% | -7.51% |
| 3 Months | -8.40% | +5.40% | -13.80% |
| 6 Months | -14.56% | +3.18% | -17.74% |
| YTD | -29.74% | +8.72% | -38.46% |
| 1 Year | -42.58% | +9.50% | -52.08% |
| 2 Years | -28.85% | +29.12% | -57.97% |
| 3 Years | -9.49% | +37.57% | -47.06% |
| 5 Years | +102.27% | +93.28% | +8.99% |
The stock's risk-adjusted returns paint an even grimmer picture, with a one-year risk-adjusted return of -1.00 against volatility of 42.71%, placing it firmly in the "HIGH RISK LOW RETURN" category. The stock's beta of 1.50 indicates it is 50% more volatile than the broader market, amplifying downside moves during market corrections whilst failing to participate meaningfully in rallies.
Technical indicators are uniformly bearish, with the stock trading below all major moving averages (5-day, 20-day, 50-day, 100-day, and 200-day). The MACD, RSI, Bollinger Bands, and KST indicators all signal bearish trends on both weekly and monthly timeframes. The stock's current trend classification of "BEARISH" since October 24, 2025, reflects this technical weakness.
Investment Thesis: Multiple Red Flags Justify Caution
The investment case for Mysore Petro Chemicals is severely compromised by a confluence of negative factors spanning operational performance, financial trends, and market positioning. The company's proprietary score of just 3 out of 100 with a "STRONG SELL" rating accurately reflects the multiple challenges facing the business.
"With operating losses of ₹1.57 crores on sales of just ₹5.03 crores, Mysore Petro's core business is fundamentally unprofitable, relying entirely on investment income to avoid reporting losses—a model that raises serious questions about long-term viability."
Key Strengths & Risk Factors
KEY STRENGTHS
- Debt-Free Balance Sheet: Net cash position with negative debt-to-equity of -0.08 provides financial flexibility and eliminates refinancing risk.
- Stable Promoter Holding: 72.99% promoter stake with zero pledging indicates governance stability and alignment with minority shareholders.
- Substantial Investment Portfolio: Investments of ₹242.77 crores provide cushion and generate other income that supports near-term profitability.
- Dividend History: Company maintains dividend payments (₹2.00 per share, 1.87% yield) despite operational challenges, showing commitment to shareholder returns.
- Long-Term Growth Track Record: 5-year sales CAGR of 25.24% demonstrates historical ability to grow revenues, though this trend has reversed sharply.
KEY CONCERNS
- Collapsing Revenue Base: Sales declined 66.87% from ₹15.18 crores (Mar'24) to ₹5.03 crores (Sep'25), indicating severe business contraction or market share loss.
- Persistent Operating Losses: Seven consecutive quarters of negative operating profit (excluding other income) with widening losses to ₹1.57 crores in Q2 FY26.
- Other Income Dependency: Company relies entirely on investment income to avoid losses, with core operations deeply unprofitable at current scale.
- Weak Return Metrics: ROE of 6.59% and negative ROCE of -3.26% indicate poor capital efficiency and value destruction.
- Deteriorating Quality Grade: "BELOW AVERAGE" quality rating with negative financial trend and weak long-term fundamental strength.
- Institutional Absence: Zero mutual fund holding and minimal 3.47% total institutional ownership reflects professional investor avoidance.
- Technical Breakdown: Stock trading below all moving averages with uniformly bearish indicators and 42.58% one-year decline.
Outlook: What to Watch
POSITIVE CATALYSTS
- Revenue Stabilisation: Any quarter showing sequential revenue growth above ₹10 crores would signal potential bottoming of business decline.
- Operating Margin Recovery: Return to positive operating profit (excluding other income) would indicate core business viability restoration.
- Strategic Clarity: Management articulation of turnaround plan or strategic pivot could restore investor confidence.
- Institutional Interest: Any mutual fund or FII accumulation would signal professional validation of recovery thesis.
RED FLAGS
- Further Revenue Decline: Sales below ₹5 crores in coming quarters would suggest accelerating business deterioration.
- Widening Operating Losses: Operating margins below -35% would indicate complete loss of pricing power or cost control.
- Investment Portfolio Drawdown: Any reduction in investment base would signal cash consumption to fund operations.
- Dividend Cut: Suspension of dividend payments would confirm management's concern about cash preservation needs.
- Technical Breakdown: Breach of ₹101.30 (52-week low) would open downside towards ₹90-95 levels.
The Verdict: Strong Sell on Fundamental Deterioration
Score: 3/100
For Fresh Investors: Avoid initiation entirely. The company exhibits multiple red flags including collapsing revenues (down 45% YoY), persistent operating losses (₹1.57 crores in Q2 FY26), and complete dependence on other income for profitability. With negative financial trends, bearish technicals, and a "RISKY" valuation grade, there is no compelling reason to establish positions at current levels.
For Existing Holders: Strongly consider exiting positions on any technical bounce towards ₹115-120 levels. The stock has declined 42.58% over the past year and shows no signs of operational stabilisation. The 3/100 proprietary score and STRONG SELL rating reflect genuine concerns about business viability. Holding onto hopes of recovery appears increasingly unjustified given seven consecutive quarters of operating losses and accelerating revenue decline.
Fair Value Estimate: ₹85-90 (20-25% downside from current levels) based on liquidation value of net assets, given the core business generates negative operating profits and shows no path to profitability at current scale.
The combination of deteriorating fundamentals, negative financial trends, bearish technical setup, and institutional absence creates a highly unfavourable risk-reward profile. The company's reliance on other income to mask operating losses is unsustainable, and the 66.87% revenue decline over six quarters suggests fundamental business model challenges that management has been unable to address. Until there is clear evidence of operational stabilisation and a credible path to profitability, investors should maintain a strong sell stance.
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.
