NB Footwear Q2 FY26: Zero Revenue, Mounting Losses Signal Deep Operational Crisis

The company, originally incorporated in September 1987 as part of Hyderabad's Nava Bharat conglomerate, was engaged in the business of manufacturing leather goods and footwear. However, NB Footwear has been completely non-operational for several years, with zero sales reported across all recent quarters. The Q2 FY2026 results underscore the company's continued inability to generate any revenue whilst incurring minimal but persistent operating expenses.

With negative shareholder equity of ₹1.59 crores as of March 2025 and a book value per share of -₹1.92, the company's balance sheet reflects years of accumulated losses that have completely eroded its capital base. The stock currently trades at ₹8.68, down 58.05% from its 52-week high of ₹20.69, highlighting the severe value destruction faced by shareholders over the past year.

Financial Performance: A Company Without Operations

In Q2 FY2026 (July-September 2025), NB Footwear reported a net loss of ₹0.03 crores, representing a 62.50% sequential improvement from the ₹0.08 crores loss recorded in Q1 FY2026. Whilst this reduction in losses might appear positive on the surface, it merely reflects marginally lower operating expenses rather than any operational turnaround. The company continues to report zero revenue across all quarters, with no signs of business activity resumption.

The quarterly loss structure reveals that the company incurs minimal but consistent costs. In Q2 FY2026, employee costs stood at ₹0.02 crores, whilst operating profit before depreciation, interest and tax (PBDIT) excluding other income came in at -₹0.03 crores. With zero interest charges and depreciation, the pre-tax loss directly translated to the net loss figure. Notably, the company paid no taxes given its loss-making status.

The quarterly trend analysis reveals fluctuating losses ranging from ₹0.03 crores to ₹0.08 crores over the past seven quarters, with no discernible pattern of improvement. The variation in losses appears to be driven primarily by changes in employee costs and other administrative expenses rather than any revenue-generating activities. This pattern of persistent losses without corresponding revenue generation raises serious questions about the company's future viability and strategic direction.

Balance Sheet Crisis: Negative Equity and Eroded Capital Base

NB Footwear's balance sheet as of March 2025 reveals a company in severe financial distress. Shareholder funds stand at -₹1.59 crores, comprising share capital of ₹14.50 crores offset by accumulated losses reflected in reserves and surplus of -₹16.09 crores. This negative equity position means that the company's liabilities exceed its assets, technically rendering it insolvent from a balance sheet perspective.

The company's asset base has been virtually eliminated, with fixed assets, investments, and current assets all reported at negligible or zero values. Current liabilities of ₹0.07 crores represent the company's primary obligations, predominantly comprising other current liabilities of ₹0.02 crores. The absence of any long-term debt indicates that the company has no access to credit markets, likely due to its non-operational status and negative net worth.

The deterioration in reserves and surplus over recent years illustrates the cumulative impact of sustained losses. From -₹14.96 crores in March 2020, the deficit has widened to -₹16.09 crores by March 2025, representing an additional ₹1.13 crores in accumulated losses over this five-year period. This steady erosion of capital, coupled with zero revenue generation, paints a bleak picture of a company that has been unable to arrest its decline or chart a path to operational recovery.

Profitability Metrics: A Company Without Earnings Power

Given the complete absence of revenue and persistent losses, traditional profitability metrics offer limited insight but nonetheless underscore the company's dire situation. The company's return on equity (ROE) stands at 0.0%, reflecting the impossibility of generating returns when there is no operational business. With negative book value, calculating meaningful ROE becomes technically challenging, but the underlying reality is clear: shareholders have seen their equity completely eroded.

The company's return on capital employed (ROCE) is reported as 19.74% on an average basis, but this figure is misleading given the negative capital employed. In practical terms, the company generates no returns on any capital, as there is no business activity to deploy capital towards. Operating margins, gross margins, and profit margins all stand at 0.0%, reflecting the complete absence of revenue generation.

Peer Comparison: Amongst the Weakest in an Already Challenged Sector

Within the diversified consumer products sector, NB Footwear stands out for all the wrong reasons. A comparison with sector peers reveals the company's exceptionally weak positioning, with most fundamental metrics either unavailable due to its non-operational status or significantly inferior to industry standards.

The peer comparison highlights NB Footwear's uniquely challenged position. Whilst several peers are also loss-making, NB Footwear distinguishes itself with a deeply negative price-to-book value of -7.37x, indicating that the market values the company at a significant discount to its already negative book value. This contrasts sharply with peers like Amin Tannery and Technopack Polymers, which maintain positive ROE figures of 3.26% and 8.63% respectively, demonstrating at least some level of operational profitability.

The company's zero return on equity places it at the bottom of the peer group, tied only with other non-operational entities. Even amongst loss-making peers, NB Footwear's complete absence of revenue generation sets it apart as a particularly distressed case. The lack of any debt (Debt to Equity of 0.00) might appear positive but actually reflects the company's inability to access credit markets due to its non-operational status and negative net worth.

Valuation Analysis: Risky Classification Reflects Fundamental Distress

NB Footwear's valuation metrics paint a picture of a company that the market has essentially written off as a going concern. The stock's price-to-book value of -7.37x is particularly telling – it indicates that investors are willing to pay only a fraction of the company's already negative book value, suggesting expectations of further value destruction or potential liquidation.

Traditional valuation multiples like price-to-earnings ratio are unavailable given the company's loss-making status. The enterprise value to EBITDA ratio of -11.72x reflects the negative EBITDA generation, whilst the enterprise value to capital employed ratio of -7.37x mirrors the negative equity situation. These metrics collectively signal that the company lacks fundamental value based on conventional financial analysis frameworks.

The company's valuation grade of "RISKY" – assigned since April 25, 2023 – appropriately reflects the fundamental challenges. This classification indicates that the company does not meet minimum quality and financial health standards for investment consideration. The stock's 52-week performance range of ₹7.31 to ₹20.69 shows extreme volatility, with the current price of ₹8.68 sitting just 18.74% above the yearly low, suggesting that the market has largely priced in the company's distressed status.

Shareholding Pattern: Promoter Stake Reduction Signals Lack of Confidence

The shareholding pattern over recent quarters reveals concerning trends that underscore the lack of confidence in the company's prospects. Promoter holding stood at 37.04% as of September 2025, down from 37.89% in the previous quarters, representing a reduction of 0.85 percentage points in June 2025. This decrease in promoter stake, whilst modest, is significant given the company's already precarious financial position.

The complete absence of institutional participation is particularly noteworthy. Foreign institutional investors (FIIs), mutual funds, insurance companies, and other domestic institutional investors (DIIs) all maintain zero holdings in the company. This institutional vacuum reflects the company's failure to meet minimum investment criteria for professional fund managers, who typically avoid non-operational entities with negative equity and no clear path to recovery.

Non-institutional shareholders, comprising primarily retail investors and non-promoter entities, hold 62.96% of the company as of September 2025. This high retail concentration in a distressed, non-operational company raises concerns about potential information asymmetry and the risk of retail investors being trapped in a deteriorating investment. The key promoters – Nitin Krishnalal Minocha with 29.63% and Copo Holdings Private Limited with 7.41% – retain significant stakes, but their recent reduction signals a lack of commitment to turning the company around.

Stock Performance: Severe Underperformance Reflects Fundamental Weakness

NB Footwear's stock performance over the past year has been catastrophic, with the shares declining 48.06% compared to the Sensex's gain of 10.38%, resulting in a negative alpha of 58.44 percentage points. This massive underperformance reflects the market's recognition of the company's non-operational status and deteriorating financial health.

The short-term performance shows marginal strength, with the stock gaining 6.24% over the past week and 2.72% over the past month, outperforming the Sensex in these brief periods. However, this recent uptick appears to be speculative in nature rather than driven by any fundamental improvement, as the company continues to report zero revenue and mounting losses.

The medium-term picture is decidedly negative. Over three months, the stock has declined 18.27%, underperforming the Sensex by 22.88 percentage points. The six-month performance is even worse, with a decline of 40.14% compared to the Sensex's gain of 5.48%, resulting in negative alpha of 45.62 percentage points. This sustained underperformance across multiple timeframes reflects the market's growing concern about the company's viability.

Interestingly, the longer-term returns paint a different picture. Over three years, the stock has delivered returns of 92.04% compared to the Sensex's 38.87%, whilst the five-year return stands at an impressive 478.67% versus the Sensex's 95.14%. However, these historical gains are largely irrelevant for current investors, as they reflect a period when the company may have had some operational activity or speculative interest that has since evaporated.

Technical Analysis: Bearish Trend Confirms Fundamental Weakness

From a technical perspective, NB Footwear exhibits a clearly bearish trend that has been in place since early November 2025. The stock is currently trading below all major moving averages – the 5-day MA at ₹8.21, 20-day MA at ₹8.59, 50-day MA at ₹9.02, and 100-day MA at ₹10.64 – indicating sustained selling pressure and lack of buying interest at current levels.

The technical indicator summary reveals predominantly bearish signals across multiple timeframes. The MACD shows mildly bearish signals on the monthly chart, whilst Bollinger Bands indicate bearish to mildly bearish positioning. The KST indicator displays bearish to mildly bearish readings, and the Dow Theory suggests a mildly bearish trend with no clear direction. The RSI shows no clear signal, indicating that the stock is neither oversold nor overbought, but rather languishing in a zone of disinterest.

Key technical levels provide little comfort for bulls. Immediate support lies at ₹7.31, representing the 52-week low, whilst immediate resistance sits at ₹8.59 around the 20-day moving average. Major resistance at ₹10.64 (100-day MA) appears distant, whilst the 52-week high of ₹20.69 seems almost unattainable given the current fundamental situation. The stock's high beta of 1.50 indicates that it is 50% more volatile than the broader market, amplifying both gains and losses – though in recent periods, the volatility has manifested primarily as downside risk.

Investment Thesis: A Speculative Shell with No Fundamental Support

The investment thesis for NB Footwear, if one can call it that, rests entirely on speculation rather than fundamentals. With zero revenue, negative equity, no operational activity, and mounting losses, the company fails every conventional investment criterion. The proprietary Mojo Score of just 12 out of 100, with a "STRONG SELL" rating, appropriately reflects this dire situation.

The company's quality grade of "BELOW AVERAGE" understates the severity of its challenges. In reality, NB Footwear exhibits characteristics of a corporate shell that has lost its operational purpose. The flat financial trend designation for Q2 FY2026, whilst technically accurate given the marginal reduction in losses, masks the fundamental reality that the company has been non-operational for years with no signs of revival.

From a valuation perspective, the "RISKY" classification is apt. The company trades at a significant discount to its already negative book value, suggesting that the market anticipates further value destruction or potential liquidation. The absence of any institutional holdings underscores professional investors' assessment that this company does not merit capital allocation under any reasonable investment framework.

Outlook: What Would Need to Change for Recovery

For NB Footwear to represent anything approaching an investment opportunity, several fundamental transformations would need to occur. First and foremost, the company would need to resume revenue-generating operations, which would require capital investment, management commitment, and a viable business plan – none of which are currently evident. Second, a capital restructuring would be necessary to address the negative equity situation, potentially through a rights issue, preferential allotment, or debt-to-equity conversion, though the absence of debt makes the latter impossible.

Third, the company would need to demonstrate sustained operational profitability over multiple quarters to rebuild investor confidence and attract institutional participation. Fourth, promoters would need to increase rather than decrease their stake, signalling genuine commitment to the company's revival. Finally, the company would need to provide transparent communication about its strategic direction, financial projections, and timeline for achieving profitability.

The probability of these positive catalysts materialising appears extremely low. The company has been non-operational for years without any announced plans for revival, suggesting that management may have effectively abandoned operational ambitions. The recent reduction in promoter stake, though small, reinforces this interpretation. For existing shareholders, the outlook is bleak, with continued value erosion the most likely scenario in the absence of dramatic intervention.