The micro-cap company, which operates in the competitive non-ferrous metals sector, has demonstrated resilient revenue growth despite challenging market conditions. Net sales for Q3 FY26 reached an all-time quarterly high of ₹176.82 crores, marking a 6.67% sequential improvement and a robust 21.68% year-on-year expansion. This growth trajectory positions the company favourably within its peer group, though margin pressures and elevated interest costs remain areas requiring close monitoring.
The stock has underperformed its sector significantly over the past year, declining 10.83% compared to the non-ferrous metals sector's 53.47% gain, resulting in a substantial 64.30 percentage point underperformance. Technical indicators currently flash bearish signals, with the stock trading below all key moving averages and showing negative momentum across multiple timeframes.
Financial Performance: Revenue Strength Amid Margin Volatility
Rajputana Industries delivered its strongest quarterly revenue performance in Q3 FY26, with net sales climbing to ₹176.82 crores from ₹165.76 crores in the previous quarter. The 6.67% quarter-on-quarter growth reflects sustained operational momentum, whilst the 21.68% year-on-year expansion underscores the company's ability to capitalise on favourable market conditions in the non-ferrous metals space.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 | 176.82 | +6.67% | 3.00 | +14.07% | 4.33% |
| Sep'25 | 165.76 | -0.81% | 2.63 | -5.73% | 3.61% |
| Jun'25 | 167.11 | +11.52% | 2.79 | +43.08% | 4.00% |
| Mar'25 | 149.85 | +3.12% | 1.95 | -13.33% | 3.63% |
| Dec'24 | 145.31 | +4.95% | 2.25 | +25.00% | 3.12% |
| Sep'24 | 138.46 | +16.56% | 1.80 | -20.70% | 2.56% |
| Jun'24 | 118.79 | — | 2.27 | — | 4.89% |
Operating profit (PBDIT) excluding other income reached ₹7.66 crores in Q3 FY26, the highest quarterly figure on record, translating to an operating margin of 4.33%. This represents a 72 basis point sequential improvement from 3.61% in Q2 FY26 and a 121 basis point year-on-year expansion from 3.12% in Q3 FY25. The margin improvement demonstrates enhanced operational efficiency, though the company's margins remain modest compared to some industry peers.
Net profit for the quarter stood at ₹3.00 crores, up 14.07% from ₹2.63 crores in the previous quarter and 33.33% higher than the ₹2.25 crores recorded in the year-ago period. The PAT margin improved to 1.70% from 1.59% sequentially, reflecting better cost absorption despite elevated interest expenses. For the nine-month period ending December 2025, the company has accumulated net profits of ₹8.42 crores on revenues of ₹509.69 crores.
However, a closer examination reveals persistent challenges in cost management. Interest expenses surged to ₹2.20 crores in Q3 FY26 from ₹1.77 crores in Q2 FY26, representing a 24.29% quarter-on-quarter increase and a 94.69% year-on-year jump from ₹1.13 crores in Q3 FY25. For the nine-month period, interest costs have climbed 63.68% to ₹6.22 crores, reflecting the company's elevated debt burden and rising borrowing costs. This trend warrants careful attention, as sustained interest expense growth could constrain profitability expansion even as revenues scale.
Operational Dynamics: Balancing Growth with Financial Leverage
Rajputana Industries' operational performance reveals a company navigating the delicate balance between aggressive growth and financial prudence. The company's return on equity (ROE) stands at 14.31% on an average basis, a respectable figure that indicates reasonably efficient capital deployment. Higher ROE values signify better capital efficiency and profitability, and Rajputana's double-digit ROE places it favourably within its peer group, demonstrating the management's ability to generate adequate returns on shareholder capital.
The company's return on capital employed (ROCE) averaged 17.25% over recent periods, though the latest figure has moderated to 13.01%. This metric, which measures profitability relative to total capital deployed, suggests that the business generates acceptable returns on its invested capital base. The compression from average to latest ROCE, however, indicates that incremental capital deployment may be yielding diminishing returns, a pattern that requires monitoring as the company scales operations.
Leverage Concerns: Debt Burden Weighing on Profitability
The company's balance sheet reveals moderate leverage with a debt-to-equity ratio of 0.70 and a debt-to-EBITDA multiple of 2.45. Whilst not alarming, these metrics indicate a meaningful debt burden that requires careful management. Long-term debt stood at ₹26.97 crores as of March 2025, up from ₹19.11 crores in the previous year, representing a 41.13% increase.
More concerning is the interest coverage ratio, with EBIT-to-interest averaging just 2.12x. This relatively thin coverage suggests limited cushion for absorbing further interest rate increases or operational setbacks. The 63.68% surge in nine-month interest expenses to ₹6.22 crores underscores the pressure elevated borrowing costs are placing on bottom-line profitability.
Working capital management presents a mixed picture. Current assets reached ₹125.93 crores as of March 2025, up from ₹101.56 crores the previous year, whilst current liabilities stood at ₹92.94 crores, marginally down from ₹93.86 crores. The company maintains adequate liquidity with a current ratio above 1.3, though the substantial ₹44.24 crores in trade payables (down from ₹66.09 crores) suggests some normalisation in supplier credit terms.
Capital expenditure has remained measured, with investing cash flows of ₹8.00 crores in FY24 primarily directed towards fixed asset additions. The company's fixed asset base stood at ₹47.16 crores as of March 2025, up modestly from ₹44.63 crores, indicating disciplined capacity expansion aligned with revenue growth. This prudent approach to capital allocation helps preserve financial flexibility whilst supporting organic expansion.
Industry Context: Navigating Non-Ferrous Metals Volatility
The non-ferrous metals sector has experienced significant volatility over the past year, with commodity price fluctuations, global demand uncertainty, and supply chain dynamics creating a challenging operating environment. Rajputana Industries operates in this cyclical industry, where margins are heavily influenced by raw material costs, processing efficiency, and end-market demand from construction, automotive, and industrial sectors.
The company's 21.68% year-on-year revenue growth in Q3 FY26 significantly outpaces the industry average, suggesting market share gains or successful penetration of higher-value product segments. However, the sector's overall performance has been robust, with the non-ferrous metals index delivering 53.47% returns over the past year, highlighting the sector's strong momentum from which Rajputana has not fully benefited at the stock price level.
Margin Dynamics in a Competitive Landscape
Operating margins in the non-ferrous metals sector typically range from 3% to 8%, depending on product mix, scale advantages, and operational efficiency. Rajputana's 4.33% operating margin in Q3 FY26 positions it in the middle of this range, indicating room for improvement through scale benefits, value-added product development, or enhanced cost management.
The company's ability to expand operating margins by 121 basis points year-on-year despite volatile commodity prices demonstrates operational resilience. However, sustaining this trajectory will require continued focus on procurement efficiency, capacity utilisation, and product mix optimisation to offset the headwinds from elevated interest costs and competitive pricing pressures.
Rajputana's sales-to-capital-employed ratio of 4.86x indicates efficient asset utilisation, with the company generating nearly five times its capital base in annual revenues. This metric compares favourably to capital-intensive manufacturing peers and suggests effective working capital management and asset productivity. The company's ability to scale revenues without proportionate capital intensity bodes well for future profitability as operating leverage kicks in.
Peer Comparison: Valuation Discount Despite Operational Strength
Rajputana Industries trades at a significant valuation discount to several peers in the non-ferrous metals space, despite demonstrating competitive operational metrics. The company's price-to-earnings ratio of 21.49x appears reasonable compared to peers such as Madhav Copper (54.96x) and Innomet Advanced (55.36x), though it trades at a premium to ABans Enterprises (10.77x).
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Rajputana Industries | 21.49 | 2.55 | 14.31% | 0.70 | NA |
| Madhav Copper | 54.96 | 4.10 | 5.98% | 0.75 | NA |
| Manaksia Aluminium | 31.26 | 1.46 | 4.15% | 1.61 | 0.23% |
| Aluwind Infra | 18.48 | 2.32 | 13.60% | 0.27 | NA |
| Innomet Advanced | 55.36 | 2.39 | 4.53% | 0.26 | NA |
| ABans Enterprises | 10.77 | — | — | — | — |
More importantly, Rajputana's 14.31% ROE significantly exceeds the peer group average of approximately 7%, highlighting superior capital efficiency. Only Aluwind Infra comes close with 13.60% ROE, whilst established players like Madhav Copper (5.98%) and Manaksia Aluminium (4.15%) trail considerably. This ROE advantage suggests that Rajputana generates better returns on shareholder capital, a key quality indicator that should, in theory, command a valuation premium.
The company's price-to-book ratio of 2.55x sits in the middle of the peer range, below Madhav Copper's 4.10x but above Manaksia Aluminium's 1.46x. Given Rajputana's superior ROE, the current P/BV multiple appears reasonable, if not slightly conservative. The debt-to-equity ratio of 0.70 is moderate within the peer group, lower than Manaksia's 1.61 but higher than Innomet's 0.26, reflecting a balanced approach to financial leverage.
With a market capitalisation of ₹178.00 crores, Rajputana ranks third in its peer group, positioning it as a mid-sized player with potential for further scale advantages. The company's enterprise value-to-EBITDA multiple of 12.44x and EV-to-sales ratio of 0.41x suggest modest valuation relative to earnings and revenue generation capacity.
Valuation Analysis: Attractive Entry Point or Value Trap?
Rajputana Industries currently trades at what appears to be an attractive valuation, with the stock classified as "ATTRACTIVE" based on proprietary valuation metrics. The company's P/E ratio of 21.49x represents a reasonable multiple for a business demonstrating 21.68% year-on-year revenue growth and expanding profitability, particularly when compared to the broader non-ferrous metals sector's elevated valuations.
The stock has declined 24.04% from its 52-week high of ₹101.90, creating a potential entry opportunity for value-oriented investors. However, this decline must be contextualised against the stock's 10.83% underperformance over the past year and its current bearish technical trend. The 52-week low of ₹70.05 provides a near-term support level, with the current price of ₹77.40 sitting just 10.49% above this floor.
The company's book value per share of ₹28.90 implies that the stock trades at 2.68x book value, which appears justified given the 14.31% ROE. A rough fair value calculation using the Gordon Growth Model and assuming a sustainable ROE of 14%, cost of equity of 12%, and long-term growth rate of 8% would suggest intrinsic value in the range of ₹85-95 per share, indicating potential upside of 10-23% from current levels.
However, several factors temper this optimistic valuation scenario. The stock's high beta of 1.50 indicates above-average volatility, with the shares demonstrating 40.87% annualised volatility compared to the Sensex's 11.53%. This elevated risk profile necessitates a higher required return, which compresses fair value estimates. Additionally, the absence of dividend payments eliminates a key component of total return for value investors.
The valuation grade history reveals concerning volatility, with the stock oscillating between "Expensive" and "Attractive" classifications multiple times between August and September 2025. This instability suggests market uncertainty about the company's sustainable earnings power and growth trajectory. The current "Attractive" classification since September 3, 2025, reflects the stock's price decline rather than fundamental improvement.
Shareholding Pattern: Stable Promoter Base, Declining Institutional Interest
Rajputana Industries' shareholding structure reveals a stable promoter base but declining institutional participation, a pattern that warrants attention. Promoter holding has remained steady at 66.08% across the past five quarters, demonstrating strong promoter commitment with zero pledging of shares. This stability provides governance comfort and aligns promoter interests with minority shareholders.
| Shareholder Category | Sep'25 | Mar'25 | Dec'24 | Sep'24 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 66.08% | 66.08% | 66.08% | 66.08% | 0.00% |
| FII | 0.22% | 0.29% | 0.38% | 0.88% | -0.07% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 9.38% | 7.04% | 6.08% | 6.13% | +2.34% |
| Non-Institutional | 24.32% | 26.59% | 27.46% | 26.91% | -2.27% |
However, foreign institutional investor (FII) participation has declined consistently, falling from 3.21% in August 2024 to just 0.22% in September 2025. This 93.15% reduction in FII holding over five quarters signals waning international investor confidence, likely reflecting concerns about the company's growth sustainability, sector cyclicality, or broader emerging market allocation shifts. The absence of mutual fund holdings further underscores limited domestic institutional interest.
On a more positive note, other domestic institutional investors (DIIs) have increased their stake from 6.13% in September 2024 to 9.38% in September 2025, with a notable 2.34 percentage point sequential increase in the latest quarter. This accumulation by DIIs, which include insurance companies and smaller institutional players, provides some counterbalance to FII exits and suggests selective institutional recognition of the company's value proposition.
Non-institutional holdings, representing retail and high-net-worth individuals, have declined from 26.91% in September 2024 to 24.32% in September 2025, with a 2.27 percentage point reduction in the latest quarter. This retail exodus coincides with the stock's price decline and bearish technical trend, indicating weak hands exiting positions. The overall institutional holding of just 9.59% remains concerningly low for a listed company, limiting liquidity and institutional oversight.
Stock Performance: Significant Underperformance Across Timeframes
Rajputana Industries' stock performance has been disappointing across virtually all timeframes, with the shares underperforming both the broader market and its sectoral peers. Over the past year, the stock has declined 10.83% whilst the Sensex advanced 9.66%, resulting in a negative alpha of 20.49 percentage points. This substantial underperformance reflects investor scepticism about the company's ability to translate operational improvements into sustained shareholder value creation.
| Period | Stock Return | Sensex Return | Alpha | Sector Return |
|---|---|---|---|---|
| 1 Week | -1.28% | -0.94% | -0.34% | — |
| 1 Month | -2.03% | -0.35% | -1.68% | — |
| 3 Months | -12.54% | -1.52% | -11.02% | — |
| 6 Months | -11.03% | +3.32% | -14.35% | — |
| YTD | -6.86% | -2.28% | -4.58% | — |
| 1 Year | -10.83% | +9.66% | -20.49% | +53.47% |
The three-month performance has been particularly weak, with the stock declining 12.54% compared to the Sensex's 1.52% decline, generating negative alpha of 11.02 percentage points. This recent underperformance coincides with the stock's technical trend shift to "Bearish" on February 13, 2026, and reflects mounting concerns about margin sustainability and interest cost pressures.
More concerning is the 64.30 percentage point underperformance versus the non-ferrous metals sector over the past year. Whilst the sector delivered robust 53.47% returns, Rajputana's 10.83% decline highlights company-specific challenges that have prevented it from participating in the sector's strong momentum. This divergence suggests structural issues beyond normal cyclical volatility, potentially related to competitive positioning, product mix, or market perception.
The stock's risk-adjusted returns paint an even bleaker picture. With 40.87% annualised volatility over the past year, Rajputana exhibits nearly four times the Sensex's 11.53% volatility. The risk-adjusted return of -0.26 and negative Sharpe ratio classify the stock as "HIGH RISK LOW RETURN"—the worst possible combination for investors. The 1.50 beta indicates that the stock amplifies market movements by 50%, falling sharply during market declines but failing to fully capture upside during rallies.
Technical indicators uniformly flash bearish signals. The stock trades below all key moving averages—5-day (₹78.41), 20-day (₹77.16), 50-day (₹80.98), 100-day (₹81.05), and 200-day (₹81.34)—indicating sustained selling pressure. MACD, RSI, Bollinger Bands, and KST all register bearish readings on weekly timeframes, whilst Dow Theory signals a bearish monthly trend. The absence of institutional buying support, as evidenced by declining FII and non-institutional holdings, has exacerbated the technical weakness.
Investment Thesis: Quality Fundamentals Meet Technical Headwinds
Rajputana Industries presents a complex investment proposition characterised by improving operational fundamentals but challenged by technical weakness and market sentiment. The company's Mojo Score of 43/100 reflects this dichotomy, with strengths in valuation offset by concerns about near-term momentum and quality consistency.
The valuation component scores positively, with the stock classified as "Attractive" at current levels. The 21.49x P/E ratio appears reasonable for a company delivering 21.68% revenue growth and 33.33% profit growth year-on-year, particularly given the superior 14.31% ROE relative to peers. The 24.04% decline from 52-week highs has created a potential value opportunity for patient investors willing to look past near-term technical weakness.
Quality assessment yields a mixed verdict, with the company rated "Average" based on long-term financial performance. Positive factors include healthy 47.30% five-year sales growth, strong 17.25% average ROCE, absence of promoter pledging, and disciplined capital allocation. However, concerns include weak 2.12x interest coverage, moderate 2.45x debt-to-EBITDA, elevated 63.68% nine-month interest expense growth, and minimal 9.59% institutional holdings.
The financial trend registers as "Positive" based on Q3 FY26 results, with net sales, operating profit, PAT, and margins all reaching quarterly highs. This operational momentum provides fundamental support for the investment case, though sustainability remains uncertain given sector cyclicality and interest cost pressures. The technical trend, however, firmly registers as "Bearish," with the stock below all moving averages, negative MACD, and weak delivery volumes.
Key Strengths & Risk Factors
KEY STRENGTHS
- Revenue Momentum: 21.68% YoY growth in Q3 FY26 with quarterly sales reaching all-time high of ₹176.82 crores
- Margin Expansion: Operating margin improved 121 bps YoY to 4.33%, demonstrating operational efficiency gains
- Superior ROE: 14.31% average ROE significantly exceeds peer average of ~7%, indicating better capital efficiency
- Stable Promoter Base: 66.08% promoter holding with zero pledging provides governance comfort and alignment
- Attractive Valuation: P/E of 21.49x appears reasonable given growth profile and ROE premium to peers
- Strong Asset Utilisation: Sales-to-capital-employed ratio of 4.86x indicates efficient asset productivity
- Positive Financial Trend: Q3 FY26 marked quarterly highs across sales, PBDIT, and PAT metrics
KEY CONCERNS
- Elevated Interest Burden: Interest costs surged 63.68% in nine months to ₹6.22 crores, pressuring margins
- Weak Interest Coverage: EBIT-to-interest ratio of just 2.12x provides limited cushion for rate increases
- Bearish Technical Trend: Stock below all moving averages with uniformly bearish indicators
- Significant Underperformance: 64.30 percentage point lag versus sector over past year
- Declining Institutional Interest: FII holding collapsed 93.15% from 3.21% to 0.22% over five quarters
- High Volatility: 40.87% annualised volatility with 1.50 beta indicates elevated risk profile
- No Dividend: Absence of dividend payments eliminates income component of total return
Outlook: What to Watch in Coming Quarters
POSITIVE CATALYSTS
- Sustained revenue growth above 20% YoY demonstrating market share gains
- Further operating margin expansion towards 5%+ through scale benefits
- Stabilisation or reduction in interest costs as debt gets repaid
- Increased institutional participation, particularly from mutual funds
- Technical trend reversal above ₹81-82 resistance zone
RED FLAGS
- Interest coverage falling below 2.0x indicating financial stress
- Revenue growth decelerating below 15% YoY
- Operating margins contracting back towards 3% levels
- Further decline in institutional holdings below 8%
- Stock breaking below ₹70 support (52-week low)
The forward outlook for Rajputana Industries hinges on the company's ability to sustain revenue momentum whilst managing its elevated interest burden. The non-ferrous metals sector remains cyclical and commodity-price sensitive, requiring vigilant monitoring of input costs, end-market demand, and competitive dynamics. Management's capital allocation decisions over the next 12-18 months will prove critical, particularly regarding debt reduction versus growth investment trade-offs.
Key monitoring points include quarterly interest expense trends (target: stabilisation below ₹2.00 crores per quarter), operating margin trajectory (target: sustained above 4.50%), institutional shareholding changes (target: increase to above 15%), and technical trend reversal signals (target: sustained move above 50-day moving average of ₹80.98). Achievement of these milestones would materially improve the investment case and potentially trigger a rating upgrade.
The Verdict: Fundamentally Sound but Timing Challenged
Score: 43/100
For Fresh Investors: Avoid initiating positions at current levels. Whilst valuation appears attractive and operational metrics are improving, the bearish technical trend, elevated volatility, and declining institutional interest create unfavourable risk-reward dynamics. Wait for technical stabilisation above ₹82 and evidence of sustained margin expansion before considering entry.
For Existing Holders: Consider reducing positions on any rallies towards ₹82-85 levels. The 10.83% one-year decline and 64.30 percentage point sector underperformance suggest structural challenges beyond normal volatility. Maintain tight vigilance on interest coverage and margin trends; exit if quarterly interest costs exceed ₹2.50 crores or operating margins compress below 3.80%.
Fair Value Estimate: ₹85-90 (10-16% upside potential), but technical weakness suggests patience warranted until trend reversal confirmed.
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. Investments in equity markets carry inherent risks, including the potential loss of principal. The author and publisher assume no responsibility for investment decisions made by readers based on this content.
