Risa International Q2 FY26: Mounting Losses Signal Deepening Distress for Dormant Textile Trader

The Q2 FY26 results paint a stark picture of a company that has effectively ceased meaningful business operations. With no revenue generation whatsoever, Risa International reported an operating loss (PBDIT) of ₹0.03 crores in Q2 FY26, an improvement from the ₹0.10 crores loss in Q1 FY26. However, this marginal improvement in operating losses was offset by rising interest costs of ₹0.07 crores, pushing the pre-tax loss to ₹0.10 crores compared to ₹0.15 crores in the previous quarter. The company's inability to generate any sales revenue whilst continuing to incur operational and financial expenses represents a fundamental business model failure.

The stock market has responded with sustained pessimism. Following the results announcement, Risa International's shares traded at ₹0.70, down 1.41% for the day, and hovering near its 52-week low of ₹0.57. The stock now trades at a deeply negative price-to-book value of -3.10x, reflecting investor recognition that the company's liabilities substantially exceed its assets. With negative shareholder funds of ₹3.65 crores as of March 2025, the company's balance sheet presents a picture of technical insolvency.

Financial Performance: A Company Without Revenue

The most striking aspect of Risa International's financial performance is the complete absence of revenue generation. For at least the past seven quarters spanning from March 2024 through September 2025, the company has reported zero net sales. This is not a temporary disruption but appears to represent a fundamental cessation of business activity. The quarterly income statement shows consistent ₹0.00 entries across all revenue-related metrics, indicating that the company has effectively stopped trading in textiles—its core business—for an extended period.

Despite the absence of revenue, the company continues to incur operational expenses. Employee costs remain steady at approximately ₹0.02-0.03 crores per quarter, whilst interest expenses have been gradually rising—from ₹0.03 crores in Q4 FY24 to ₹0.07 crores in Q2 FY26. This 133% increase in interest costs over five quarters suggests growing financial strain, likely due to accumulated losses requiring working capital support or penalty interest on overdue obligations.

The March 2025 quarter stands out with an exceptionally large loss of ₹8.69 crores, driven by an operating loss of ₹8.65 crores. This appears to represent a one-time write-off or provision, possibly related to asset impairment or settlement of long-outstanding liabilities. Excluding this exceptional quarter, the company's quarterly losses have ranged between ₹0.09 crores and ₹0.15 crores—still unsustainable given zero revenue generation.

Balance Sheet Erosion: Negative Equity and Declining Assets

Risa International's balance sheet has deteriorated dramatically over the past five years, transitioning from positive shareholder equity of ₹24.17 crores in March 2020 to negative equity of ₹3.65 crores by March 2025. This ₹27.82 crore erosion in shareholder value represents a complete wipeout of the company's net worth, with cumulative losses now exceeding the original share capital of ₹31.90 crores.

The reserves and surplus account tells the story of this decline. From a modest negative balance of ₹7.73 crores in March 2020, reserves have plunged to negative ₹35.55 crores by March 2025. The sharpest deterioration occurred in FY25, when reserves fell by ₹9.01 crores—primarily due to the ₹9.00 crores loss reported for the full year. This represents nearly one-third of the company's share capital being eroded in a single year.

The asset side of the balance sheet has collapsed even more dramatically. Current assets have plummeted from ₹41.44 crores in March 2020 to just ₹0.09 crores by March 2025—a staggering 99.8% decline. This represents an almost complete liquidation of working capital, inventories, and receivables. With virtually no assets remaining and current liabilities of ₹8.57 crores, the company faces a severe working capital deficit of ₹8.48 crores.

Interestingly, trade payables have remained frozen at ₹6.47 crores for the past three years (March 2023 through March 2025), suggesting that creditors have not been paid and the company may be facing legal disputes or settlement negotiations. The company has no long-term debt, but the rising interest expenses in recent quarters indicate short-term borrowings or penalty interest on overdue payables.

Historical Context: From Active Trader to Dormant Shell

Risa International's current state of dormancy stands in stark contrast to its operating history. The annual income statement reveals that the company was once an active textile trader with meaningful revenue generation. In FY15 (March 2015), the company reported net sales of ₹176.00 crores with a profit after tax of ₹2.00 crores and operating margins of 1.7%. Even as recently as FY16, sales stood at ₹133.00 crores.

However, the business began a precipitous decline thereafter. Sales fell 52.6% to ₹63.00 crores in FY17, then plunged 77.8% to ₹14.00 crores in FY18. By FY19, sales had completely ceased, registering ₹0.00 crores—a state that has persisted for at least six consecutive years through FY25. This suggests that the company faced a catastrophic business disruption around 2018-2019, possibly due to loss of key customers, supply chain collapse, or strategic decisions to wind down operations.

The company's profitability metrics tell a similar story. Operating margins, which stood at 1.7% in FY15, have been completely eroded. The company has been loss-making since at least FY19, with losses accelerating in recent years. For FY25, the full-year loss reached ₹9.00 crores on zero sales—the largest annual loss in the company's available financial history.

Valuation Analysis: A Penny Stock Trading Below Liquidation Value

At ₹0.70 per share, Risa International trades as a classic penny stock with a market capitalisation of just ₹11.00 crores. This valuation is particularly noteworthy because it exceeds the company's negative book value—investors are effectively paying ₹11.00 crores for a company with negative equity of ₹3.65 crores. The price-to-book ratio of -3.10x reflects this anomaly, where the stock trades at a premium to a negative book value.

Traditional valuation metrics are rendered meaningless for a loss-making company with zero revenue. The P/E ratio is listed as "NA (Loss Making)" due to persistent losses. EV/EBITDA stands at -1.52x, a negative multiple that reflects negative EBITDA. The company's enterprise value is negative, meaning its minimal market capitalisation is less than its net debt and liabilities.

The valuation grade is classified as "RISKY"—an assessment that appears generous given the fundamental business failure. The stock has lost 40.68% over the past year, underperforming the Sensex by 49.62 percentage points. Over longer periods, the underperformance is even more dramatic: the 10-year return stands at -87.54% compared to the Sensex's +230.48% gain, representing a staggering 318 percentage point underperformance.

The current share price of ₹0.70 is 48.53% below the 52-week high of ₹1.36, but still 22.81% above the 52-week low of ₹0.57. This positioning suggests that whilst the stock has fallen substantially, there remains potential for further downside given the deteriorating fundamentals and absence of any business recovery signals.

Shareholding Pattern: Minimal Promoter Commitment, Zero Institutional Interest

The shareholding pattern reveals a company that has been largely abandoned by both promoters and institutional investors. Promoter holding stands at just 13.09%—extraordinarily low for an Indian listed company and unchanged for at least five consecutive quarters. This minimal promoter stake suggests either significant dilution over the years or active selling by the founding shareholders, neither of which inspires confidence.

Institutional interest is virtually non-existent. Foreign institutional investors hold a mere 0.24%, whilst mutual funds have zero exposure. Insurance companies hold 0.31%, representing token holdings that have likely been forgotten or written off. The total institutional holding of just 0.55% places Risa International firmly in the category of stocks that professional investors have completely abandoned.

The overwhelming 86.35% non-institutional holding suggests that the shareholder base consists primarily of retail investors, many of whom may be trapped with illiquid positions. The complete absence of any shareholding changes over five consecutive quarters indicates minimal trading activity and a frozen shareholder register. There is no promoter pledging—unsurprising given that the shares have minimal collateral value.

Stock Performance: Sustained Decline Across All Timeframes

Risa International's stock performance has been dismal across virtually all measurement periods, with particularly severe underperformance relative to benchmark indices. The stock has declined 40.68% over the past year whilst the Sensex has gained 8.94%, resulting in negative alpha of 49.62 percentage points. This pattern of sustained underperformance extends across multiple timeframes.

The recent performance has been particularly poor. Over the past month, the stock has plunged 14.63%, underperforming the Sensex by 17.44 percentage points. Year-to-date, the decline stands at 36.36% against the Sensex's 8.32% gain. This accelerating decline suggests growing investor recognition of the company's fundamental problems.

Interestingly, the two-year and five-year returns show positive absolute performance of 27.27% and 48.94% respectively, though still underperforming the Sensex. This suggests there was a period of speculative buying or short-covering between 2020-2023, possibly driven by penny stock speculation rather than fundamental improvement. However, the 10-year return of -87.54% reveals the longer-term destruction of shareholder value.

The stock's beta of 1.50 indicates high volatility relative to the market—unsurprising for a penny stock with minimal liquidity. With volatility of 54.45% compared to the Sensex's 12.33%, Risa International exhibits extreme price swings. The risk-adjusted return of -0.75 and negative Sharpe ratio classify this as a "HIGH RISK LOW RETURN" investment—the worst possible combination for investors.

Technical Analysis: Mildly Bearish Trend with Weak Support

From a technical perspective, Risa International is currently in a "MILDLY BEARISH" trend that began on October 31, 2025 at ₹0.77. The stock trades below all major moving averages—5-day (₹0.72), 20-day (₹0.77), 50-day (₹0.76), 100-day (₹0.78), and 200-day (₹0.88)—a classic bearish configuration that suggests continued downward pressure.

Technical indicators present a mixed but predominantly negative picture. The MACD shows "Mildly Bullish" on weekly charts but "Bearish" on monthly charts, suggesting very short-term momentum that lacks conviction. Bollinger Bands are bearish on both weekly and monthly timeframes, indicating the stock is trading near the lower band with potential for continued weakness. Moving averages remain decidedly bearish, confirming the downtrend.

Key support lies at the 52-week low of ₹0.57, just 18.6% below current levels. A break below this level could trigger another leg down, potentially towards ₹0.50 or lower. Resistance is clustered between ₹0.77-0.88, representing the various moving averages that now act as overhead supply. Any rally attempt would face selling pressure at these levels.

Peer Comparison: Underperforming Within a Struggling Sector

Even within the struggling Trading & Distributors sector, Risa International stands out as one of the weakest performers. The company's 1-year return of -40.68% significantly underperforms the sector average of -22.27%, representing 18.41 percentage points of underperformance. This suggests company-specific problems beyond broader sectoral headwinds.

Risa International ranks dead last (#6) amongst its peer group in terms of market capitalisation at ₹11.00 crores. More concerningly, it is one of only three loss-making companies in the peer set, alongside Diggi Multitrade and Nyssa Corp. However, even compared to these loss-making peers, Risa's negative price-to-book value of -3.10x stands out as particularly problematic, indicating deeper balance sheet distress.

Investment Thesis: Multiple Red Flags, Zero Catalysts

The investment thesis for Risa International is overwhelmingly negative, with virtually no redeeming qualities or potential catalysts for recovery. The company scores just 17 out of 100 on the proprietary Mojo Score, placing it firmly in "STRONG SELL" territory. This exceptionally low score reflects the convergence of multiple critical problems: zero revenue generation, mounting losses, negative equity, minimal promoter commitment, and complete abandonment by institutional investors.

The quality assessment classifies Risa International as "BELOW AVERAGE"—a generous rating given the fundamental business failure. The financial trend is rated "FLAT" for Q2 FY26, reflecting marginal quarter-on-quarter improvement in operating losses. However, this "improvement" is meaningless in the context of zero revenue and persistent losses. The technical trend remains "MILDLY BEARISH," suggesting continued downward pressure on the stock price.

Outlook: No Visible Path to Recovery

The outlook for Risa International is decidedly negative, with no visible catalysts for business recovery or financial improvement. The company appears to be in a state of gradual liquidation, burning through remaining resources whilst generating no revenue. Without a dramatic strategic shift—such as asset monetisation, business restructuring, or fresh capital infusion—the trajectory points towards eventual delisting or insolvency proceedings.

Investors should monitor any announcements regarding asset sales, creditor settlements, or strategic initiatives. However, the complete absence of such developments over multiple quarters suggests that management has no clear plan for revival. The frozen shareholding pattern and minimal promoter stake indicate that those closest to the company have little incentive or ability to turn things around.