The quarter's performance represents a complete breakdown in the company's already fragile business model. Net sales, which had shown some signs of life in recent quarters, evaporated entirely in Q3 FY26, recording ₹0.00 crores compared to ₹0.88 crores in Q3 FY25. This 100.00% year-on-year revenue collapse eliminated any possibility of profitability, with operating profit (PBDIT) excluding other income plunging to a loss of ₹0.24 crores from a profit of ₹0.18 crores in the year-ago quarter.
Financial Performance: A Complete Revenue Vacuum
The quarterly results paint a picture of operational paralysis. After posting minimal sales of ₹0.10 crores in Q2 FY26, the company recorded zero revenue in Q3 FY26, marking the second consecutive quarter of near-total business inactivity. The sequential decline from Q2 to Q3 was 100.00%, whilst the year-on-year comparison reveals an equally catastrophic 100.00% drop from the ₹0.88 crores recorded in Q3 FY25.
| Quarter | Net Sales (₹ Cr) | QoQ Change | YoY Change | Net Profit (₹ Cr) | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 (Q3) | 0.00 | -100.00% | -100.00% | -0.24 | 0.0% |
| Sep'25 (Q2) | 0.00 | -100.00% | -100.00% | -0.02 | 0.0% |
| Jun'25 (Q1) | 0.10 | N/A | -82.46% | 0.01 | 10.0% |
| Mar'25 (Q4) | 0.00 | -100.00% | N/A | -0.54 | 0.0% |
| Dec'24 (Q3) | 0.88 | +700.00% | N/A | 0.20 | 22.73% |
| Sep'24 (Q2) | 0.11 | -80.70% | N/A | -0.02 | -18.18% |
| Jun'24 (Q1) | 0.57 | N/A | N/A | 0.09 | 15.79% |
The company's inability to generate sales has rendered traditional profitability metrics meaningless. With zero revenue, operating margins, gross margins, and PAT margins all stand at 0.0% for Q3 FY26. Employee costs remained minimal at ₹0.00 crores, suggesting a skeletal workforce, whilst the absence of interest and depreciation charges indicates negligible operational scale. The net loss of ₹0.24 crores for the quarter represents pure cash burn with no revenue generation to offset expenses.
Operational Crisis: Capital Destruction Accelerates
The company's operational metrics reveal a business in terminal decline. Return on capital employed (ROCE) for H1 FY26 plummeted to a catastrophic -137.04%, marking the worst performance on record. This figure, which measures how efficiently the company generates profits from its capital base, signals severe capital destruction. The average ROCE over recent years stands at an equally dismal -42.90%, whilst return on equity (ROE) averages 0.0%, indicating that shareholder capital is generating no returns whatsoever.
Critical Red Flag: Operational Paralysis
Revenue Generation Has Ceased: With zero sales for two consecutive quarters (Q2 and Q3 FY26), the company appears to have no active business operations. The collapse from ₹0.88 crores in Q3 FY25 to ₹0.00 crores in Q3 FY26 represents a complete breakdown in the trading business model.
Capital Destruction: ROCE of -137.04% in H1 FY26 indicates the company is burning through capital at an alarming rate with no revenue generation to offset losses. This level of capital inefficiency is unsustainable for any business.
Balance Sheet Erosion: Shareholder funds stand at a mere ₹0.18 crores as of March 2025, with reserves and surplus deeply negative at -₹5.57 crores. The company's book value per share of ₹0.32 contrasts starkly with the current market price of ₹58.22, creating a price-to-book ratio of 35.23x that defies fundamental logic.
The balance sheet as of March 2025 reveals a company teetering on the edge. Total shareholder funds amount to just ₹0.18 crores, barely positive after years of accumulated losses pushed reserves and surplus to -₹5.57 crores. Current liabilities of ₹0.68 crores exceed the company's current assets of ₹0.86 crores by a narrow margin, leaving minimal working capital cushion. With zero fixed assets and no investments, the company lacks any tangible asset base to support future operations.
Industry Context: Garments Sector Offers No Shelter
RSC International operates in the garments and apparel sector, a segment that has faced headwinds from volatile raw material prices, changing consumer preferences, and intense competition. However, the company's struggles appear far more fundamental than sector-specific challenges. Whilst peers in the industry continue to generate revenue and maintain operations, RSC International's complete absence of sales suggests company-specific operational failures rather than broader industry weakness.
The company's historical evolution provides context for its current predicament. Incorporated in January 1993 as Ratangiri Textiles Limited, the firm initially focused on fabric trading for the domestic ready-made garment market before diversifying into exports in 1994. The company expanded its loom capacity from 20 to 24 units in 1999, but this modest scale appears insufficient to compete in today's market. The absence of any meaningful capital expenditure or capacity expansion in recent years suggests the business has been in managed decline for an extended period.
Peer Comparison: Valuation Disconnect From Reality
A comparison with peers in the garments and apparel sector highlights RSC International's fundamental weaknesses and valuation anomalies. The company's ROE of 0.0% lags far behind industry peers, whilst its price-to-book ratio of 35.23x represents an inexplicable premium given the absence of earnings or revenue growth.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| RSC International | NA (Loss Making) | 35.23x | 0.0% | 0.09 | NA |
| Mohit Industries | NA (Loss Making) | 0.23x | 1.31% | 0.39 | NA |
| PBM Polytex | NA (Loss Making) | 0.34x | 5.45% | -0.27 | NA |
| Marc Loire | 7.22x | 1.03x | 0.0% | -0.11 | NA |
| Padam Cotton | 4.15x | 1.74x | 39.98% | 0.01 | 3.51% |
| Swasti Vinayaka | 18.88x | 1.47x | 10.16% | 0.21 | NA |
The comparison reveals RSC International's extreme valuation disconnect. Whilst loss-making peers trade at price-to-book ratios below 0.50x, RSC International commands a 35.23x multiple despite generating no revenue and posting losses. Even profitable peers with positive ROE figures trade at P/BV ratios between 1.03x and 1.74x, making RSC International's valuation appear detached from fundamental reality. The company's market capitalisation of ₹35.00 crores ranks it fifth among the peer group, yet its operational metrics place it at the bottom of the pack.
Valuation Analysis: Premium Without Justification
RSC International's valuation metrics defy rational analysis. With the company loss-making, the P/E ratio is not applicable. However, the price-to-book ratio of 35.23x represents an astronomical premium for a business with virtually no operations, no revenue, and a book value per share of just ₹0.32. The enterprise value to sales ratio of 22.64x is meaningless given the absence of sales, whilst the negative EV/EBITDA of -35.32x reflects the company's loss-making status.
The company's valuation grade stands at "RISKY", a designation that appears generous given the operational realities. With no earnings, minimal book value, and zero revenue generation, any positive valuation represents speculative hope rather than fundamental value. The stock's 52-week range of ₹17.46 to ₹65.85 shows extreme volatility, with the current price of ₹58.22 sitting 11.59% below the high but 233.45% above the low, suggesting speculative trading rather than investment-grade accumulation.
Shareholding: Promoter Stability Amid Operational Chaos
The shareholding pattern reveals interesting dynamics. Promoter holding stands at 37.21% as of December 2025, stable from September 2025 but representing a dramatic increase from the 0.16% recorded in June 2025. This 37.05 percentage point jump in Q2 FY26 suggests a significant promoter stake increase, though the timing coincides with the company's operational collapse. The absence of any institutional holdings—zero FII, mutual fund, insurance, or DII participation—underscores the lack of professional investor confidence in the business.
| Quarter | Promoter % | QoQ Change | FII % | MF % | Non-Inst % |
|---|---|---|---|---|---|
| Dec'25 | 37.21% | 0.00% | 0.00% | 0.00% | 62.79% |
| Sep'25 | 37.21% | +37.05% | 0.00% | 0.00% | 62.79% |
| Jun'25 | 0.16% | 0.00% | 0.00% | 0.00% | 99.84% |
| Mar'25 | 0.16% | -36.90% | 0.00% | 0.00% | 99.84% |
| Dec'24 | 37.06% | N/A | 0.00% | 0.00% | 62.94% |
Non-institutional holdings comprise 62.79% of the equity, representing retail and other non-professional investors. The volatility in promoter holdings—swinging from 37.06% in December 2024 to 0.16% in March 2025 and back to 37.21% by September 2025—raises questions about the stability and commitment of the promoter group. Key promoters include Shaliesh Agrawal and Ramji Das Agarwal, each holding 18.53% stakes. Positively, there is no promoter pledging, eliminating one potential risk factor, though this offers little comfort given the operational paralysis.
Stock Performance: Speculative Volatility Dominates
The stock's price performance reflects speculative trading rather than fundamental investment. Over the past three years, RSC International has delivered a staggering 949.01% return, vastly outperforming the Sensex's 35.84% gain by 913.17 percentage points. However, this extraordinary performance appears disconnected from operational reality, with the gains likely driven by low liquidity and speculative positioning rather than improving fundamentals.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | -4.99% | +0.81% | -5.80% |
| 1 Week | -4.99% | -0.92% | -4.07% |
| 1 Month | -6.83% | -0.33% | -6.50% |
| 3 Months | -4.27% | -1.50% | -2.77% |
| 6 Months | +6.90% | +3.35% | +3.55% |
| YTD | -2.95% | -2.26% | -0.69% |
| 2 Years | +537.68% | +15.01% | +522.67% |
| 3 Years | +949.01% | +35.84% | +913.17% |
| 5 Years | +1188.05% | +59.86% | +1128.19% |
Recent performance has turned negative, with the stock down 4.99% over the past week and 6.83% over the past month, underperforming the Sensex in both periods. The technical trend has shifted to "MILDLY BULLISH" as of January 28, 2026, down from "Bullish" previously, suggesting weakening momentum. The stock trades below all key moving averages (5-day, 20-day, 50-day, 100-day, and 200-day), indicating technical weakness. With daily trading volumes averaging just 1,700 shares and 100.00% delivery ratios, liquidity remains extremely thin, amplifying volatility and making the stock unsuitable for institutional investors.
Investment Thesis: Quality Deficit Meets Valuation Excess
The investment thesis for RSC International is fundamentally broken. The company's quality grade stands at "BELOW AVERAGE", reflecting weak long-term financial performance characterised by negative ROCE, zero ROE, and inconsistent revenue generation. The Mojo score of 33 out of 100 places the stock firmly in "SELL" territory, with the rating unchanged since November 2024 when it first received this designation.
The financial trend assessment of "FLAT" masks the severity of the situation—zero revenue and mounting losses represent far worse than flat performance. Key negative factors include ROCE at its lowest level of -137.04% in H1 FY26 and cash and cash equivalents at ₹0.00 crores, leaving no liquidity buffer. The only positive factor cited—debtors turnover ratio at its highest of 8.17 times—is meaningless when the company generates no sales to create debtors in the first place.
Key Strengths
- No Debt Burden: Zero interest-bearing debt eliminates refinancing risk and interest expense pressure
- No Promoter Pledging: Absence of pledged shares removes one potential governance concern
- Stable Promoter Holding: 37.21% promoter stake unchanged for two consecutive quarters
- Low Fixed Cost Base: Minimal employee costs and zero depreciation reduce cash burn rate
- Historical Resilience: Company has survived multiple business cycles since 1993 incorporation
Key Concerns
- Zero Revenue Generation: Complete absence of sales for two consecutive quarters signals operational paralysis
- Severe Capital Destruction: ROCE of -137.04% represents extreme capital inefficiency and value destruction
- Eroded Book Value: Shareholder funds of just ₹0.18 crores with reserves at -₹5.57 crores
- Valuation Disconnect: P/BV of 35.23x defies logic for a loss-making, revenue-less business
- Zero Institutional Interest: Complete absence of FII, MF, insurance, or DII holdings
- Extreme Illiquidity: Daily volumes of just 1,700 shares create exit risk
- No Visible Turnaround Plan: Absence of capital expenditure or strategic initiatives
Outlook: What to Watch
For investors monitoring RSC International, the outlook remains deeply concerning. The company faces a critical juncture where resumption of operations and revenue generation will determine survival. However, the path forward appears uncertain at best.
Positive Catalysts (Low Probability)
- Revenue Resumption: Any meaningful sales generation in Q4 FY26 would signal operational revival
- Strategic Restructuring: Announcement of business model changes or new partnerships
- Capital Infusion: Fresh equity or promoter funding to support working capital needs
- Asset Monetisation: Sale of any remaining assets to strengthen the balance sheet
Red Flags (High Probability)
- Continued Revenue Drought: Another quarter of zero or near-zero sales in Q4 FY26
- Further Losses: Mounting quarterly losses depleting the minimal shareholder funds
- Promoter Stake Changes: Reduction in promoter holding signalling loss of confidence
- Working Capital Stress: Current liabilities exceeding current assets leading to solvency concerns
- Regulatory Actions: Exchange surveillance or delisting warnings due to operational inactivity
The Verdict: Avoid at All Costs
Score: 33/100
For Fresh Investors: Stay away entirely. The company generates no revenue, destroys capital at an alarming rate, and trades at an inexplicable valuation premium. The absence of institutional investors, combined with extreme illiquidity, creates significant exit risk. There is no credible investment case for initiating a position.
For Existing Holders: Exit at the earliest opportunity, accepting current losses rather than risking further capital erosion. The Q3 FY26 results confirm operational paralysis with no visible turnaround catalyst. The stock's recent price decline offers a window to exit before further deterioration. Any bounce should be used to liquidate positions.
Fair Value Estimate: ₹0.32 (book value per share) representing 99.45% downside from current price of ₹58.22. Even this book value may prove optimistic given ongoing losses and absence of revenue generation.
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 16, 2026, and actual results may differ materially from projections or assessments provided herein.
