Seasons Textiles Q2 FY26: Profits Plunge 82% as Revenue Decline Continues

The textile manufacturer's struggles reflect broader challenges in the garments and apparels sector, compounded by company-specific operational headwinds. Despite a modest 4.81% gain in share price to ₹22.00 on November 14, 2025, the stock remains significantly below its 52-week high of ₹24.95, trading at an 11.82% discount. The company's weak fundamentals are reflected in its loss-making status on a trailing twelve-month basis, rendering traditional valuation metrics like P/E ratio meaningless.

With an overall Mojo Score of just 44 out of 100, Seasons Textiles carries a "SELL" rating, positioning it amongst the weakest performers in its peer group. The company's below-average quality grade, flat financial trend, and negligible institutional interest paint a concerning picture for investors seeking sustainable growth opportunities in the textile sector.

Financial Performance: Deteriorating Profitability Amidst Revenue Contraction

Seasons Textiles' Q2 FY2026 results reveal a company grappling with multiple operational challenges. Net sales of ₹6.70 crores marked a sequential decline of 12.99% from Q1 FY2026's ₹7.70 crores and a steeper 22.36% year-on-year drop from ₹8.63 crores in Q2 FY2025. This persistent revenue contraction suggests weakening demand in the company's core markets across the United States, Europe, and Asia-Pacific regions.

Operating profit (PBDIT excluding other income) stood at ₹0.75 crores in Q2 FY2026, representing an operating margin of 11.19%, down from 11.43% in the previous quarter. Whilst the margin compression appears modest at 24 basis points, the absolute operating profit declined 14.77% quarter-on-quarter, reflecting the dual impact of lower volumes and margin pressure. Year-on-year comparison reveals an even starker picture, with operating profit falling 22.68% from ₹0.97 crores in Q2 FY2025.

The company's profitability was further squeezed by elevated interest costs of ₹0.48 crores, which consumed 63.16% of operating profits. Although interest expense declined from ₹0.54 crores in Q1 FY2026, the high debt servicing burden continues to constrain bottom-line performance. Depreciation remained stable at ₹0.30 crores, maintaining consistency with the previous quarter.

Net profit margin collapsed to a mere 0.45% in Q2 FY2026 from 2.21% in the preceding quarter, highlighting the company's inability to translate even modest operating profits into meaningful bottom-line earnings. On a half-yearly basis (H1 FY2026), the company reported net sales of ₹14.40 crores and cumulative net profit of ₹0.20 crores, translating to a thin PAT margin of 1.39%.

Operational Challenges: Weak Returns and High Leverage

Seasons Textiles' operational metrics reveal deep-seated structural weaknesses that extend beyond cyclical industry headwinds. The company's average Return on Capital Employed (ROCE) stands at a paltry 3.34%, significantly below acceptable benchmarks for capital-intensive manufacturing businesses. This indicates that the company generates barely ₹3.34 of operating profit for every ₹100 of capital employed, raising serious questions about the efficiency of asset utilisation and strategic capital allocation.

The company's balance sheet reveals a highly leveraged capital structure that constrains operational flexibility. With debt to EBITDA averaging 6.60 times, Seasons Textiles faces significant refinancing risk and limited capacity to invest in growth initiatives or weather industry downturns. The EBIT to interest coverage ratio of just 0.79x is particularly concerning—the company's operating profits fall short of covering interest obligations, forcing it to rely on other income or working capital adjustments to meet debt servicing requirements.

Sales to capital employed ratio of 0.42x suggests that the company generates only ₹42 of revenue for every ₹100 of capital employed, indicating significant underutilisation of assets. This metric, combined with the weak ROCE, points to either excess capacity, inefficient operations, or a mismatch between capital investments and revenue-generating capability.

Industry Context: Navigating Headwinds in Garments & Apparels

The garments and apparels sector in India faces a challenging operating environment characterised by intense competition, shifting consumer preferences, and volatile raw material costs. Seasons Textiles' export-oriented business model exposes it to additional risks from currency fluctuations, geopolitical tensions affecting trade flows, and changing demand dynamics in key markets like the United States and Europe.

The company's product portfolio—focused on woven fabrics of cotton mixed with manmade fibres and synthetic staple fibres—operates in a commoditised segment with limited pricing power. Competition from larger, better-capitalised players with economies of scale puts pressure on margins, whilst rising labour and input costs squeeze profitability further. The company's inability to maintain consistent revenue growth suggests market share losses or weakening demand in its target segments.

Peer Comparison: Struggling Amongst Struggling Peers

Within the garments and apparels peer group, Seasons Textiles finds itself in dubious company. The sector as a whole demonstrates weak fundamentals, with most comparable companies either loss-making or generating negligible returns on equity.

Seasons Textiles' price-to-book value of 0.45x suggests the market values the company at less than half its book value, reflecting deep scepticism about the quality and realisable value of its assets. Whilst this appears attractive on the surface, the company's negligible ROE of 0.0% indicates that book value itself may be overstated or that assets are not generating adequate returns. The debt-to-equity ratio of 0.59 is moderate compared to peers, some of whom show negative equity positions, but remains concerning given the weak cash generation capability.

Valuation Analysis: Low Price Masks Fundamental Weakness

Seasons Textiles trades at ₹22.00 per share, commanding a market capitalisation of just ₹16.48 crores—firmly in micro-cap territory. The stock's valuation appears "attractive" based on traditional metrics, but this assessment requires significant qualification. With the company loss-making on a trailing twelve-month basis, the P/E ratio is rendered meaningless. The price-to-book value of 0.45x suggests the stock trades at a 55% discount to book value, but this discount reflects fundamental concerns rather than a genuine opportunity.

The company's EV/EBITDA multiple of 11.39x and EV/Sales of 1.28x appear reasonable in isolation, but must be viewed in the context of deteriorating fundamentals and weak return metrics. The valuation grade has oscillated between "Attractive" and "Very Attractive" in recent months, reflecting the stock's volatility rather than improving fundamentals.

The stock trades 11.82% below its 52-week high of ₹24.95 but remains 62.96% above its 52-week low of ₹13.50, suggesting significant price volatility. With a beta of 1.50, the stock exhibits 50% higher volatility than the broader market, amplifying both upside and downside movements.

Shareholding Pattern: Stable but Uninspiring

Seasons Textiles' shareholding pattern reveals a promoter-dominated structure with negligible institutional participation—a red flag for investors seeking quality companies with professional governance and institutional validation.

Promoter holding has remained frozen at 61.45% across the last five quarters, with the Wadhwa family controlling the company through direct and HUF holdings. Inderjeet Singh Wadhwa holds 42.63%, whilst Neelam Wadhwa holds 18.67%. The complete absence of FII, mutual fund, insurance, and other institutional holdings signals that sophisticated investors have found no compelling reason to invest in the company.

Positively, there is no promoter pledging, eliminating one potential risk factor. However, the 38.55% non-institutional holding—comprising largely retail investors—has also remained static, suggesting neither accumulation nor distribution but rather a lack of active interest in the stock.

Stock Performance: Volatile Recovery from Depressed Levels

Seasons Textiles has delivered mixed returns across different timeframes, with longer-term performance reflecting recovery from pandemic-era lows rather than sustainable operational improvement.

The stock's recent momentum is evident in its one-week (+9.45%), one-month (+16.40%), and three-month (+10.66%) returns, all of which significantly outpaced the Sensex. However, year-to-date performance of +4.81% trails the Sensex's +7.72%, generating negative alpha of -2.91%. This suggests that recent gains may be more attributable to short-term volatility rather than sustained fundamental improvement.

The stock trades above all key moving averages—5-day (₹20.23), 20-day (₹19.95), 50-day (₹19.86), 100-day (₹19.93), and 200-day (₹19.56)—indicating a short-term bullish technical setup. Technical indicators show a "Mildly Bullish" trend, with MACD and Bollinger Bands signalling bullish momentum on the weekly timeframe, though monthly indicators remain mixed.

Investment Thesis: Multiple Red Flags Outweigh Low Valuation

The investment case for Seasons Textiles rests almost entirely on its low absolute valuation, but this single factor is overwhelmed by a litany of fundamental concerns. The company's Mojo Score of 44 out of 100 places it firmly in "SELL" territory, reflecting below-average quality, flat financial trends, and weak long-term return metrics.

The company's quality assessment reveals structural weaknesses: 5-year sales growth of merely 0.93%, EBIT growth of 3.58%, and an EBIT to interest coverage ratio of just 0.79x. With debt to EBITDA at 6.60x and average ROCE of 3.34%, the company demonstrates neither growth potential nor capital efficiency. The complete absence of institutional holdings (0.00%) underscores that professional investors see no value proposition here.

Key Strengths & Risk Factors

Outlook: What to Watch

For Seasons Textiles to merit investment consideration, it must demonstrate consistent revenue growth, meaningful margin expansion, and improved return metrics over multiple quarters. The company needs to reduce its debt burden and achieve an EBIT to interest coverage ratio above 2.0x to establish financial stability. Until these fundamental improvements materialise, the low valuation merely reflects appropriate pricing of underlying risks rather than an attractive entry opportunity.