Simplex Papers Q3 FY26: A Company in Perpetual Distress with Zero Revenue and Mounting Losses

The company, established in 1994 and once engaged in trading various paper products including Simplex Bond, Simplex Copier, and Maplitho, has effectively ceased operations. The Q3 FY26 results reveal a company with no sales, minimal employee costs of ₹0.01 crores, and operating losses that persist quarter after quarter. With current liabilities of ₹13.61 crores against shareholder funds of negative ₹12.05 crores as of March 2025, Simplex Papers presents a balance sheet in severe distress.

Financial Performance: A Pattern of Persistent Losses

Simplex Papers' Q3 FY26 performance mirrors a troubling pattern that has remained unchanged for years. The company reported zero net sales for the quarter ended December 2025, maintaining the same position it has held across all recent quarters. Operating profit before depreciation, interest, and tax (PBDIT) stood at negative ₹0.03 crores, marginally improved from negative ₹0.04 crores in Q2 FY26 but essentially flat compared to negative ₹0.04 crores in Q3 FY25.

The company's profit before tax in Q3 FY26 stood at negative ₹0.03 crores, with no tax liability given the loss-making status. Net profit after tax remained at negative ₹0.03 crores, translating to earnings per share of negative ₹10.00. Across the board, every profitability metric remains in negative territory, with margins at 0.0% reflecting the complete absence of revenue-generating operations.

For the nine-month period of FY2026 (April-December 2025), the company has accumulated losses of ₹0.09 crores with zero sales throughout. This extends a multi-year trend where Simplex Papers has failed to generate any meaningful revenue since at least FY2015, with annual financial statements showing consistent zeros across sales and profit lines.

Operational Reality: A Shell Company with No Business Activity

The harsh reality is that Simplex Papers has effectively ceased functioning as an operational business. The company maintains minimal employee costs of ₹0.01 crores per quarter, suggesting a skeleton staff possibly for regulatory compliance purposes. Fixed assets stand at a negligible ₹0.02 crores, with no investments and minimal current assets comprising primarily receivables or cash balances.

The company's return on equity (ROE) stands at 0.0%, whilst return on capital employed (ROCE) is deeply negative at -17.60% on average and -17.00% for the latest period. These metrics underscore the complete absence of productive capital deployment. With no debt on the books, the company's negative net debt to equity ratio of -1.02 reflects its net cash position, though this provides little comfort given the overall insolvency situation.

Market Context: Underperforming a Weak Sector

India's paper, forest, and jute products sector has faced headwinds over the past year, with the sector index declining 15.67%. However, Simplex Papers has underperformed even this weak sector by 16.95 percentage points, with its stock falling 32.62% over the past 12 months compared to the Sensex's 9.01% gain. This represents a negative alpha of 41.63 percentage points relative to the broader market.

The company's technical trend turned mildly bearish on February 1, 2026, at ₹1,580, having previously been in a bearish trend since November 3, 2025. The stock trades above its 5-day, 20-day, 50-day, and 100-day moving averages, suggesting some short-term momentum, but the longer-term picture remains deeply concerning. With a beta of 1.50, the stock exhibits high volatility relative to the market, amplifying both gains and losses.

Peer Comparison: Among the Weakest in a Struggling Sector

Within its peer group of micro-cap paper companies, Simplex Papers ranks poorly across all metrics. Its ROE of 0.0% compares unfavourably to Konndor Industries' 4.93% and Gratex Industries' 2.80%. The negative price-to-book value of -0.41x reflects the market's recognition that the company's liabilities exceed its assets. With a market capitalisation of just ₹5.00 crores, Simplex Papers ranks fourth among its peer group, ahead only of companies in similar distress.

Valuation Analysis: Overvalued Despite Micro-Cap Status

Despite its minuscule market capitalisation, Simplex Papers appears overvalued given its complete lack of operations and negative book value. The company's P/E ratio is not applicable due to persistent losses, whilst its price-to-book value of -0.41x reflects a market price that, whilst low in absolute terms, still assigns value to a company with negative equity. The EV/EBITDA ratio of -17.33x is meaningless in the context of negative operating profits.

The stock's valuation grade has been classified as "Risky" since June 2023, having previously been rated "Does Not Qualify." This assessment reflects the fundamental challenges facing the company: zero revenue generation, persistent losses, negative book value, and no clear path to operational recovery. Any investment in Simplex Papers at current levels represents pure speculation rather than value investing.

Shareholding Pattern: Stable but Unremarkable Structure

The shareholding pattern of Simplex Papers has remained completely static over the past five quarters, with promoter holding steady at 49.94% through entities including Simplex Realty Limited (49.01%) and smaller stakes by Lucky Vyapaar & Holdings Private Ltd. and others. Insurance companies hold 13.82%, whilst other domestic institutional investors hold a minimal 0.15%. Notably, there is zero participation from foreign institutional investors or mutual funds, reflecting the complete lack of institutional interest in this distressed entity.

The absence of any shareholding changes suggests limited trading activity and no strategic interest from either promoters looking to increase their stake or external investors seeking to acquire control. With no promoter pledging, at least the risk of forced selling due to margin calls is absent, though this provides little comfort given the company's operational status.

Stock Performance: Massive Underperformance Across All Timeframes

Simplex Papers' stock performance presents a picture of severe long-term underperformance punctuated by occasional speculative bursts. Over the past year, the stock has declined 32.62%, underperforming the Sensex by 41.63 percentage points. The three-year performance shows a decline of 23.34% against the Sensex's 38.88% gain, representing a negative alpha of 62.22 percentage points.

However, recent weeks have seen speculative interest, with the stock gaining 9.45% over the past week and 8.47% over three months. Year-to-date returns stand at 15.00%, though this follows the stock's collapse from its 52-week high of ₹2,680.00 reached in mid-2025. With extremely low trading volumes—just one share traded on February 10—these price movements likely reflect thin liquidity rather than fundamental improvement.

Investment Thesis: No Credible Path to Recovery

The investment thesis for Simplex Papers is fundamentally broken. The company scores just 17 out of 100 on proprietary quality metrics, earning a "Strong Sell" rating that has been in place since April 2025. The company's quality grade is classified as "Below Average," reflecting long-term financial underperformance, whilst its financial trend is marked as "Flat" with no signs of improvement. Technical indicators show a "Mildly Bearish" trend, and valuation is classified as "Risky."

The company exhibits no positive catalysts for recovery. With zero revenue generation for years, negative equity that continues to deteriorate, and no apparent business strategy or operational activity, Simplex Papers appears to be a shell company maintained for regulatory purposes rather than an operating business. The absence of any disclosure regarding restructuring plans, asset sales, or strategic initiatives further reinforces this assessment.

Outlook: Monitoring a Company in Terminal Decline

For the foreseeable future, investors should monitor whether Simplex Papers takes any concrete steps towards operational revival or asset monetisation. The company's continued listing on stock exchanges despite years of zero revenue raises questions about its long-term viability. Any further deterioration in book value or increase in liabilities would signal deepening distress. Conversely, any announcement of strategic initiatives, asset sales, or restructuring plans could provide speculative opportunities, though such developments appear unlikely given the company's prolonged inactivity.