The quarter-on-quarter improvement, whilst encouraging on the surface, comes against the backdrop of a loss-making March 2025 quarter (₹-1.62 crores) and a weak June 2025 quarter (₹1.76 crores). The year-on-year comparison benefits from an exceptionally low base, as September 2024 profit stood at just ₹1.38 crores. More concerning is the company's full-year FY25 performance, where it posted a marginal loss of ₹1.00 crore on revenues of ₹403.00 crores, marking a sharp reversal from the ₹19.00 crore profit in FY24.
The textile machinery and yarn manufacturing sector has faced headwinds from volatile cotton prices, subdued domestic demand, and intense competition. Super Sales India, an associate of the prestigious Lakshmi Machine Works Group, operates in two primary segments: marketing textile machinery manufactured by Lakshmi Machine Works and manufacturing yarn and gears. The company's performance has been particularly challenged by declining operating margins, which compressed from 18.9% in FY22 to just 5.7% in FY25.
Financial Performance: Marginal Recovery Amidst Structural Weakness
Super Sales India's Q2 FY26 results demonstrate a tactical improvement but fail to address the company's fundamental operational challenges. Net sales grew 6.16% quarter-on-quarter to ₹104.92 crores from ₹98.83 crores in Q1 FY26, whilst year-on-year growth remained anaemic at 3.71% from ₹101.17 crores in Q2 FY25. This modest top-line expansion reflects the company's struggle to gain market share in a competitive environment.
| Quarter | Net Sales (₹ Cr) | QoQ Change | Operating Profit (₹ Cr) | OPM % | Net Profit (₹ Cr) | PAT Margin % |
|---|---|---|---|---|---|---|
| Sep'25 | 104.92 | +6.16% | 11.01 | 10.49% | 4.06 | 3.87% |
| Jun'25 | 98.83 | -6.10% | 8.34 | 8.44% | 1.76 | 1.78% |
| Mar'25 | 105.25 | +5.27% | 5.22 | 4.96% | -1.62 | -1.54% |
| Dec'24 | 99.98 | -1.18% | 3.15 | 3.15% | -2.54 | -2.54% |
| Sep'24 | 101.17 | +3.90% | 7.07 | 6.99% | 1.38 | 1.36% |
| Jun'24 | 97.37 | -2.79% | 7.69 | 7.90% | 1.02 | 1.05% |
| Mar'24 | 100.16 | — | 4.18 | 4.17% | -1.95 | -1.95% |
The operating profit excluding other income surged to ₹11.01 crores in Q2 FY26, marking the highest level in the trailing quarters and translating to an operating margin of 10.49%. This represents a significant improvement from 8.44% in Q1 FY26 and 6.99% in Q2 FY25. However, this margin expansion must be viewed in context—the company's operating margins have collapsed from 18.9% in FY22 to 5.7% in FY25, indicating severe competitive pressures and operational inefficiencies.
The profit before tax of ₹5.85 crores in Q2 FY26 marks a substantial recovery from ₹2.26 crores in Q1 FY26 and ₹1.70 crores in Q2 FY25. Critically, other income contributed ₹2.94 crores, representing 50.26% of profit before tax—a concerning dependency on non-operating income that raises questions about the sustainability of core business profitability. The company's interest burden remained stable at ₹2.08 crores, whilst depreciation stood at ₹6.02 crores.
Operational Challenges: Weak Returns and Deteriorating Quality
Beneath the quarterly profit recovery lies a deeply concerning operational picture. Super Sales India's return on equity has plummeted to just 4.72% on average, with the latest annual ROE at a dismal -0.18%, reflecting the company's inability to generate adequate returns for shareholders. The return on capital employed tells a similar story, averaging 5.64% and dropping to -0.30% in the most recent period—well below the cost of capital and indicative of value destruction.
The company's five-year operating profit CAGR stands at -182.89%, representing one of the most alarming deteriorations in the peer group. This catastrophic decline in operating profitability stems from margin compression, rising employee costs (which increased from ₹31.00 crores in FY21 to ₹48.00 crores in FY25), and the company's inability to pass through cost increases to customers. The sales CAGR of 11.70% over five years, whilst positive, has not translated into bottom-line growth, highlighting severe operational inefficiencies.
Critical Concern: Return on Equity Collapse
Super Sales India's ROE has deteriorated from positive territory to -0.18% in FY25, indicating the company is destroying shareholder value. With average ROE of just 4.72%, the company falls well short of its cost of equity, making it an unattractive proposition for equity investors seeking adequate risk-adjusted returns.
The balance sheet reveals a company with adequate financial strength but questionable deployment of capital. Shareholder funds stood at ₹564.92 crores as of March 2025, with investments of ₹366.98 crores—a substantial portion of the balance sheet tied up in non-operating assets. The company maintains zero long-term debt, which is positive from a leverage perspective, but the inability to generate adequate returns on the substantial equity base raises questions about capital allocation efficiency.
Working capital management has shown improvement, with current assets of ₹190.65 crores against current liabilities of ₹126.62 crores, providing a comfortable current ratio. However, the operating cash flow of ₹29.01 crores in FY25 represents the lowest in recent years, down from ₹33.00 crores in FY24 and ₹64.00 crores in FY23, indicating deteriorating cash generation capabilities despite the improved quarterly profit.
Margin Dynamics: Temporary Reprieve or Sustainable Recovery?
The Q2 FY26 operating margin expansion to 10.49% represents a welcome improvement but must be evaluated against the company's historical performance and competitive positioning. At its peak in FY22, Super Sales India achieved operating margins of 18.9%, nearly double the current level. The subsequent margin compression to 5.7% in FY25 reflects fundamental challenges in the business model, including pricing pressures, raw material cost volatility, and competitive intensity.
| Financial Year | Net Sales (₹ Cr) | YoY Growth | Operating Profit (₹ Cr) | OPM % | Net Profit (₹ Cr) | PAT Margin % |
|---|---|---|---|---|---|---|
| FY25 | 403.00 | -3.8% | 23.00 | 5.7% | -1.00 | -0.2% |
| FY24 | 419.00 | +14.2% | 42.00 | 10.0% | 19.00 | 4.5% |
| FY23 | 367.00 | -12.4% | 46.00 | 12.5% | 28.00 | 7.6% |
| FY22 | 419.00 | +57.5% | 79.00 | 18.9% | 48.00 | 11.5% |
| FY21 | 266.00 | -6.0% | 39.00 | 14.7% | 8.00 | 3.0% |
The gross profit margin of 11.31% in Q2 FY26, whilst improved from 8.51% in Q1 FY26, remains substantially below the 20.5% achieved in FY22. This persistent margin pressure stems from the company's limited pricing power in a commoditised business environment and its exposure to volatile raw material costs. The textile machinery marketing business, which depends on Lakshmi Machine Works for product supply, operates on relatively thin margins, whilst the yarn manufacturing segment faces intense competition from numerous players.
Employee costs have remained elevated at ₹12.97 crores in Q2 FY26, representing 12.36% of sales. Whilst this is in line with recent quarters, the absolute level of employee costs has increased significantly from ₹31.00 crores in FY21 to ₹48.00 crores in FY25, without commensurate revenue growth. This suggests potential overstaffing or wage inflation that the company has been unable to offset through productivity improvements or revenue expansion.
Key Insight: Dependency on Non-Operating Income
Other income of ₹2.94 crores in Q2 FY26 constituted 50.26% of profit before tax, highlighting the company's troubling reliance on investment income and other non-core sources to maintain profitability. This dependency raises serious questions about the sustainability of reported profits and the health of the core operating business.
Industry Context: Navigating a Challenging Textile Landscape
The Indian textile and apparel industry has faced a difficult operating environment characterised by volatile cotton prices, weak export demand, and intense domestic competition. The textile machinery segment, in particular, has been impacted by subdued capital expenditure by textile mills, many of which are grappling with their own margin pressures and demand uncertainties.
Super Sales India's position as a marketing arm for Lakshmi Machine Works provides certain advantages in terms of product quality and brand association, but also limits the company's flexibility in pricing and product mix. The yarn manufacturing business operates in a highly fragmented and competitive market, where numerous players compete primarily on price, leaving limited scope for differentiation or margin expansion.
The garments and apparels sector has witnessed mixed performance, with some players benefiting from export opportunities whilst others struggle with domestic demand weakness. Super Sales India's underperformance relative to the sector (-35.61 percentage points over one year) suggests company-specific challenges beyond broader industry headwinds.
Peer Comparison: Lagging Behind Industry Standards
A comparison with peers in the garments and apparels sector reveals Super Sales India's relative underperformance across key metrics. Whilst the company maintains a low debt-to-equity ratio of 0.09, its return on equity of 4.72% trails behind several competitors, including RRIL at 7.98% and True Green at 2.95%.
| Company | P/E (TTM) | P/BV | ROE % | Debt/Equity | Div Yield % |
|---|---|---|---|---|---|
| Super Sales India | NA (Loss Making) | 0.41 | 4.72 | 0.09 | 0.33 |
| DCM Nouvelle | 37.73 | 0.80 | 2.15 | 1.04 | — |
| Zodiac Clothing | NA (Loss Making) | 1.20 | 0.00 | 0.41 | — |
| RRIL | 33.84 | 2.39 | 7.98 | 0.14 | — |
| Shiva Texyarn | 15.16 | 0.17 | 1.83 | 0.54 | 0.32 |
| True Green | NA (Loss Making) | 2.10 | 2.95 | 1.47 | — |
The company's price-to-book ratio of 0.41x appears attractive on the surface, trading at a significant discount to book value. However, this discount reflects the market's assessment of the company's poor return profile and deteriorating fundamentals. With a loss-making FY25 performance, the P/E ratio is not meaningful, but the company's inability to generate consistent profits makes valuation on earnings multiples impossible.
Super Sales India's dividend yield of 0.33% (based on a ₹2.50 per share dividend) provides minimal income support, particularly given the negative dividend payout ratio of -43.66% in FY25, indicating the dividend was paid despite the loss-making performance—a practice that raises concerns about capital allocation discipline.
Valuation Analysis: Discount Reflects Fundamental Weakness
Super Sales India's current valuation metrics present a complex picture. The stock trades at a price-to-book ratio of 0.41x, representing a substantial discount to book value of ₹1,839.23 per share versus the current market price of ₹810.00. However, this discount is entirely justified given the company's poor return on equity and deteriorating operating performance.
The EV/EBITDA multiple of 12.05x appears reasonable on the surface, but the negative EV/EBIT of -227.37x reflects the company's loss-making operating performance when excluding other income. The EV/Sales ratio of 0.71x suggests the market is ascribing limited value to the company's revenue-generating capabilities, reflecting concerns about margin sustainability and profitability.
The company's valuation grade has deteriorated to "Risky" from "Very Attractive" in early 2025, reflecting the market's reassessment of the company's prospects. The 52-week price range of ₹716.00 to ₹1,498.00 illustrates the significant volatility and uncertainty surrounding the stock, with the current price 45.93% below the 52-week high.
From a valuation perspective, the key question is not whether the stock is cheap relative to book value, but whether the company can generate adequate returns on that book value. With ROE at -0.18% in FY25 and average ROE of 4.72%, the company is failing to create value for shareholders, making even the current discounted valuation appear expensive relative to the returns generated.
Shareholding Pattern: Stable but Uninspiring
The shareholding pattern of Super Sales India has remained remarkably stable over the past five quarters, with promoter holding steady at 59.43%. This stability provides some comfort regarding promoter commitment, and the absence of any pledging of promoter shares is positive. However, the complete absence of institutional investors—with 0.00% holding from FIIs, mutual funds, insurance companies, and other DIIs—speaks volumes about the lack of institutional confidence in the company's prospects.
| Shareholder Category | Sep'25 | Jun'25 | Mar'25 | Dec'24 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 59.43% | 59.43% | 59.43% | 59.43% | 0.00% |
| FII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Mutual Funds | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Insurance | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Other DII | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% |
| Non-Institutional | 40.57% | 40.57% | 40.57% | 40.57% | 0.00% |
The promoter group is led by Quattro Engineering India Limited (30.59%), Lakshmi Machine Works Limited (9.77%), and Shivali Jayavarthanavelu (7.87%), amongst others. The association with the reputable Lakshmi Machine Works Group provides credibility, but this has not translated into improved operating performance or institutional interest.
The absence of institutional investors is particularly telling. Sophisticated institutional investors typically conduct thorough due diligence and are attracted to companies with strong fundamentals, consistent performance, and attractive risk-reward profiles. The complete lack of FII, mutual fund, and insurance company participation suggests these investors have evaluated Super Sales India and found it wanting, likely due to concerns about profitability, returns, and growth prospects.
Stock Performance: Severe Underperformance Across Timeframes
Super Sales India's stock performance has been dismal across most timeframes, with the stock declining 37.69% over the past year compared to the Sensex's 5.28% gain, resulting in a negative alpha of -42.97 percentage points. The year-to-date performance is even more concerning, with the stock down 41.73% against the Sensex's 7.10% gain, representing a staggering underperformance of -48.83 percentage points.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Day | +6.39% | +0.57% | +5.82% |
| 1 Week | +4.17% | -0.35% | +4.52% |
| 1 Month | +9.29% | +1.44% | +7.85% |
| 3 Months | -2.41% | +4.79% | -7.20% |
| 6 Months | -5.26% | +5.33% | -10.59% |
| YTD | -41.73% | +7.10% | -48.83% |
| 1 Year | -37.69% | +5.28% | -42.97% |
| 2 Years | -29.53% | +28.94% | -58.47% |
| 3 Years | +0.66% | +38.07% | -37.41% |
| 5 Years | +232.58% | +93.37% | +139.21% |
The recent one-month performance shows a bounce of 9.29%, outperforming the Sensex by 7.85 percentage points, likely reflecting the Q2 results announcement. However, this short-term bounce does little to offset the severe underperformance over longer periods. The three-month return of -2.41% against the Sensex's +4.79% and six-month return of -5.26% against the Sensex's +5.33% indicate persistent weakness.
The five-year return of 232.58% appears impressive in isolation, but this largely reflects the recovery from COVID-19 lows and the strong FY22 performance when the company achieved peak margins. Since then, the stock has given back substantial gains as operational performance deteriorated. The risk-adjusted return of -0.97 over one year, combined with high volatility of 38.99%, places the stock in the "HIGH RISK LOW RETURN" category—the worst possible quadrant for investors.
Technical indicators paint a bearish picture, with the stock in a "BEARISH" trend since November 7, 2025. The stock trades below all key moving averages—5-day (₹784.19), 20-day (₹754.91), 50-day (₹773.12), 100-day (₹832.05), and 200-day (₹870.51)—indicating sustained selling pressure and lack of buying interest. The beta of 1.50 suggests the stock is 50% more volatile than the market, amplifying both gains and losses.
Investment Thesis: Multiple Red Flags Outweigh Tactical Recovery
The investment case for Super Sales India is severely compromised by multiple structural weaknesses that far outweigh the tactical quarterly profit recovery. The company's overall Mojo score of 17 out of 100, resulting in a "STRONG SELL" rating, reflects the confluence of negative factors across valuation, quality, financial trends, and technical indicators.
The valuation grade of "RISKY" accurately captures the market's assessment of the company's poor return profile and uncertain prospects. Whilst the price-to-book ratio of 0.41x appears cheap, this discount is more than justified by the company's inability to generate adequate returns on equity. The quality grade of "BELOW AVERAGE" reflects the weak long-term financial performance, with five-year EBIT CAGR of -182.89% representing one of the worst deteriorations in profitability amongst listed companies.
The positive financial trend for Q2 FY26 provides limited comfort, as it comes against a very low base and is heavily dependent on non-operating income. The bearish technical trend, with the stock trading below all moving averages and in a confirmed downtrend, suggests continued selling pressure and lack of investor confidence.
Key Strengths
- Strong Balance Sheet: Zero long-term debt and comfortable current ratio provide financial flexibility
- Promoter Commitment: Stable 59.43% promoter holding with no pledging demonstrates confidence
- Lakshmi Machine Works Association: Connection to reputable group provides credibility and product access
- Q2 Margin Recovery: Operating margin improved to 10.49%, highest in recent quarters
- Adequate Liquidity: Current assets of ₹190.65 crores provide working capital cushion
- Diversified Operations: Presence in both textile machinery marketing and yarn manufacturing
Key Concerns
- Collapsing Profitability: Five-year EBIT CAGR of -182.89% indicates severe operational deterioration
- Dismal Returns: ROE of -0.18% and ROCE of -0.30% represent value destruction
- Dependency on Other Income: Non-operating income constitutes 50.26% of Q2 PBT
- Margin Compression: Operating margins collapsed from 18.9% in FY22 to 5.7% in FY25
- Zero Institutional Interest: Complete absence of FII, MF, and insurance holdings
- Weak Cash Generation: Operating cash flow declined to ₹29.01 crores, lowest in years
- High Volatility: Beta of 1.50 and 38.99% volatility indicate elevated risk
Outlook: What to Watch
For investors monitoring Super Sales India, several key factors will determine whether the Q2 recovery represents the beginning of a sustainable turnaround or merely a temporary reprieve in a longer-term decline.
Positive Catalysts
- Sustained Margin Improvement: Ability to maintain operating margins above 10% for multiple quarters
- Revenue Growth Acceleration: Top-line growth exceeding mid-single digits consistently
- Reduced Other Income Dependency: Core operating profit becoming primary earnings driver
- Institutional Interest: Entry of FIIs or mutual funds signalling confidence
- Textile Sector Recovery: Improvement in capital expenditure by textile mills
Red Flags
- Margin Relapse: Operating margins falling back below 8% in coming quarters
- Continued Loss-Making: Return to negative net profit in subsequent quarters
- Cash Flow Deterioration: Further decline in operating cash flow generation
- Dividend Cut: Reduction or elimination of dividend given negative payout ratio
- Sector Headwinds: Intensifying competition or demand weakness in textile machinery
"With return on equity at -0.18%, operating margins compressed to 5.7%, and 50% of quarterly profit derived from non-operating income, Super Sales India's Q2 recovery appears more tactical than transformational—a brief respite in a longer narrative of structural decline."
The Verdict: Exit Recommended
Score: 17/100
For Fresh Investors: Avoid completely. The company's deteriorating fundamentals, collapsing returns on equity, heavy dependency on non-operating income, and complete absence of institutional interest make this an unsuitable investment. The apparent valuation discount is a value trap, not an opportunity.
For Existing Holders: Exit positions on any strength. The Q2 profit recovery does not address the fundamental structural weaknesses—margin compression, declining cash flows, and negative returns on capital. The bearish technical trend and severe underperformance suggest continued downside risk. Use the recent bounce to exit.
Fair Value Estimate: ₹650 (19.75% downside from current levels), based on 0.35x price-to-book ratio given the company's sub-par return profile and deteriorating operating performance.
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.
