The third quarter results represent a significant setback for Super Sales India, which had shown signs of recovery in Q2 FY26. The company's inability to maintain operational efficiency, coupled with rising costs and subdued demand, has raised serious concerns about its near-term profitability trajectory. With the stock trading below all key moving averages and technical indicators flashing bearish signals, investor sentiment has turned decidedly negative.
Financial Performance: A Quarter of Deterioration
Super Sales India's Q3 FY26 financial performance revealed troubling trends across multiple metrics. Net sales stood at ₹103.86 crores, declining 1.01% sequentially from ₹104.92 crores in Q2 FY26, though showing a modest 3.88% year-on-year improvement from ₹99.98 crores in Q3 FY25. This marginal top-line growth, however, masked severe profitability challenges that emerged during the quarter.
The most alarming development was the collapse in operating margins. Operating profit excluding other income plummeted to ₹5.47 crores in Q3 FY26 from ₹11.01 crores in the previous quarter, resulting in a margin compression of 520 basis points to 5.27% from 10.49%. This dramatic margin erosion was driven by escalating employee costs, which increased to ₹13.06 crores from ₹12.97 crores, and other operational inefficiencies that the company failed to control.
The profit before tax turned negative at ₹-1.05 crores compared to a positive ₹5.85 crores in Q2 FY26, despite other income of ₹1.96 crores. Interest costs remained elevated at ₹2.29 crores, the highest in recent quarters, whilst depreciation stayed substantial at ₹5.90 crores. The company's inability to generate positive earnings at the operating level, even after accounting for other income, highlights fundamental business challenges.
| Quarter | Net Sales (₹ Cr) | QoQ Growth | Operating Margin (Excl OI) | Net Profit (₹ Cr) | PAT Margin |
|---|---|---|---|---|---|
| Dec'25 | 103.86 | -1.01% | 5.27% | -0.87 | -0.84% |
| Sep'25 | 104.92 | +6.16% | 10.49% | 4.06 | 3.87% |
| Jun'25 | 98.83 | -6.10% | 8.44% | 1.76 | 1.78% |
| Mar'25 | 105.25 | +5.27% | 4.96% | -1.62 | -1.54% |
| Dec'24 | 99.98 | -1.18% | 3.15% | -2.54 | -2.54% |
| Sep'24 | 101.17 | +3.90% | 6.99% | 1.38 | 1.36% |
| Jun'24 | 97.37 | — | 7.90% | 1.02 | 1.05% |
On a nine-month basis for FY26, the company has reported a cumulative net profit of ₹4.95 crores on revenues of ₹307.61 crores, representing a PAT margin of just 1.61%. This marks a concerning deterioration from the company's historical performance, with FY25 closing with a net loss of ₹1.00 crore on revenues of ₹403.00 crores.
Operational Challenges: Margin Pressure and Cost Concerns
The most critical issue facing Super Sales India is its inability to maintain consistent operational efficiency. The company's return on capital employed (ROCE) stands at a meagre 5.63% on average, with the latest figure dropping to just 0.51%, indicating extremely poor capital productivity. Similarly, return on equity (ROE) averages a weak 4.79%, with the most recent quarter showing a dismal 0.31%, reflecting inadequate returns for shareholders.
The company's balance sheet reveals a mixed picture. Whilst shareholder funds stood at ₹564.92 crores as of March 2025, with negligible long-term debt, the operational inefficiencies have prevented the company from generating adequate returns on this equity base. The debt-to-equity ratio remains low at 0.11, suggesting conservative financial leverage, but this has not translated into superior profitability.
Critical Operational Concerns
Margin Volatility: Operating margins have fluctuated wildly between 3.15% and 10.49% over the past seven quarters, indicating an inability to maintain pricing power or control costs effectively. The Q3 FY26 margin of 5.27% represents a 50% decline from the previous quarter.
Rising Interest Burden: Interest costs have increased to ₹2.29 crores in Q3 FY26, the highest in recent quarters, despite the company maintaining low overall debt levels. This suggests either short-term working capital pressures or unfavourable borrowing terms.
Weak Capital Efficiency: With ROCE at 0.51% and ROE at 0.31% in the latest period, the company is destroying shareholder value rather than creating it. These metrics are amongst the weakest in the garments and apparels sector.
The company's investment portfolio has grown substantially to ₹366.98 crores as of March 2025, up from ₹348.21 crores in the previous year. However, this capital allocation towards investments rather than core business expansion raises questions about management's confidence in the underlying textile business's growth prospects.
Industry Context: Underperformance in a Challenging Sector
The garments and apparels sector has faced headwinds over the past year, with the sector index declining 10.37%. However, Super Sales India's 42.48% decline significantly underperforms this benchmark, indicating company-specific challenges beyond broader industry trends. The sector has grappled with fluctuating raw material costs, subdued domestic demand, and competitive pressures from imports, but Super Sales India's struggles appear more acute than its peers.
The company's five-year sales growth of 12.73% and EBIT growth of 11.17% appear respectable on the surface, but mask significant year-to-year volatility. FY25 saw revenues decline 3.8% to ₹403.00 crores from ₹419.00 crores in FY24, whilst operating profit excluding other income collapsed from ₹42.00 crores to just ₹23.00 crores, a 45% decline. This volatility suggests the company lacks sustainable competitive advantages or operational resilience.
Sector Positioning: Lagging Behind
Super Sales India's challenges are evident when comparing its performance to sector trends. Whilst the garments and apparels sector declined 10.37% over the past year, the company's 42.48% decline represents a massive 32.11 percentage point underperformance. This suggests structural issues within the company's business model rather than purely cyclical industry pressures.
Peer Comparison: Valuation Disconnect
A comparison with sector peers reveals a concerning valuation anomaly. Super Sales India trades at a trailing P/E ratio of 111.79x, significantly higher than peers like Shiva Texyarn (12.84x) and Mahalaxmi Rubtech (22.73x), despite having inferior profitability metrics. The company's ROE of 4.79% lags behind most peers, whilst its price-to-book ratio of 0.34x is the lowest in the peer group, suggesting the market recognises the quality concerns.
| Company | P/E (TTM) | ROE (%) | Debt to Equity | Price to Book | Div Yield (%) |
|---|---|---|---|---|---|
| Super Sales India | 111.79 | 4.79 | 0.11 | 0.34 | 0.41 |
| Shiva Texyarn | 12.84 | 4.38 | 0.70 | 1.46 | 0.37 |
| Mahalaxmi Rubtech | 22.73 | 7.69 | 0.08 | 2.26 | — |
| True Green | NA (Loss Making) | 3.30 | 1.85 | 1.57 | — |
| Bhilwara Tech | NA (Loss Making) | 5.60 | -0.09 | 1.18 | — |
| T T | NA (Loss Making) | 10.12 | 0.58 | 1.47 | 0.70 |
The elevated P/E multiple despite weak profitability suggests the market may be pricing in an unrealistic recovery scenario or the multiple is distorted by near-zero earnings. With a market capitalisation of just ₹186.00 crores, Super Sales India ranks sixth amongst its peer group, reflecting its micro-cap status and limited institutional interest.
Valuation Analysis: Premium Without Justification
Super Sales India's current valuation presents a paradox. On one hand, the stock trades at a P/E ratio of 111.79x, suggesting an expensive valuation relative to earnings. On the other hand, the price-to-book ratio of 0.34x indicates the stock trades at a significant discount to its book value of ₹1,839.23 per share. This disconnect typically signals either asset quality concerns or market scepticism about the company's ability to generate adequate returns on its equity base.
The company's enterprise value metrics tell a concerning story. EV/EBITDA of 8.84x appears reasonable on the surface, but EV/EBIT of 80.62x reflects the company's weak operating profitability. The EV/Sales ratio of 0.60x and EV/Capital Employed of 0.41x suggest the market assigns little value to the company's revenue-generating capability or asset base.
The dividend yield of 0.41% offers minimal income, and with a negative dividend payout ratio of -43.66% for FY25, the sustainability of even this modest dividend appears questionable. The valuation grade has deteriorated from "Very Attractive" to "Risky" over the past year, reflecting the market's growing concerns about the company's fundamental trajectory.
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% and non-institutional investors holding the remaining 40.57%. The complete absence of foreign institutional investors (FIIs), mutual funds, and insurance companies signals a lack of institutional confidence in the company's prospects.
| Quarter | Promoter (%) | FII (%) | Mutual Funds (%) | Insurance (%) | Non-Institutional (%) |
|---|---|---|---|---|---|
| Dec'25 | 59.43 | 0.00 | 0.00 | 0.00 | 40.57 |
| Sep'25 | 59.43 | 0.00 | 0.00 | 0.00 | 40.57 |
| Jun'25 | 59.43 | 0.00 | 0.00 | 0.00 | 40.57 |
| Mar'25 | 59.43 | 0.00 | 0.00 | 0.00 | 40.57 |
| Dec'24 | 59.43 | 0.00 | 0.00 | 0.00 | 40.57 |
Positively, there is no promoter pledging, indicating financial stability at the promoter level. The key promoter, Quattro Engineering India Private Limited, holds 31.94%, followed by individual promoters including Shivali Jayavarthanavelu (10.12%) and Revantha Services Private Limited (7.29%). However, the absence of any institutional buying activity over multiple quarters suggests sophisticated investors are staying away from the stock, likely due to concerns about operational performance and corporate governance visibility.
Stock Performance: Severe Underperformance Across All Timeframes
Super Sales India's stock performance has been dismal across virtually all timeframes, significantly underperforming both the Sensex and its sector. The stock has declined 42.48% over the past year compared to a 7.18% gain in the Sensex, resulting in a negative alpha of -49.66 percentage points. This underperformance has accelerated in recent months, with the stock down 24.92% over three months versus a 2.53% decline in the Sensex.
| Period | Stock Return (%) | Sensex Return (%) | Alpha (%) |
|---|---|---|---|
| 1 Week | -8.98 | +0.90 | -9.88 |
| 1 Month | -16.31 | -2.84 | -13.47 |
| 3 Month | -24.92 | -2.53 | -22.39 |
| 6 Month | -35.74 | +0.97 | -36.71 |
| YTD | -18.21 | -3.46 | -14.75 |
| 1 Year | -42.48 | +7.18 | -49.66 |
| 2 Years | -65.19 | +15.65 | -80.84 |
| 3 Years | -26.11 | +38.27 | -64.38 |
The stock currently trades at ₹581.50, down 45.29% from its 52-week high of ₹1,062.80 but only 9.72% above its 52-week low of ₹530.00, indicating it is trading near the bottom of its annual range. The stock is below all key moving averages—5-day MA (₹624.13), 20-day MA (₹674.00), 50-day MA (₹710.72), 100-day MA (₹743.41), and 200-day MA (₹819.39)—confirming the strong bearish trend.
The technical outlook remains decidedly negative, with the overall trend classified as "Bearish" since January 5, 2026. Multiple technical indicators including MACD, Bollinger Bands, and KST all flash bearish signals on both weekly and monthly timeframes. With a beta of 1.50, the stock exhibits higher volatility than the market, amplifying losses during downturns. The risk-adjusted return of -1.14 over the past year, combined with 37.32% volatility, places the stock firmly in the "HIGH RISK LOW RETURN" category.
Investment Thesis: Quality Concerns Outweigh Valuation Appeal
The investment case for Super Sales India is challenged by multiple headwinds. The company's proprietary Mojo score stands at a weak 40 out of 100, resulting in a "SELL" rating. This score reflects the convergence of poor operational performance, deteriorating financial trends, bearish technical momentum, and valuation concerns despite the low price-to-book ratio.
The quality assessment reveals an "Average" grade, downgraded to "Below Average" since November 2025. Key quality concerns include weak return ratios (ROCE of 5.63%, ROE of 4.79%), moderate long-term growth rates, and minimal institutional participation. Whilst the company maintains a strong balance sheet with low leverage and no promoter pledging, these positives are insufficient to offset operational weaknesses.
Key Strengths & Risk Factors
KEY STRENGTHS
- Strong Balance Sheet: Negligible debt with debt-to-equity ratio of just 0.11, providing financial flexibility
- No Promoter Pledging: Zero per cent pledged shares indicate promoter confidence and financial stability
- Asset Base: Substantial investments of ₹366.98 crores and fixed assets of ₹163.57 crores as of March 2025
- Stable Promoter Holding: Consistent 59.43% promoter stake demonstrates long-term commitment
- Positive Operating Cash Flow: Generated ₹29.00 crores from operations in FY25 despite profitability challenges
- Discount to Book Value: Trading at 0.34x book value offers potential value if operations improve
- Established Presence: Long operating history since 1981 with association to Lakshmi Machine Works Group
KEY CONCERNS
- Quarterly Loss: Q3 FY26 net loss of ₹0.87 crores marks sharp deterioration from Q2 profit of ₹4.06 crores
- Margin Collapse: Operating margin (excl OI) plunged from 10.49% to 5.27% quarter-on-quarter
- Weak Return Ratios: ROCE of 0.51% and ROE of 0.31% in latest period indicate value destruction
- Volatile Profitability: Inconsistent quarterly performance with alternating profits and losses
- Zero Institutional Interest: Complete absence of FII, mutual fund, and insurance holdings
- Severe Stock Underperformance: Down 42.48% over one year vs Sensex gain of 7.18%
- Bearish Technical Outlook: Trading below all moving averages with uniformly negative technical indicators
- High Volatility: Beta of 1.50 and 37.32% volatility create high-risk profile
- Rising Interest Costs: Interest expense at ₹2.29 crores, highest in recent quarters
Outlook: What to Watch
POSITIVE CATALYSTS
- Sustained margin improvement above 8-10% for multiple consecutive quarters
- Return to consistent quarterly profitability with PAT margins exceeding 3%
- Improvement in ROCE above 10% and ROE above 12%, indicating better capital efficiency
- Entry of institutional investors (FIIs or mutual funds) signalling confidence
- Successful cost optimisation initiatives reducing employee cost as percentage of sales
RED FLAGS
- Continued quarterly losses or further margin compression below 5%
- Increase in debt levels or deterioration in working capital management
- Further decline in stock price below ₹530 (52-week low)
- Reduction in promoter holding or any promoter pledging
- Inability to generate positive operating profit (excl OI) for consecutive quarters
The near-term outlook for Super Sales India remains challenging. The company must demonstrate its ability to stabilise margins and return to consistent profitability. With the financial trend classified as "Flat" and technical indicators bearish, any recovery will require multiple quarters of sustained operational improvement before investor confidence can be rebuilt.
The Verdict: Avoid Until Operational Turnaround Evident
Score: 40/100
For Fresh Investors: Avoid initiating positions. The combination of quarterly losses, collapsing margins, weak return ratios, and bearish technical momentum presents an unfavourable risk-reward profile. Wait for at least two consecutive quarters of margin improvement above 8% and return to profitability before considering entry.
For Existing Holders: Consider reducing exposure on any technical bounce towards ₹650-₹675 levels. The operational challenges, lack of institutional support, and severe underperformance suggest limited near-term upside. Maintain positions only if you have a long-term investment horizon (3+ years) and believe in management's ability to execute a turnaround.
Fair Value Estimate: ₹450-₹500 (22.5% downside from current levels), based on 0.25x price-to-book ratio given weak return ratios and operational uncertainties.
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.
