Despite the sequential recovery, the stock has remained under pressure, trading at ₹107.50 as of November 17, 2025, down 14.65% over the past year and significantly underperforming the Sensex's 9.48% gain during the same period. The company's technical indicators signal a mildly bearish trend, whilst valuation metrics suggest fair pricing at current levels.
The micro-cap textile player, which operates across garments, apparels, and financial services, has demonstrated mixed operational performance in the September quarter. Whilst revenue growth has been encouraging, margin compression and elevated costs have constrained bottom-line expansion, creating a challenging environment for profitability improvement.
| Quarter | Net Sales (₹ Cr) | QoQ Change | YoY Change | Cons. Net Profit (₹ Cr) | Operating Margin |
|---|---|---|---|---|---|
| Sep'25 | 35.88 | +19.64% | +14.12% | 1.99 | 11.18% |
| Jun'25 | 29.99 | -17.27% | +42.95% | 1.20 | 11.34% |
| Mar'25 | 36.25 | +26.84% | +18.31% | -8.68 | 13.96% |
| Dec'24 | 28.58 | -9.10% | N/A | 1.99 | 14.66% |
| Sep'24 | 31.44 | +49.86% | N/A | 2.25 | 12.09% |
| Jun'24 | 20.98 | -31.53% | N/A | 0.84 | 10.01% |
| Mar'24 | 30.64 | N/A | N/A | 1.82 | 11.06% |
Financial Performance: Revenue Growth Fails to Translate to Bottom Line
Weizmann's Q2 FY26 results present a mixed picture of operational performance. Net sales reached ₹35.88 crores, registering robust sequential growth of 19.64% from Q1 FY26's ₹29.99 crores and a healthy 14.12% year-on-year expansion from ₹31.44 crores in Q2 FY25. On a half-yearly basis for H1 FY26, the company posted net sales of ₹65.87 crores, representing a commendable 25.66% growth compared to the corresponding period last year.
However, the revenue expansion has not been matched by proportionate profit growth. The standalone net profit for Q2 FY26 stood at ₹2.08 crores, up 30.00% sequentially from ₹1.60 crores but down 6.31% year-on-year from ₹2.22 crores. More concerning is the consolidated profit performance, which declined 11.56% year-on-year despite the sequential recovery.
Operating margins have shown persistent weakness, with the operating margin (excluding other income) contracting to 11.18% in Q2 FY26 from 12.09% in Q2 FY25, representing a 91 basis point deterioration. The PAT margin similarly compressed to 5.80% from 7.06% year-on-year, a substantial 126 basis point decline that underscores the company's struggle to maintain profitability amidst rising costs.
Employee costs have been a significant headwind, rising to ₹3.68 crores in Q2 FY26 from ₹2.88 crores in Q2 FY25, representing a 27.78% year-on-year increase that has outpaced revenue growth. Depreciation charges also escalated to ₹1.11 crores from ₹0.70 crores, reflecting the impact of capital expenditure undertaken in recent periods.
Operational Challenges: Weak Returns and Balance Sheet Concerns
Weizmann's operational efficiency metrics paint a concerning picture of capital productivity. The company's latest return on equity (ROE) stands at a troubling -5.92%, reflecting the significant losses incurred in FY25, whilst the five-year average ROE of 6.22% remains substantially below industry standards. This weak capital efficiency suggests the company has struggled to generate adequate returns for shareholders despite maintaining reasonable leverage levels.
The return on capital employed (ROCE) shows more promise, with the latest half-yearly figure reaching 17.91%, representing the highest level in recent periods. However, the five-year average ROCE of 11.35% indicates that this improvement may be cyclical rather than structural. The company's ability to sustain elevated returns on capital remains questionable given the margin pressures and competitive intensity in the garments sector.
Balance sheet quality presents a mixed assessment. Weizmann maintains a conservative debt profile with minimal long-term debt of ₹0.84 crores as of March 2025 and a net debt-to-equity ratio averaging just 0.17 over five years. The debt-to-EBITDA ratio of 1.15 suggests comfortable leverage, providing financial flexibility for growth initiatives. However, shareholder funds declined to ₹60.86 crores in FY25 from ₹72.80 crores in FY24, primarily due to the substantial losses recorded during the year.
Working capital management has shown improvement, with cash flow from operations reaching ₹13.00 crores in FY25, the highest in recent years. This positive operational cash generation demonstrates the company's ability to convert profits into cash, though the overall cash position remains minimal at near-zero levels.
⚠️ Key Concerns: Profitability Under Pressure
Margin Compression: Operating margins have declined 91 basis points year-on-year to 11.18%, whilst PAT margins contracted 126 basis points to 5.80%, indicating significant cost pressures.
Weak ROE: The latest ROE of -5.92% and five-year average of 6.22% highlight poor capital efficiency and shareholder value creation.
Elevated Costs: Employee costs surged 27.78% year-on-year, substantially outpacing revenue growth of 14.12%, eroding profitability.
Industry Context: Struggling in a Competitive Landscape
The garments and apparels sector in India has faced considerable headwinds in recent quarters, with demand volatility, raw material price fluctuations, and intense competition compressing margins across the industry. Weizmann's performance reflects these broader sectoral challenges, with the company underperforming its industry benchmark by 18.61 percentage points over the past year.
The company's diversified business model, spanning textiles, financial services, and renewable energy (through its 3 MW wind farm), provides some insulation from sector-specific risks. However, this diversification has also diluted management focus and potentially hindered the company's ability to achieve operational scale in any single segment.
Weizmann's long-term growth trajectory shows modest expansion, with five-year sales CAGR of 9.20% and EBIT CAGR of 10.08%. Whilst these growth rates are respectable for a micro-cap company, they fall short of the double-digit expansion typically required to justify premium valuations or attract institutional interest.
Competitive Positioning
Weizmann operates in a highly fragmented and competitive garments sector characterised by thin margins and limited pricing power. The company's micro-cap status and absence of institutional shareholding suggest limited market visibility and liquidity constraints. With zero FII and mutual fund holdings, the stock lacks the support of sophisticated investors who typically drive valuation re-ratings.
Peer Comparison: Valuation Discount Reflects Operational Weakness
Weizmann's valuation metrics and operational performance position it at the lower end of its peer group within the garments and apparels sector. The company's price-to-book value of 2.80x appears reasonable compared to peers, though this multiple must be viewed in the context of weak return on equity.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield (%) |
|---|---|---|---|---|---|
| Weizmann | NA (Loss Making) | 2.80 | 6.22 | 0.17 | 0.51 |
| Atvo Enterprises | 1302.75 | 14.56 | 0.95 | 0.00 | N/A |
| Winsome Textile | 6.48 | 0.53 | 11.19 | 0.70 | N/A |
| Lorenzini Apparels | NA (Loss Making) | 3.60 | 18.93 | -0.09 | N/A |
| Shahlon Silk | 49.65 | 1.57 | 2.00 | 1.25 | 0.32 |
Weizmann's ROE of 6.22% trails the peer average and significantly lags Lorenzini Apparels' impressive 18.93% and Winsome Textile's 11.19%. This profitability gap justifies the company's valuation discount and highlights the operational improvements required to close the performance gap with better-managed peers.
The company's conservative balance sheet, with a debt-to-equity ratio of just 0.17, compares favourably to Shahlon Silk's 1.25 and Winsome Textile's 0.70. This financial prudence provides downside protection but has not translated into superior returns, suggesting inefficient capital deployment rather than strategic conservatism.
Weizmann offers a modest dividend yield of 0.51%, having declared a dividend of ₹0.50 per share with an ex-dividend date of September 18, 2025. The dividend payout ratio of 8.85% indicates significant retained earnings, though the company's ability to deploy these funds productively remains questionable given the weak ROE profile.
Valuation Analysis: Fair Pricing Offers Limited Margin of Safety
Weizmann's current valuation appears fair but uninspiring, with limited upside potential given the operational challenges and weak profitability trajectory. The stock trades at a price-to-book value of 2.80x, which appears reasonable on the surface but must be evaluated against the company's sub-par return on equity of 6.22%.
The absence of a meaningful P/E ratio due to recent losses eliminates a key valuation benchmark, forcing investors to rely on asset-based and enterprise value metrics. The EV-to-EBITDA multiple of 10.98x and EV-to-sales ratio of 1.43x suggest moderate valuations relative to historical norms, though these multiples offer little comfort given the margin compression trends.
The company's market capitalisation of ₹174.00 crores positions it firmly in micro-cap territory, with the attendant liquidity constraints and volatility risks. The stock has traded in a 52-week range of ₹88.10 to ₹157.65, currently sitting 31.81% below its high and 22.02% above its low, suggesting neither extreme valuation nor compelling value.
The valuation grade history shows volatility between "Fair" and "Expensive" classifications throughout 2025, reflecting the market's uncertainty about the company's earnings trajectory. The current "Fair" valuation suggests the stock is neither a bargain nor egregiously overpriced, offering limited margin of safety for investors.
Shareholding: Stable Promoter Base, Zero Institutional Interest
Weizmann's shareholding pattern reveals a stable promoter base but concerning absence of institutional participation. Promoter holding has remained unchanged at 68.34% across the last five quarters, indicating strong management commitment but also limited free float for public investors.
| Quarter | Promoter (%) | FII (%) | MF (%) | Insurance (%) | DII (%) | Public (%) |
|---|---|---|---|---|---|---|
| Sep'25 | 68.34 | 0.00 | 0.00 | 0.00 | 0.00 | 31.66 |
| Jun'25 | 68.34 | 0.00 | 0.00 | 0.00 | 0.00 | 31.66 |
| Mar'25 | 68.34 | 0.00 | 0.00 | 0.00 | 0.00 | 31.66 |
| Dec'24 | 68.34 | 0.00 | 0.00 | 0.00 | 0.00 | 31.66 |
| Sep'24 | 68.34 | 0.00 | 0.00 | 0.00 | 0.00 | 31.66 |
The complete absence of foreign institutional investors (FII), mutual funds (MF), insurance companies, and other domestic institutional investors (DII) raises red flags about the stock's investment appeal. Institutional investors typically conduct rigorous due diligence before committing capital, and their absence suggests concerns about the company's growth prospects, governance standards, or liquidity profile.
The promoter group comprises nine entities, led by Hansneel Impex Private Limited (19.97%), Prabhanjan Multitrade Private Limited (14.46%), and Sitex India Private Limited (10.42%). The diversified promoter structure with multiple holding entities is common amongst family-controlled businesses but can sometimes raise governance concerns regarding related-party transactions and decision-making transparency.
Positively, there is zero promoter pledging, indicating financial stability at the promoter level and eliminating one potential risk factor. The stable 31.66% non-institutional holding provides some liquidity for retail investors, though trading volumes remain modest.
Stock Performance: Persistent Underperformance Across Timeframes
Weizmann's stock price performance has been disappointing across most timeframes, with the shares consistently underperforming broader market indices. Trading at ₹107.50 as of November 17, 2025, the stock has declined 14.65% over the past year, generating negative alpha of 24.13 percentage points relative to the Sensex's 9.48% gain.
| Period | Stock Return (%) | Sensex Return (%) | Alpha (%) |
|---|---|---|---|
| 1 Week | -2.58 | +0.96 | -3.54 |
| 1 Month | +0.19 | +0.86 | -0.67 |
| 3 Months | -0.78 | +4.18 | -4.96 |
| 6 Months | -9.66 | +2.85 | -12.51 |
| YTD | -22.58 | +8.36 | -30.94 |
| 1 Year | -14.65 | +9.48 | -24.13 |
| 2 Years | -20.84 | +28.69 | -49.53 |
| 3 Years | -4.36 | +37.31 | -41.67 |
| 4 Years | +107.93 | +41.98 | +65.95 |
| 5 Years | +233.85 | +91.65 | +142.20 |
The year-to-date performance has been particularly weak, with the stock down 22.58% compared to the Sensex's 8.36% gain, resulting in negative alpha of 30.94 percentage points. This underperformance reflects investor concerns about deteriorating profitability and uncertain growth prospects.
Technical indicators paint a bearish picture, with the stock trading below all key moving averages—5-day (₹107.86), 20-day (₹107.99), 50-day (₹109.17), 100-day (₹113.03), and 200-day (₹114.49). The current trend classification of "Mildly Bearish" suggests continued near-term weakness, though the stock has found support at the 52-week low of ₹88.10.
The stock exhibits high beta of 1.50, indicating significantly greater volatility than the broader market. With annualised volatility of 41.08% over the past year, Weizmann falls into the "High Risk Low Return" category—an unfavourable combination that typically deters risk-averse investors. The negative Sharpe ratio confirms that the stock has failed to adequately compensate investors for the elevated volatility risk.
"Weizmann's persistent underperformance across short and medium-term timeframes, combined with negative alpha and high volatility, reflects fundamental concerns about profitability sustainability and growth visibility."
Investment Thesis: Limited Catalysts for Re-rating
Weizmann's investment case rests on shaky foundations, with limited near-term catalysts to drive meaningful stock price appreciation. The company's proprietary Mojo score of 45 out of 100 places it firmly in "SELL" territory, reflecting concerns across multiple parameters including valuation, quality, financial trends, and technical momentum.
The "Average" quality grade reflects the company's modest long-term growth trajectory, with five-year sales CAGR of 9.20% and EBIT CAGR of 10.08%. Whilst these growth rates are respectable for a micro-cap company, they fall short of the double-digit expansion required to justify premium valuations or attract institutional capital.
The "Positive" short-term financial trend classification provides some comfort, driven by the highest-ever operating cash flow of ₹13.68 crores in FY25, 25.66% half-yearly sales growth, and improved ROCE of 17.91%. However, these positives must be weighed against persistent margin compression and weak absolute profitability levels.
The "Mildly Bearish" technical trend and "Fair" valuation grade suggest limited upside potential from current levels. The stock's high beta of 1.50 and elevated volatility of 41.08% introduce additional risk without commensurate return potential, creating an unfavourable risk-reward profile for most investors.
Key Strengths & Risk Factors
✓ KEY STRENGTHS
- Strong Revenue Momentum: Net sales grew 14.12% YoY and 19.64% QoQ in Q2 FY26, with H1 FY26 sales up 25.66% year-on-year.
- Conservative Balance Sheet: Minimal debt with debt-to-equity of just 0.17 and no promoter pledging.
- Improved Cash Generation: Operating cash flow reached ₹13.00 crores in FY25, the highest in recent years.
- Stable Promoter Holding: Promoter stake maintained at 68.34% with zero pledging indicates management confidence.
- Diversified Revenue Streams: Operations across textiles, financial services, and renewable energy provide some risk diversification.
- Modest Dividend: Dividend yield of 0.51% provides some income, though payout ratio of 8.85% is conservative.
- Positive Short-term Trend: Financial trend classification improved to "Positive" driven by operational improvements.
⚠ KEY CONCERNS
- Persistent Margin Compression: Operating margins declined 91 bps YoY to 11.18%, with PAT margins down 126 bps to 5.80%.
- Weak Return on Equity: Latest ROE of -5.92% and five-year average of 6.22% indicate poor capital efficiency.
- Zero Institutional Interest: Complete absence of FII, MF, insurance, and DII holdings raises governance concerns.
- High Volatility: Beta of 1.50 and annualised volatility of 41.08% create "High Risk Low Return" profile.
- Consistent Underperformance: Stock down 14.65% over one year with negative alpha of 24.13 percentage points.
- Elevated Cost Structure: Employee costs surged 27.78% YoY, significantly outpacing revenue growth.
- Limited Growth Visibility: Five-year sales CAGR of 9.20% and EBIT CAGR of 10.08% are modest for a micro-cap.
- Micro-cap Liquidity Constraints: Market cap of ₹174 crores limits institutional participation and trading liquidity.
Outlook: What to Watch
POSITIVE CATALYSTS
- Margin Recovery: Sustained improvement in operating margins above 13% would signal operational efficiency gains.
- Consistent Profitability: Three consecutive quarters of profit growth would rebuild investor confidence.
- Institutional Entry: Any mutual fund or insurance company taking a position would validate the investment case.
- Cash Flow Sustainability: Maintaining operating cash flow above ₹12 crores annually would strengthen financial flexibility.
- ROE Improvement: Return on equity moving sustainably above 10% would narrow the gap with better-performing peers.
RED FLAGS
- Further Margin Erosion: Operating margins falling below 10% would signal intensifying competitive pressures.
- Return to Losses: Any quarterly loss would severely damage investor sentiment and valuation support.
- Deteriorating Working Capital: Negative operating cash flow would raise concerns about earnings quality.
- Rising Debt Levels: Significant increase in borrowings without commensurate ROCE improvement would be concerning.
- Promoter Stake Reduction: Any decline in promoter holding or introduction of pledging would be negative.
The Verdict: Avoid This Troubled Textile Player
Score: 45/100
For Fresh Investors: Avoid initiating positions. Weizmann's combination of weak profitability, persistent margin compression, and complete absence of institutional interest creates an unfavourable risk-reward profile. The high volatility (beta 1.50) and negative alpha across most timeframes suggest better opportunities exist elsewhere in the textile sector.
For Existing Holders: Consider reducing exposure or exiting positions, particularly on any near-term rallies above ₹115. The deteriorating ROE, margin pressures, and bearish technical setup suggest limited upside potential. Reallocate capital to higher-quality textile manufacturers with stronger institutional backing and better profitability metrics.
Fair Value Estimate: ₹95-100 (9.3% downside from current levels), based on sustainable ROE of 8-9% and P/BV multiple of 2.5x justified by the company's average quality profile and modest growth prospects.
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.
