The numbers paint a stark picture of a company in severe operational distress. Welterman International, promoted in 1992 by the Dhanani Group as a manufacturer of leather soles with technical assistance from Italian machinery leader MA-MECC, has been unable to generate any meaningful revenue for multiple consecutive quarters. The Q2 FY26 results mark a continuation of this troubling trend, with operating losses before depreciation, interest, and tax (PBDIT) excluding other income reaching -₹0.20 crores—the lowest figure recorded in recent quarterly history.
What makes the situation particularly alarming is that the company's entire shareholder funds have turned deeply negative at -₹12.38 crores as of March 2025, indicating that liabilities substantially exceed assets. With a negative book value per share of -₹27.87, the company is technically insolvent from an accounting perspective, raising serious questions about its ability to continue as a going concern without substantial capital infusion or operational restructuring.
Financial Performance: A Complete Operational Shutdown
The quarterly financial trajectory reveals a company that has essentially ceased meaningful operations. Net sales have remained at zero for at least the past seven consecutive quarters through Q2 FY26, indicating a complete absence of revenue-generating activities. This is not merely a temporary downturn but appears to be a structural collapse of the business model.
| Quarter | Net Sales (₹ Cr) | PBDIT Excl OI (₹ Cr) | Net Loss (₹ Cr) | Other Income (₹ Cr) |
|---|---|---|---|---|
| Sep'25 | 0.00 | -0.20 | -0.16 | 0.05 |
| Jun'25 | 0.00 | -0.05 | -0.01 | 0.05 |
| Mar'25 | 0.00 | -0.06 | -0.02 | 0.05 |
| Dec'24 | 0.00 | -0.13 | -0.09 | 0.05 |
| Sep'24 | 0.00 | -0.06 | -0.02 | 0.05 |
| Jun'24 | 0.00 | -0.06 | -0.02 | 0.05 |
| Mar'24 | 0.00 | -0.09 | -0.05 | 0.05 |
The only positive element in the income statement is a consistent other income of ₹0.05 crores per quarter, which has been the sole source preventing even larger losses. However, this non-operating income is insufficient to cover the company's ongoing expenses, which include employee costs of ₹0.03 crores and depreciation of ₹0.01 crores per quarter. In Q2 FY26, the loss before tax stood at -₹0.16 crores, with the company paying no taxes due to its loss-making status.
The half-yearly performance for H1 FY26 (April to September 2025) shows cumulative losses of ₹0.17 crores on zero revenue, compared to losses of ₹0.04 crores in H1 FY25. This represents a substantial deterioration in financial performance, with losses more than quadrupling year-on-year despite minimal operational activity.
Critical Financial Distress Indicators
Zero Revenue Generation: The company has failed to generate any sales revenue for at least seven consecutive quarters, indicating a complete cessation of business operations.
Negative Shareholder Funds: With shareholder funds at -₹12.38 crores, the company's liabilities exceed its assets, technically rendering it insolvent.
Deteriorating Losses: Quarterly losses in Q2 FY26 reached ₹0.16 crores, the highest in recent history, despite no revenue to support operations.
Dependency on Other Income: The company's only positive cash flow comes from other income of ₹0.05 crores per quarter, which is insufficient to cover ongoing expenses.
Balance Sheet: A Portrait of Financial Deterioration
The balance sheet analysis reveals a company whose financial foundation has completely eroded over time. As of March 2025, Welterman International's shareholder funds stood at -₹12.38 crores, comprised of share capital of ₹4.44 crores offset by accumulated losses in reserves and surplus of -₹16.82 crores. This represents a steady deterioration from -₹12.22 crores in March 2024 and -₹12.09 crores in March 2023.
The company's asset base has shrunk dramatically. Fixed assets declined to just ₹0.62 crores in March 2025 from ₹2.42 crores in March 2021, indicating either asset disposals or inadequate capital expenditure to maintain productive capacity. Current assets stood at a meagre ₹0.63 crores, down from ₹4.79 crores in March 2020, reflecting the severe liquidity constraints facing the business.
On the liability side, long-term debt has decreased from ₹16.66 crores in March 2020 to ₹5.79 crores in March 2025, suggesting some debt repayment despite the operational challenges. However, trade payables remain elevated at ₹3.91 crores, and current liabilities total ₹4.97 crores. The debt-to-equity ratio is mathematically distorted due to negative equity, but the company maintains a net cash position when considering its minimal debt against available cash, though this offers little comfort given the absence of revenue generation.
Industry Context: Struggling in a Challenging Leather Sector
The leather industry in India has faced significant headwinds in recent years, including environmental regulations, labour issues, and competition from synthetic alternatives. However, Welterman International's complete operational shutdown goes far beyond typical industry challenges. The company's inability to generate any revenue suggests fundamental issues with its business model, customer relationships, or production capabilities rather than merely cyclical industry pressures.
The company was established with technical assistance from MA-MECC of Italy to manufacture leather soles, positioning itself in the footwear components segment. However, the complete absence of sales activity indicates either a loss of key customers, obsolescence of production facilities, regulatory compliance issues, or a strategic decision to wind down operations without formal closure.
Cash Flow Analysis: Minimal Operating Activity
The cash flow statement for FY24 shows zero cash flow from operations, zero from investing activities, and zero from financing activities, with net cash declining by ₹1.00 crore during the year. This pattern indicates a company in operational hibernation, with minimal business activity and no significant capital allocation decisions. The closing cash balance stood at zero as of March 2024, further highlighting the severe liquidity constraints.
Peer Comparison: Lagging Far Behind Industry Standards
A comparison with peers in the leather sector reveals just how far Welterman International has fallen behind industry standards. Whilst other companies in the sector maintain positive operations and profitability, Welterman stands as a stark outlier.
| Company | P/E Ratio | P/BV Ratio | ROE (%) | Debt to Equity |
|---|---|---|---|---|
| Welterman Intl. | NA (Loss Making) | -0.94 | 0.0% | -0.46 |
| Bhartiya Intl. | 39.67 | 2.37 | 5.31% | 0.84 |
| Lehar Footwears | 19.71 | 3.41 | 8.11% | 0.42 |
| Agribio Spirits | 65.07 | 3.79 | 9.38% | 0.02 |
| Superhouse Ltd | 57.40 | 0.38 | 5.29% | 0.31 |
| COSCO (India) | NA (Loss Making) | 2.02 | 4.84% | 1.24 |
Welterman International ranks last among its peer group with a market capitalisation of just ₹12.00 crores, compared to significantly larger peers. The company's negative book value of -0.94 times stands in stark contrast to the positive price-to-book ratios of 2.4 times on average for peers. More critically, whilst peers maintain return on equity ranging from 4.84% to 9.38%, Welterman's ROE is effectively zero due to negative shareholder funds and ongoing losses.
Valuation Analysis: Risky and Uninvestable
The valuation metrics for Welterman International paint a picture of a company that is fundamentally uninvestable by traditional financial standards. The stock currently trades at ₹26.22 with a market capitalisation of ₹12.00 crores, but these numbers provide little meaningful insight given the company's negative book value and absence of earnings.
The price-to-earnings ratio is not applicable as the company is loss-making. The price-to-book value stands at -0.94 times, reflecting the negative shareholder funds. Enterprise value to EBITDA is -17.33 times, whilst EV to capital employed is -2.59 times—both metrics distorted by negative denominators. The company's overall valuation grade is classified as "RISKY," a designation it has held since January 2025 when it was downgraded from "Does Not Qualify."
The stock trades significantly above its 52-week low of ₹15.41 but remains 9.74% below its 52-week high of ₹29.05 reached in August 2025. The substantial volatility—with a standard deviation of 69.14%—reflects the speculative nature of trading in this micro-cap stock rather than any fundamental investment appeal.
"With zero revenue, negative book value, and mounting quarterly losses, Welterman International represents a textbook case of a company in terminal decline, offering no credible path to recovery without radical restructuring or fresh capital infusion."
Shareholding Pattern: Stable but Concerning Concentration
The shareholding pattern has remained remarkably stable over the past five quarters, with no changes in any category. Promoter holding stands at 45.34%, led by Managing Director Kayum Razak Dhanani with 45.03%, alongside minor holdings by Sayaji Airways (0.17%) and Liberty Construction & Leasing Ltd (0.13%).
| Category | Mar'25 | Dec'24 | Jun'24 | Mar'24 | Dec'23 |
|---|---|---|---|---|---|
| Promoter | 45.34% | 45.34% | 45.34% | 45.34% | 45.34% |
| 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 | 1.35% | 1.35% | 1.35% | 1.35% | 1.35% |
| Non-Institutional | 53.31% | 53.31% | 53.31% | 53.31% | 53.31% |
The complete absence of foreign institutional investors (FIIs), mutual funds, and insurance companies underscores the lack of institutional confidence in the company's prospects. The minimal other domestic institutional investor (DII) holding of 1.35% and the majority non-institutional holding of 53.31% suggest a shareholder base dominated by retail investors, many of whom may be holding illiquid positions with limited exit options. Positively, there is no promoter pledging, indicating promoters have not leveraged their shares for borrowing.
Stock Performance: Extreme Volatility, Poor Long-Term Returns
The stock's performance reflects the underlying operational distress, with extreme volatility and poor risk-adjusted returns. Over the past year, Welterman International's stock has declined 2.20%, significantly underperforming the Sensex's 9.10% gain and generating negative alpha of -11.30%.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | -5.00% | +1.74% | -6.74% |
| 3 Months | -5.31% | +5.24% | -10.55% |
| 1 Year | -2.20% | +9.10% | -11.30% |
| 2 Years | +178.34% | +30.53% | +147.81% |
| 3 Years | -41.01% | +37.16% | -78.17% |
| 5 Years | +820.00% | +95.10% | +724.90% |
The returns profile is highly erratic. Whilst the stock has delivered exceptional gains over five years (+820.00%) and four years (+801.03%), these returns appear disconnected from fundamental performance and likely reflect speculative trading in an illiquid micro-cap stock. The three-year return of -41.01% and one-year return of -2.20% more accurately reflect the deteriorating operational reality.
The stock's beta of 1.50 indicates it is 50% more volatile than the broader market, whilst its risk-adjusted return of -0.03 over one year (compared to the Sensex's 0.74) highlights poor performance relative to the risk undertaken. With volatility of 69.14%—more than five times the Sensex's 12.33%—the stock falls squarely into the "HIGH RISK LOW RETURN" category.
Technical Analysis: Mildly Bullish Signals Disconnected from Fundamentals
From a technical perspective, the stock currently exhibits a "Mildly Bullish" trend as of November 2025, though this appears disconnected from the underlying fundamental distress. The MACD indicator shows bullish signals on both weekly and monthly timeframes, whilst Bollinger Bands indicate mildly bullish momentum. However, the On-Balance Volume (OBV) shows only mildly bullish readings, and Dow Theory suggests mildly bearish undertones.
The stock trades at ₹26.22, with immediate support at the 52-week low of ₹15.41 and resistance near the 20-day moving average area of ₹23.37. The 52-week high of ₹29.05 represents strong resistance. Delivery volumes have shown extreme volatility, with recent delivery percentage at 100% but minimal absolute volumes of just 246 shares traded, highlighting the stock's illiquidity.
Investment Thesis: Multiple Red Flags, No Credible Turnaround Path
The investment thesis for Welterman International is overwhelmingly negative across all key parameters. The company's Mojo Score stands at just 33 out of 100, placing it firmly in "SELL" territory. The proprietary scoring system highlights multiple critical concerns:
Valuation: Classified as "RISKY" with negative book value and no meaningful earnings to value. Quality Grade: "BELOW AVERAGE" reflecting poor long-term financial performance, zero revenue generation, and negative return metrics. Financial Trend: "FLAT" officially, but in reality showing deterioration with mounting losses. Technical Trend: "MILDLY BULLISH" but this appears disconnected from fundamental realities and driven by low-volume speculative trading.
Limited Strengths
- No Promoter Pledging: Promoters have not pledged their shares, indicating no immediate financial distress at the promoter level.
- Declining Debt: Long-term debt has decreased from ₹16.66 crores in March 2020 to ₹5.79 crores in March 2025.
- Net Cash Position: When considering minimal debt against cash, the company maintains a net cash position, though this offers little comfort given operational realities.
- Stable Shareholding: No volatile changes in shareholding pattern over past five quarters.
- Consistent Other Income: Regular other income of ₹0.05 crores per quarter provides minimal cash flow.
Critical Concerns
- Zero Revenue: No sales revenue for at least seven consecutive quarters indicates complete operational shutdown.
- Negative Shareholder Funds: Shareholder funds at -₹12.38 crores render the company technically insolvent.
- Mounting Losses: Q2 FY26 loss of ₹0.16 crores represents the worst quarterly performance in recent history.
- Negative Book Value: Book value per share of -₹27.87 indicates complete erosion of shareholder equity.
- No Institutional Interest: Zero holdings by FIIs, mutual funds, and insurance companies.
- Extreme Illiquidity: Minimal trading volumes (246 shares) make exit extremely difficult.
- No Turnaround Plan: No visible strategy or management commentary on operational revival.
Outlook: What to Watch (Though Recovery Appears Unlikely)
Positive Catalysts (Highly Unlikely)
- Resumption of manufacturing operations and revenue generation
- Fresh capital infusion or strategic investor entry
- Asset monetisation to reduce liabilities
- Management communication on turnaround strategy
Red Flags (Highly Probable)
- Continued absence of revenue generation
- Further deterioration in quarterly losses
- Inability to meet financial obligations
- Potential delisting or bankruptcy proceedings
- Complete illiquidity preventing investor exits
The Verdict: Avoid at All Costs
Score: 33/100
For Fresh Investors: Avoid completely. This is a company with zero revenue, negative book value, mounting losses, and no credible path to operational recovery. The stock represents a speculative bet with extreme downside risk and virtually no fundamental support. Fresh capital should be deployed elsewhere in companies with viable business models and positive cash flows.
For Existing Holders: Exit at the earliest opportunity, even at a loss. The company's complete operational shutdown, negative shareholder funds, and absence of any turnaround plan make holding this stock untenable. The illiquid nature of the stock may make exit difficult, but any opportunity to liquidate positions should be seized. Continued holding risks total capital loss if the company enters formal insolvency proceedings.
Fair Value Estimate: Not calculable given zero earnings and negative book value. Current price of ₹26.22 appears disconnected from fundamental reality.
Rationale: Welterman International exhibits all the hallmarks of a company in terminal decline—zero revenue for multiple quarters, negative shareholder funds of -₹12.38 crores, mounting quarterly losses, and complete absence of institutional investor interest. With no visible turnaround plan, minimal management communication, and deteriorating financials, the stock offers no investment merit and represents pure speculation with asymmetric downside risk.
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. The views expressed herein are based on publicly available information and analysis as of the publication date and may change without notice. Past performance is not indicative of future results. Investing in micro-cap stocks carries substantial risk of capital loss.
