Winsome Breweries Q2 FY26: Zero Revenue, Survival on Other Income Raises Existential Questions

The Q2 FY26 results reveal a company surviving entirely on non-operating income, with other income of ₹0.51 crores constituting the entirety of its revenue stream. This pattern has persisted for over seven consecutive quarters, with the company reporting nil sales throughout FY25 and continuing into FY26. The net profit of ₹0.21 crores represents a 16.00% quarter-on-quarter decline from ₹0.25 crores in Q1 FY26, whilst year-on-year comparisons show a 47.50% decline from ₹0.40 crores in Q2 FY24. For the first half of FY26, cumulative net profit stands at ₹0.46 crores, derived entirely from other income totalling ₹1.01 crores.

Financial Performance: Operational Dormancy with Accounting Profits

The financial performance of Winsome Breweries presents an unusual case of a listed company maintaining profitability without any operational revenue. In Q2 FY26, the company recorded other income of ₹0.51 crores, marginally higher than ₹0.50 crores in Q1 FY26, representing the sole source of revenue. Operating expenses remain minimal but persistent, with employee costs of ₹0.09 crores in Q2 FY26, down from ₹0.10 crores in the previous quarter. The operating profit excluding other income stood at negative ₹0.07 crores, reflecting the absence of any business activity.

Depreciation charges of ₹0.23 crores remained consistent quarter-on-quarter, whilst the company reported zero interest costs, indicating a debt-free balance sheet. The profit before tax of ₹0.21 crores translated directly into net profit as the company incurred no tax liability in Q2 FY26. This pattern of zero tax payments has persisted across recent quarters, with the exception of Mar'25 and Mar'24 when minimal tax provisions were recorded. The tax rate volatility—ranging from 0.00% to negative 40.00%—reflects the company's loss-making operational structure and reliance on non-taxable or differently-taxed other income sources.

On an annual basis, the company reported net sales of ₹1.00 crore for FY25, unchanged from FY24, representing minimal operational activity. The five-year sales growth stands at a deeply negative 33.78%, reflecting the systematic decline from ₹9.00 crores in FY20 to effectively zero in recent years. Total expenditure of ₹2.00 crores in FY25 was offset by other income of ₹2.00 crores, resulting in breakeven profitability at the net level. The operating profit excluding other income has remained negative for multiple years, standing at negative ₹1.00 crore in FY24 and breakeven in FY25.

Balance Sheet Analysis: Asset-Rich but Operationally Dormant

The balance sheet of Winsome Breweries reveals a company with substantial assets but minimal operational deployment. As of March 2025, shareholder funds stood at ₹34.19 crores, comprising share capital of ₹27.67 crores and reserves of ₹6.52 crores. The reserves have shown marginal improvement from ₹6.37 crores in March 2024, reflecting the modest profitability generated through other income. The company maintains a debt-free capital structure, with long-term debt at zero and minimal current liabilities of ₹16.56 crores, primarily consisting of other current liabilities of ₹6.75 crores and trade payables of ₹0.44 crores.

On the asset side, fixed assets stood at ₹9.58 crores as of March 2025, down from ₹10.09 crores in the previous year, indicating continued depreciation without fresh capital expenditure. Investments of ₹9.74 crores represent a significant portion of the asset base, marginally higher from ₹9.70 crores in FY24. Current assets of ₹30.99 crores include cash and liquid assets, which likely generate the other income reported in quarterly results. The book value per share stands at ₹12.36, significantly below the current market price of ₹28.27, resulting in a price-to-book ratio of 2.29 times.

The return on equity (ROE) averaged 2.92% over recent years, reflecting weak profitability relative to shareholder funds. More concerning is the average return on capital employed (ROCE) of negative 15.19%, indicating that the company destroys value when operational activities are considered. The latest ROE of 0.47% and ROCE of negative 5.16% underscore the fundamental challenge—without operational revenue, the company cannot generate meaningful returns on its capital base. The sales to capital employed ratio of 0.12 times highlights the severe underutilisation of assets.

Cash Flow Dynamics: Negative Operations, Investment Liquidation

The cash flow statement reveals a troubling pattern of negative operating cash flows and reliance on investment liquidation. For FY25, operating cash flow stood at negative ₹2.00 crores, representing the lowest level in recent years and reflecting the company's inability to generate cash from business operations. The negative operating cash flow combines with profit before tax of breakeven and working capital changes of negative ₹2.00 crores, indicating cash consumption despite accounting profitability.

To fund the operating cash deficit, the company generated ₹1.00 crore through investing activities in FY25, likely through liquidation or income from investments. This pattern has persisted across years, with investing cash flows of ₹2.00 crores in FY24, ₹1.00 crore in FY23, and ₹4.00 crores in FY22. The company has not raised any financing, with cash flow from financing activities at zero for multiple consecutive years. The net cash position declined from ₹2.00 crores in FY24 to ₹1.00 crore in FY25, reflecting the ongoing cash burn despite asset liquidation.

Valuation Analysis: Extreme Multiples Reflect Distress

The valuation metrics for Winsome Breweries reflect the market's recognition of the company's distressed operational status. The trailing twelve-month price-to-earnings ratio stands at an astronomical 489.39 times, driven by minimal earnings of approximately ₹0.06 per share against a market price of ₹28.27. This extreme multiple is meaningless in traditional valuation terms, as it reflects accounting profits from other income rather than sustainable operational earnings. The price-to-book ratio of 2.29 times indicates the market values the company at more than double its net asset value, likely pricing in some expectation of asset monetisation or operational revival.

The enterprise value multiples present even more distorted pictures, with EV/EBITDA at negative 79.16 times and EV/EBIT at negative 42.11 times, reflecting negative operational profitability. The EV to sales ratio of 64.89 times is based on the minimal ₹1.00 crore annual revenue, making it essentially irrelevant for valuation purposes. The EV to capital employed ratio of 2.26 times suggests the market values the company's assets at a premium, possibly reflecting the underlying investment portfolio and fixed assets.

The company's overall valuation grade stands at "RISKY," a classification that accurately reflects the fundamental uncertainties surrounding its business model and operational viability. The valuation changed to "Risky" from "Does Not Qualify" in April 2023, coinciding with the period when operational revenue ceased. The current market capitalisation of ₹82.00 crores appears disconnected from the company's earnings power, as the entire profit stream derives from other income rather than business operations.

Peer Comparison: Underperformance Across All Metrics

Within the beverages sector peer group, Winsome Breweries stands out for all the wrong reasons. The company's return on equity of 2.92% significantly underperforms peers such as Orient Beverages (18.84%) and Comfort Intech (6.76%). The P/E ratio of 489.39 times far exceeds peer averages, with Orient Beverages trading at 15.32 times and Comfort Intech at 173.01 times. The price-to-book ratio of 2.29 times positions Winsome at the higher end compared to peers like Comfort Intech (1.17 times) and Ravikumar Distilleries (1.49 times).

The most critical distinction lies in operational activity—whilst peers generate revenue from beverage manufacturing and distribution, Winsome Breweries reports zero operational sales. The debt-to-equity ratio of 0.03 represents one of the few positive comparative metrics, indicating conservative financial leverage. However, this advantage is negated by the complete absence of revenue-generating operations. The market capitalisation of ₹82.00 crores ranks fourth within the peer group, reflecting the company's micro-cap status and limited institutional interest.

Shareholding Pattern: Stable but Uninspiring

The shareholding pattern of Winsome Breweries has remained remarkably stable over the past five quarters, with promoter holding consistently at 44.97%. The promoter group includes Indfish Ltd (19.95%), Holmswood Management Ltd (10.84%), and Kanakdhara Trade and Industries Limited (9.56%), along with individual promoters. Notably, there is zero promoter pledging, which provides some comfort regarding financial stress at the promoter level, though it does not address the operational challenges facing the company.

Institutional participation remains negligible, with mutual fund holding at a minimal 0.11% and zero FII or insurance company presence. The total institutional holding of just 0.12% reflects the lack of professional investor interest in the company, likely due to the absence of operational revenue and unclear business prospects. The non-institutional shareholding of 54.91% comprises retail investors and other entities, suggesting a largely passive shareholder base. The complete absence of any shareholding changes across five consecutive quarters indicates a lack of investor activity and interest in the stock.

Stock Performance: Severe Underperformance Across Timeframes

The stock performance of Winsome Breweries tells a story of sustained value destruction in the near term, despite longer-term gains from a low base. Over the past year, the stock has declined 38.29%, massively underperforming the Sensex's 9.48% gain, resulting in negative alpha of 47.77 percentage points. The year-to-date performance shows a decline of 35.40% against the Sensex's 8.36% gain, producing negative alpha of 43.76 percentage points. The six-month return of negative 21.84% compares unfavourably with the Sensex's 2.85% gain, indicating accelerating underperformance.

The longer-term returns present a contrasting picture, with three-year returns of 212.72% and five-year returns of 603.23%, both significantly outperforming the Sensex. However, these gains reflect recovery from extremely depressed levels rather than operational improvement. The stock traded at ₹4.02 five years ago and has risen to ₹28.27, but this appreciation occurred without corresponding improvement in business fundamentals. The 52-week range of ₹25.85 to ₹50.10 shows the stock currently trading near the lower end, down 43.57% from its 52-week high.

Technical indicators paint a uniformly bearish picture. The stock trades below all major moving averages—5-day (₹28.53), 20-day (₹28.96), 50-day (₹29.38), 100-day (₹30.20), and 200-day (₹32.81)—indicating sustained downward momentum. The overall technical trend stands at "mildly bearish," having changed from "bearish" on November 3, 2025. The MACD shows mildly bullish signals on the weekly chart but mildly bearish on the monthly chart, whilst Bollinger Bands indicate bearish trends across both timeframes. The beta of 1.50 classifies Winsome Breweries as a high-beta stock, exhibiting greater volatility than the broader market.

Quality Assessment: Below Average with Structural Concerns

The quality grade for Winsome Breweries stands at "BELOW AVERAGE," reflecting long-term financial underperformance and operational challenges. The company's five-year sales growth of negative 33.78% represents systematic revenue decline, whilst the average ROCE of negative 15.19% indicates value destruction. The average ROE of 2.92% falls well below acceptable thresholds for equity returns, particularly in the beverages sector where operational leverage should drive higher returns.

Outlook: What to Watch

The outlook for Winsome Breweries hinges entirely on whether the company can revive operational activities or clarify its strategic direction. Without operational revenue, the current business model—surviving on other income whilst maintaining minimal expenses—appears unsustainable over the medium to long term. Investors should monitor specific catalysts and warning signs that could determine the company's trajectory.