Soma Textiles Faces Financial Challenges Amidst Declining Profitability and Sales

Soma Textiles & Industries, a microcap player in the Garments & Apparels industry, has recently undergone an evaluation adjustment reflecting its current financial standing. The company reported flat financial performance for the quarter ending June 2025, with key metrics indicating challenges in growth and profitability. Over the past five years, net sales have contracted at an annual rate of 11.19%, while operating profit has similarly declined by 11.65%.
The company's ability to service its debt is a significant concern, highlighted by a Debt to EBITDA ratio of -1.00 times, indicating a precarious financial position. Additionally, the latest six-month period showed a profit after tax of Rs 2.01 crore, which has decreased by 36.12%. The return on capital employed (ROCE) for the half-year stands at a low -0.72%, further emphasizing the company's struggles.

Despite generating a notable return of 157.22% over the past year, the decline in profits by 36.8% raises questions about sustainability. The stock's performance has consistently outpaced the BSE500 index over the last three years, yet the current evaluation adjustment reflects the underlying financial challenges faced by Soma Textiles & Industries.

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