Amarjothi Spinning Mills Ltd Reports Sharp Decline in Quarterly Financial Performance Amid Sector Challenges

Quarterly Financial Performance Deteriorates

In the December 2025 quarter, Amarjothi Spinning Mills recorded net sales of ₹28.14 crores, the lowest in recent periods, reflecting a sharp decline in top-line momentum. This represents a significant setback compared to previous quarters and highlights the company’s struggle to maintain revenue growth amid subdued demand conditions in the garments and apparels industry.

Operating profitability also contracted markedly, with PBDIT falling to ₹5.02 crores, the lowest quarterly figure recorded in recent years. This decline in operating profit has exerted pressure on margins, signalling challenges in cost management and pricing power. The company’s profit before tax (excluding other income) dropped to ₹1.14 crores, underscoring the squeeze on core earnings.

Net profit after tax (PAT) for the quarter stood at ₹1.44 crores, down by 34.8% compared to the previous quarter, a steep fall that has contributed to a very negative financial trend score of -25, a sharp deterioration from -4 recorded three months earlier. Earnings per share (EPS) also declined to ₹2.13, the lowest quarterly EPS in recent history, reflecting the overall earnings weakness.

Return Ratios and Capital Efficiency Under Pressure

Return on capital employed (ROCE) for the half-year period ended December 2025 dropped to a low of 8.41%, signalling diminished capital efficiency. This is a concerning development for investors, as it indicates the company is generating lower returns on its invested capital compared to historical levels.

Additionally, the operating profit to interest coverage ratio fell to 2.71 times, the lowest in recent quarters, suggesting increased vulnerability to interest expenses and financial leverage. The debt-to-equity ratio rose to 0.27 times, the highest in recent periods, indicating a modest increase in leverage that could constrain financial flexibility going forward.

Stock Price and Market Performance

Despite the weak financial results, Amarjothi Spinning Mills’ stock price showed a modest uptick on 13 Feb 2026, closing at ₹142.95, up 0.85% from the previous close of ₹141.75. The stock traded within a range of ₹140.75 to ₹143.00 during the day. However, the share price remains well below its 52-week high of ₹195.00 and closer to the 52-week low of ₹129.00, reflecting the ongoing uncertainty surrounding the company’s prospects.

When compared to the broader market, Amarjothi Spinning Mills has underperformed significantly over the longer term. The stock’s one-year return stands at -18.15%, contrasting sharply with the Sensex’s 8.91% gain over the same period. Over three and five years, the stock has delivered negative returns of -16.43% and 38.58% respectively, while the Sensex has appreciated by 37.21% and 60.87%. Even over a decade, the stock’s 94.09% gain trails the Sensex’s robust 260.74% increase, underscoring persistent underperformance relative to the benchmark index.

Mojo Score and Analyst Ratings

Amarjothi Spinning Mills currently holds a Mojo Score of 34.0, categorised as a 'Sell' rating. This represents a downgrade from its previous 'Strong Sell' grade as of 12 Feb 2026, reflecting the worsening financial trend and deteriorating fundamentals. The company’s market capitalisation grade stands at 4, indicating a micro-cap status with limited market liquidity and scale.

The downgrade in rating is consistent with the very negative financial performance observed in the latest quarter, including declining profitability, weakening return ratios, and rising leverage. Investors are advised to exercise caution given the heightened risks and subdued outlook.

Industry Context and Sector Challenges

The garments and apparels sector has faced headwinds in recent quarters, including fluctuating raw material costs, supply chain disruptions, and subdued consumer demand in key markets. These factors have pressured margins and revenue growth across many companies in the industry, including Amarjothi Spinning Mills.

While some peers have managed to stabilise or improve their financial metrics through operational efficiencies and product diversification, Amarjothi’s results indicate that it has yet to effectively counter these sectoral challenges. The company’s declining operating profit and return ratios suggest that cost pressures and competitive dynamics remain significant hurdles.

Outlook and Investor Considerations

Given the current financial trajectory, Amarjothi Spinning Mills faces an uphill task to reverse the negative trend in the near term. The company’s ability to improve sales volumes, enhance margin profiles, and manage leverage will be critical to restoring investor confidence.

Investors should closely monitor upcoming quarterly results for signs of stabilisation or recovery. Additionally, the company’s strategic initiatives to address operational inefficiencies and capital structure optimisation will be key determinants of future performance.

Conclusion

Amarjothi Spinning Mills Ltd’s latest quarterly results underscore a pronounced weakening in financial health, with key metrics such as revenue, profitability, and return ratios all trending negatively. The company’s downgrade to a 'Sell' rating and very negative financial trend score reflect these challenges.

While the stock price has shown some resilience in the short term, the longer-term underperformance relative to the Sensex and sector peers highlights the risks involved. Investors should weigh these factors carefully and consider alternative opportunities within the garments and apparels sector or broader market.

Continued monitoring of Amarjothi’s operational and financial developments will be essential to assess any potential turnaround or further deterioration in performance.

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