Arex Industries Ltd Reports Declining Quarterly Performance Amid Negative Financial Trend

Quarterly Financial Performance Highlights

In the December 2025 quarter, Arex Industries recorded its lowest quarterly PBDIT (Profit Before Depreciation, Interest and Taxes) at ₹1.52 crore, a significant drop from previous quarters. This contraction in operating profit is further reflected in the operating profit to net sales ratio, which fell to a low of 11.70%, indicating margin compression amid challenging market conditions.

Additionally, the company’s PBT (Profit Before Tax) less other income plummeted to ₹0.20 crore, underscoring the pressure on core earnings. These figures collectively contributed to a negative financial trend score of -6, a steep decline from a positive score of 5 recorded three months prior. This shift highlights a deteriorating operational environment and reduced profitability for Arex Industries.

Comparative Analysis with Historical Trends

Historically, Arex Industries had maintained a relatively stable financial trajectory with flat to modest growth in profitability metrics. The recent quarter’s results, however, mark a departure from this trend, signalling emerging headwinds. The contraction in margins and earnings contrasts with the company’s prior ability to sustain operating profit ratios above 15% in earlier periods.

This downturn is particularly notable given the company’s standing within the Garments & Apparels industry, where peers have generally managed to maintain or improve margins despite inflationary pressures and supply chain disruptions. Arex’s underperformance relative to sector averages raises questions about its operational efficiency and cost management strategies.

Stock Price and Market Capitalisation Context

Despite the negative financial trend, Arex Industries’ stock price remained unchanged at ₹141.70 on 28 Jan 2026, with the day’s high and low both recorded at the same level. The stock’s 52-week range spans from ₹128.30 to ₹175.00, reflecting moderate volatility over the past year. The company holds a market cap grade of 4, indicating a micro-cap status within its sector.

However, the company’s Mojo Score has deteriorated to 23.0, accompanied by a downgrade in Mojo Grade from Sell to Strong Sell as of 19 Jun 2025. This downgrade reflects the growing concerns over the company’s financial health and operational challenges.

Returns Comparison with Sensex

Examining Arex Industries’ stock returns relative to the benchmark Sensex reveals a mixed performance. Over the past week, the stock outperformed the Sensex with a 5.04% gain compared to the index’s 0.39% decline. Similarly, the stock posted a modest 1.21% gain over the past month and year-to-date, while the Sensex declined by 3.74% and 3.95% respectively during the same periods.

However, over longer horizons, Arex Industries has lagged the Sensex. The stock recorded a negative return of -7.99% over the past year, while the Sensex gained 8.61%. Over three years, Arex’s return of 16.72% trails the Sensex’s 37.97%, and over ten years, the stock’s 164.86% gain is significantly below the Sensex’s 234.22% appreciation. Notably, the five-year return of 140.17% exceeds the Sensex’s 72.66%, indicating periods of outperformance amid volatility.

Sectoral and Industry Implications

Within the Garments & Apparels sector, Arex Industries’ recent financial deterioration contrasts with broader industry trends where many companies have managed to sustain or improve margins despite inflationary pressures and supply chain challenges. The company’s margin contraction to 11.70% operating profit to net sales is notably below sector averages, which typically range between 15% and 20% for well-managed peers.

This underperformance may be attributed to rising input costs, inefficiencies in production, or weaker pricing power. The company’s ability to reverse this trend will be critical to restoring investor confidence and improving its Mojo Grade in future assessments.

Outlook and Investor Considerations

Given the current financial trajectory, investors should approach Arex Industries with caution. The downgrade to a Strong Sell Mojo Grade and the negative financial trend score highlight significant risks. The company’s ability to improve operating margins and profitability in upcoming quarters will be pivotal.

Investors should also weigh Arex’s historical volatility and mixed returns against sector peers and broader market benchmarks. While the stock has shown resilience in short-term price movements, the underlying financial weakness may limit upside potential in the near term.

Strategic initiatives to enhance cost control, optimise production efficiency, and strengthen pricing power will be essential for Arex Industries to regain positive momentum. Until such improvements materialise, the company’s financial health and stock performance may remain under pressure.

Summary

Arex Industries Ltd’s December 2025 quarterly results reveal a clear deterioration in financial performance, with key profitability metrics hitting multi-quarter lows. The shift from a flat to a negative financial trend, coupled with a downgrade to Strong Sell, signals caution for investors. While the stock price has remained stable, underlying operational challenges and margin contraction present significant headwinds. Comparative analysis with the Sensex and sector peers underscores the need for strategic turnaround efforts to restore growth and profitability.

Unlock special upgrade rates for a limited period. Start Saving Now →