International Combustion (India) Ltd Reports Sharp Quarterly Decline Amid Negative Financial Trend

Quarterly Financial Performance: A Steep Decline

The latest quarterly results reveal a challenging environment for International Combustion. Net sales for the quarter stood at ₹72.19 crores, down by 12.8% compared to the previous quarter, signalling a contraction in revenue generation. This decline is particularly concerning given the company’s industrial manufacturing sector, which often benefits from steady demand cycles.

Profitability metrics have also taken a hit. The Profit After Tax (PAT) plunged to a negative ₹2.65 crores, representing a staggering fall of 170.7%. Operating profitability has deteriorated sharply, with PBDIT (Profit Before Depreciation, Interest and Taxes) registering a loss of ₹0.49 crores, the lowest recorded in recent periods. Correspondingly, the operating profit to net sales ratio has turned negative at -0.68%, underscoring the company’s inability to generate operating profits from its sales.

Further compounding the negative outlook, the Profit Before Tax less Other Income (PBT less OI) also fell to a low of ₹-2.99 crores. Earnings per share (EPS) mirrored this downturn, plunging to ₹-11.09, the lowest in recent quarters, signalling significant erosion in shareholder value.

Return on Capital Employed and Cash Position

Return on Capital Employed (ROCE), a critical measure of operational efficiency, declined to 9.34% for the half-year period, marking the lowest level in recent times. This contraction indicates that the company is generating less profit per unit of capital invested, raising questions about capital utilisation and operational effectiveness.

On a more positive note, International Combustion’s cash and cash equivalents reached a high of ₹13.27 crores for the half-year, providing some liquidity cushion amid the operational challenges. Additionally, the debtors turnover ratio improved to 5.42 times, the highest in recent periods, suggesting better management of receivables and cash conversion cycles.

Stock Price and Market Performance

Despite the weak financials, the stock price of International Combustion showed a modest intraday gain on 9 Feb 2026, closing at ₹554.80, up 0.80% from the previous close of ₹550.40. The stock traded within a range of ₹550.60 to ₹560.80 during the day. However, the 52-week high remains significantly higher at ₹1,049.00, while the 52-week low is ₹533.30, indicating considerable volatility and a wide trading band over the past year.

When compared to the broader market, the stock has underperformed the Sensex across multiple time frames. Over the past week, International Combustion declined by 2.6%, while the Sensex gained 1.59%. The one-month return for the stock was down 7.32%, against a 1.74% decline in the Sensex. Year-to-date, the stock fell 6.04%, whereas the Sensex was down 1.92%. The one-year performance is particularly stark, with the stock plunging 27.28% while the Sensex rose 7.07%.

Longer-term returns tell a more nuanced story. Over three years, the stock has outperformed the Sensex, delivering a 49.48% gain compared to the Sensex’s 38.13%. Over five years, the stock’s return of 245.13% far exceeds the Sensex’s 64.75%, highlighting periods of strong growth in the past. However, the ten-year return of 105.71% trails the Sensex’s 239.52%, suggesting that the company’s performance has lagged broader market gains over the longer horizon.

Mojo Score and Rating Update

Reflecting the deteriorating financial and operational metrics, International Combustion’s mojo score has dropped sharply to 28.0, with the mojo grade downgraded from Sell to Strong Sell as of 4 Nov 2025. This downgrade signals heightened caution among analysts and investors, underscoring the risks associated with the company’s current trajectory. The market cap grade remains at 4, indicating a mid-tier market capitalisation within the industrial manufacturing sector.

The shift from a flat to a negative financial trend over the last three months, with the score falling from 1 to -11, highlights the increasing challenges faced by the company. Key profitability indicators such as PAT, PBDIT, and operating profit margins have all deteriorated, raising concerns about the sustainability of earnings and operational efficiency.

Outlook and Investor Considerations

International Combustion’s recent quarterly results and downgraded mojo grade suggest a cautious stance for investors. The negative financial trend, marked by declining sales, shrinking margins, and losses at the PAT level, indicates operational headwinds that may persist in the near term. While the company’s strong cash position and improved debtor turnover ratio provide some operational resilience, these positives are currently overshadowed by weak profitability and capital efficiency.

Investors should weigh the company’s historical outperformance over medium-term horizons against the recent sharp deterioration in financial health. The stock’s underperformance relative to the Sensex in the short term, combined with the downgrade to Strong Sell, signals elevated risk. Those holding the stock may consider reassessing their positions, while prospective investors should seek clarity on the company’s turnaround strategy and improvement in core financial metrics before committing fresh capital.

Given the industrial manufacturing sector’s cyclical nature, any recovery in demand or operational efficiencies could provide a catalyst for improvement. However, until such signs emerge, the company’s financial trend remains a significant concern.

Summary

International Combustion (India) Ltd’s December 2025 quarter results reveal a pronounced downturn in revenue and profitability, with key financial ratios and returns deteriorating sharply. The downgrade to a Strong Sell mojo grade reflects these challenges, underscoring the need for investors to exercise caution. While liquidity and receivables management show some strength, the overall negative financial trend and poor operational returns present a difficult outlook in the near term.

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