Stock Price Movement and Market Context
On the day the new low was recorded, Khadim India’s stock price fell by 2.28%, underperforming the Footwear sector by 1.99%. The share price now trades well below all key moving averages, including the 5-day, 20-day, 50-day, 100-day, and 200-day averages, signalling sustained bearish momentum. This contrasts with the broader market, where the Sensex advanced by 0.71%, closing at 82,807.52 points, just 4.05% shy of its 52-week high of 86,159.02.
The stock’s 52-week high was Rs.332, highlighting the steep decline of 59.7% from that peak. Over the last year, Khadim India’s share price has fallen by 56.03%, while the Sensex has gained 10.99%, underscoring the stock’s relative weakness.
Financial Performance and Key Metrics
Khadim India’s financial results have been under pressure, with net sales declining at a compound annual growth rate (CAGR) of -6.01% over the past five years. The latest half-year results revealed a sharp 21.77% drop in net sales, contributing to a series of negative quarterly results. The company has reported losses or subdued profits for three consecutive quarters, with the latest six-month profit after tax (PAT) at Rs.3.31 crores, reflecting a decline of 59.14% compared to the previous period.
Profitability metrics remain subdued. The average return on equity (ROE) stands at 6.90%, indicating limited profitability relative to shareholders’ funds. The return on capital employed (ROCE) is slightly higher at 7.5%, but this has not translated into improved earnings or stock performance.
Debt servicing capacity is a concern, with a high debt-to-EBITDA ratio of 4.37 times. The company’s operating profit to interest coverage ratio for the latest quarter is 1.71 times, signalling limited cushion to meet interest obligations. Additionally, the debtors turnover ratio for the half-year is at a low 2.02 times, suggesting slower collection cycles and potential working capital pressures.
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Valuation and Comparative Analysis
Despite the weak financial performance, Khadim India’s valuation metrics suggest the stock is trading at a discount relative to its peers. The enterprise value to capital employed ratio stands at a modest 1.2, which is considered very attractive in the context of the footwear sector. This valuation discount reflects the market’s cautious stance given the company’s recent results and financial ratios.
However, the stock’s poor returns over multiple time frames highlight persistent challenges. It has underperformed the BSE500 index over the last three years, one year, and three months, with a cumulative return of -56.03% in the past year alone. Profitability has also deteriorated, with profits falling by 53.1% over the same period.
Shareholding and Market Position
The majority shareholding remains with the promoters, who continue to hold a controlling stake in the company. Khadim India operates within the footwear industry, a sector that has seen mixed performance amid changing consumer preferences and competitive pressures.
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Mojo Score and Ratings
Khadim India currently holds a Mojo Score of 15.0, categorised under a Strong Sell grade as of 11 Aug 2025, an upgrade from the previous Sell rating. The market capitalisation grade is rated at 4, reflecting the company’s relatively modest size within the footwear sector. These ratings incorporate the company’s financial metrics, price performance, and sectoral positioning.
Summary of Key Concerns
The stock’s decline to Rs.133.65 represents a culmination of several factors: sustained negative sales growth, declining profitability, high leverage, and weak debt servicing ability. The company’s inability to generate robust returns on equity and capital employed has weighed on investor sentiment. Additionally, the stock’s consistent underperformance relative to the Sensex and sector benchmarks highlights ongoing challenges in regaining market confidence.
Market Environment
While Khadim India’s shares have weakened, the broader market environment remains positive. The Sensex has been supported by gains in mega-cap stocks and continues to trade near its 52-week highs. This divergence emphasises the stock-specific nature of Khadim India’s price movement, rather than a sector-wide or market-wide downturn.
Investors monitoring the footwear sector will note that Khadim India’s valuation discount contrasts with the sector’s overall performance, which has been more resilient. The company’s current financial and market metrics provide a comprehensive picture of its recent trajectory and challenges.
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