Loyal Textile Mills Ltd Reports Negative Financial Trend Amidst Margin Pressures

Quarterly Financial Performance: A Decline in Revenue and Profitability

The December 2025 quarter has been particularly difficult for Loyal Textile Mills. Net sales plummeted to ₹105.38 crores, marking the lowest quarterly revenue in recent years. This decline is a stark contrast to the company’s previous quarterly averages and signals weakening demand or pricing pressures in its core garment and apparel markets.

Profitability metrics have also taken a hit. The company reported a net loss after tax (PAT) of ₹21.99 crores, which represents a 22.2% decline compared to the average PAT of the preceding four quarters. Operating profit margins have contracted, with the operating profit to net sales ratio standing at -1.86%, the highest negative margin recorded in recent quarters. Earnings before interest, depreciation, taxes and amortisation (PBDIT) also remained in the red at ₹-1.96 crores.

Financial Trend Shift and Mojo Score Downgrade

Reflecting these adverse developments, the company’s financial trend score has deteriorated sharply from -2 to -10 over the past three months. This negative shift has been accompanied by a downgrade in the MarketsMOJO Mojo Grade from Sell to Strong Sell as of 30 May 2023, underscoring growing investor concerns about the company’s near-term prospects.

Despite these setbacks, Loyal Textile maintains a relatively conservative capital structure with a debt-equity ratio of 1.37 times as of the half-year mark, which is the lowest in its recent history. Additionally, cash and cash equivalents have increased to ₹25.90 crores, providing some liquidity cushion amid operational headwinds.

Stock Price and Market Performance

Loyal Textile’s share price closed at ₹248.10 on 12 February 2026, down 5.00% from the previous close of ₹261.15. The stock has traded within a 52-week range of ₹187.50 to ₹393.00, reflecting significant volatility over the past year. The intraday high and low on the reporting day were ₹249.05 and ₹248.10 respectively, indicating limited trading range on the day.

When compared to the broader market benchmark, the Sensex, Loyal Textile’s returns have been disappointing. Over the past week, the stock declined by 2.32% while the Sensex gained 0.68%. Year-to-date, the stock has delivered a positive return of 14.86%, outperforming the Sensex’s negative 1.58% return. However, over longer horizons, the stock has severely underperformed; it has lost 9.78% over one year compared to the Sensex’s 10.12% gain, and over three, five, and ten years, the stock has declined by 64.51%, 51.98%, and 49.88% respectively, while the Sensex has surged by 38.22%, 62.73%, and 264.90% over the same periods.

Operational Strengths Amidst Challenges

Despite the negative financial trend, Loyal Textile exhibits some operational strengths. The company’s debt-equity ratio of 1.37 times is relatively low for the sector, suggesting prudent financial management. Furthermore, the increase in cash and cash equivalents to ₹25.90 crores provides a buffer to manage short-term obligations and invest in strategic initiatives.

However, these positives are overshadowed by the persistent losses and shrinking sales, which raise questions about the company’s ability to reverse the current downtrend. The negative operating profit margin and PBDIT figures indicate that cost pressures and possibly subdued demand are weighing heavily on the company’s earnings quality.

Sector Context and Competitive Landscape

The Garments & Apparels sector has faced headwinds from rising input costs, supply chain disruptions, and changing consumer preferences. Loyal Textile’s performance must be viewed in this broader context, where many peers have struggled to maintain margin expansion. However, some competitors have managed to stabilise or grow revenues through product innovation and market diversification, areas where Loyal Textile’s recent results suggest limited progress.

Outlook and Investor Considerations

Given the current financial trajectory and the downgrade to a Strong Sell rating by MarketsMOJO, investors should approach Loyal Textile Mills Ltd with caution. The company’s deteriorating revenue and profitability metrics, combined with its underperformance relative to the Sensex and sector peers, suggest limited near-term upside.

However, the company’s relatively low leverage and improved cash position could provide some resilience if management can implement effective turnaround strategies. Investors should monitor upcoming quarterly results closely for signs of stabilisation or margin recovery.

In the meantime, those seeking exposure to the Garments & Apparels sector may wish to consider alternative stocks with stronger fundamentals and more favourable momentum profiles, as identified by comprehensive multi-parameter analyses.

Conclusion

Loyal Textile Mills Ltd’s latest quarterly results highlight a clear shift to a negative financial trend, driven by declining sales and worsening profitability. While operational liquidity and capital structure remain manageable, the company faces significant challenges in reversing its downtrend amid a competitive and cost-pressured sector environment. The downgrade to a Strong Sell rating reflects these concerns, signalling that investors should carefully weigh risks before considering new positions in this stock.

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