Nath Industries Ltd Reports Sharp Quarterly Decline Amid Mixed Nine-Month Growth

Quarterly Financial Performance: A Mixed Bag

The company’s nine-month performance remains encouraging, with net sales rising 21.02% to ₹361.09 crores and profit after tax (PAT) growing 46.32% to ₹8.75 crores. These figures suggest that Nath Industries has maintained a reasonable growth trajectory over the longer term, supported by steady demand in its core segments.

However, the December 2025 quarter paints a contrasting picture. PAT for the quarter plunged by 86.8% to ₹0.56 crores compared to the average of the previous four quarters, signalling a sharp earnings contraction. Operating profit before depreciation, interest and taxes (PBDIT) also hit a low of ₹2.91 crores, while the operating profit to net sales ratio shrank to a mere 2.49%, the lowest in recent history.

Further compounding concerns, the operating profit to interest coverage ratio dropped to 1.11 times, indicating reduced buffer to service debt obligations. Profit before tax excluding other income (PBT less OI) was negative at ₹-2.17 crores, reflecting operational stress. Non-operating income, unusually high at 487.5% of PBT, suggests reliance on non-core income streams to prop up profitability.

Earnings per share (EPS) for the quarter also declined to ₹0.29, the lowest in the recent four-quarter span, underscoring the earnings weakness.

Financial Trend Shift and Market Reaction

MarketsMOJO’s Financial Trend parameter for Nath Industries shifted from positive to negative, with the score tumbling from +12 to -9 over the past three months. This deterioration reflects the company’s faltering operational metrics despite the longer-term growth in sales and PAT.

The downgrade to a Strong Sell rating on 22 December 2025, from a previous Sell grade, aligns with these financial headwinds. The company’s Mojo Score stands at 23.0, signalling weak fundamentals relative to peers in the Paper, Forest & Jute Products sector. Its market capitalisation grade remains low at 4, consistent with its micro-cap status and limited liquidity.

Stock Price and Relative Performance

On 11 February 2026, Nath Industries closed at ₹64.00, up 3.23% from the previous close of ₹62.00. The stock traded within a range of ₹64.00 to ₹65.65 during the day. Despite this short-term uptick, the stock remains well below its 52-week high of ₹96.60 and only marginally above its 52-week low of ₹57.20.

When compared with the broader Sensex index, Nath Industries’ returns have been underwhelming over the medium to long term. While the Sensex gained 9.01% over the past year, Nath Industries declined by 23.99%. Over five years, the stock has lost 19.04%, whereas the Sensex surged 64.25%. Even over three years, the stock’s 3.64% gain pales in comparison to the Sensex’s 38.88% rise.

Shorter-term returns show some relative outperformance, with the stock up 2.89% over one week and 3.96% over one month, compared to Sensex gains of 0.64% and 0.83% respectively. Year-to-date, both the stock and index are down slightly, with Nath Industries falling 1.54% versus the Sensex’s 1.11% decline.

Sector Context and Competitive Positioning

The Paper, Forest & Jute Products sector has faced mixed fortunes amid fluctuating raw material costs and demand cycles. Nath Industries’ recent quarterly margin contraction contrasts with some peers who have managed to sustain or expand operating margins through cost efficiencies and product mix optimisation.

Given the company’s low operating profit to net sales ratio of 2.49% in Q3, Nath Industries appears to be under pressure from rising input costs or pricing challenges. The weak interest coverage ratio further highlights financial vulnerability, especially in a rising interest rate environment.

Investors should note that the company’s reliance on non-operating income to bolster profitability is not a sustainable strategy and may mask underlying operational weaknesses.

Outlook and Investor Considerations

While the nine-month growth in sales and PAT is encouraging, the sharp quarterly earnings decline and margin squeeze raise concerns about Nath Industries’ near-term earnings quality and operational resilience. The downgrade to a Strong Sell rating by MarketsMOJO reflects these risks.

Investors should weigh the company’s historical growth against the recent negative financial trend and consider alternative opportunities within the sector that demonstrate stronger margin profiles and financial stability.

Conclusion

Nath Industries Ltd’s latest quarterly results reveal a troubling shift in financial performance, with significant margin contraction and earnings decline despite solid nine-month growth. The company’s operational metrics and financial health indicators have weakened, prompting a Strong Sell rating and signalling caution for investors.

While the stock has shown some short-term resilience relative to the Sensex, its long-term underperformance and deteriorating fundamentals suggest that investors should carefully reassess their exposure. Exploring better-rated alternatives within the sector may offer more attractive risk-reward profiles.

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