Raunaq International Ltd Reports Mixed Quarterly Results Amid Margin Pressures

Quarterly Performance Overview

Raunaq International’s latest quarter ended December 2025 has been characterised by a paradoxical performance. On one hand, the company’s net sales for the latest six months surged to ₹18.30 crores, marking an impressive growth rate of 128.46% compared to the previous period. This surge in top-line revenue is a significant positive indicator, especially in the context of the construction industry’s cyclical challenges.

However, this revenue growth has not translated into profitability. The company reported a quarterly PAT (Profit After Tax) loss of ₹0.50 crore, representing a steep decline of 180.0% relative to the average PAT of the previous four quarters. This loss is compounded by the lowest quarterly PBDIT (Profit Before Depreciation, Interest and Taxes) of ₹-0.92 crore and a PBT less other income figure of ₹-1.02 crore, signalling operational stress.

Further, the EPS (Earnings Per Share) for the quarter plummeted to ₹-1.50, the lowest in recent history, underscoring the earnings contraction despite the revenue expansion. This divergence between sales growth and profitability is a key concern for investors assessing the company’s financial health.

Operational Efficiency and Capital Returns

Despite the quarterly losses, Raunaq International has demonstrated strength in certain operational metrics. The company’s ROCE (Return on Capital Employed) for the half-year period reached a peak of 23.52%, indicating efficient utilisation of capital resources. Additionally, the Debtors Turnover Ratio improved to 3.18 times, the highest recorded, reflecting better collection efficiency and working capital management.

These operational improvements suggest that while profitability has been impacted in the short term, the company is making strides in managing its capital and receivables more effectively, which could bode well for future quarters if sustained.

Financial Trend Shift and Market Reaction

Raunaq International’s financial trend score has shifted from very positive to positive, with the score declining from 22 to 7 over the past three months. This change reflects the market’s cautious stance on the company’s recent quarterly results and outlook. The Mojo Grade was downgraded from Hold to Sell on 17 December 2025, signalling a more conservative recommendation for investors.

The stock price has mirrored this sentiment, closing at ₹48.75 on 13 February 2026, down 4.41% from the previous close of ₹51.00. The 52-week high remains ₹98.80, while the 52-week low is ₹48.64, indicating the stock is trading near its annual lows amid subdued investor confidence.

Comparative Performance Against Sensex

Raunaq International’s stock returns have underperformed the benchmark Sensex across recent short-term periods. Over the past week, the stock declined by 6.25%, while the Sensex gained 0.43%. The one-month return for Raunaq was down 11.2%, compared to a marginal Sensex decline of 0.24%. Year-to-date, the stock has fallen 13.93%, significantly lagging the Sensex’s 1.81% drop.

However, the company’s longer-term performance tells a different story. Over three and five years, Raunaq International has delivered cumulative returns of 116.67% and 129.95%, respectively, substantially outperforming the Sensex’s 37.89% and 62.34% returns over the same periods. This suggests that while recent quarters have been challenging, the company has historically generated strong shareholder value.

It is noteworthy that over a ten-year horizon, the stock has declined by 54.23%, contrasting with the Sensex’s robust 264.02% gain, highlighting volatility and sector-specific headwinds impacting the company over the longer term.

Sector and Industry Context

Operating within the construction sector, Raunaq International faces a competitive and cyclical environment influenced by infrastructure spending, government policies, and raw material costs. The sector has seen mixed fortunes recently, with some companies reporting margin pressures due to rising input costs and labour shortages.

Raunaq’s positive revenue growth and improved capital efficiency metrics are encouraging signs amid these challenges. However, the contraction in quarterly profitability and negative earnings per share raise questions about the sustainability of its operational model in the near term.

Outlook and Investor Considerations

Raunaq International’s recent quarterly results highlight a company at a crossroads. The strong revenue growth and improved capital efficiency metrics provide a foundation for optimism. Yet, the sharp decline in quarterly profitability and negative earnings per share underscore significant near-term challenges.

Investors should weigh the company’s historical outperformance over multi-year periods against the current financial trend downgrade and recent operational setbacks. The downgrade to a Sell rating by MarketsMOJO, accompanied by a Mojo Score of 32.0 and a Market Cap Grade of 4, reflects a cautious stance given the mixed signals.

Market participants should monitor upcoming quarterly results closely for signs of margin recovery and sustained profitability. Additionally, macroeconomic factors affecting the construction sector, such as interest rates, commodity prices, and government infrastructure spending, will be critical in shaping Raunaq International’s trajectory.

Given the stock’s proximity to its 52-week low and recent underperformance relative to the Sensex, risk-averse investors may prefer to await clearer signs of financial stabilisation before increasing exposure.

Summary

Raunaq International Ltd’s December 2025 quarter presents a complex picture: robust revenue growth and improved capital returns contrast with deteriorating profitability and earnings. The company’s financial trend has shifted from very positive to positive, prompting a downgrade in its Mojo Grade to Sell. While operational efficiencies offer some hope, the near-term outlook remains uncertain amid sector headwinds and market scepticism.

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