Quarterly Performance Surges with Record Revenues and Profitability
The December 2025 quarter marked a pivotal shift for Soma Textiles, with net sales reaching an all-time high of ₹28.01 crores. This surge represents a substantial acceleration compared to the previous four-quarter average, underscoring the company’s ability to capitalise on market demand despite sector headwinds. Operating profit before depreciation, interest and taxes (PBDIT) also hit a record ₹0.29 crores, reflecting improved operational leverage.
Most notably, the company’s profit after tax (PAT) soared to ₹1.21 crores, a staggering 352.1% increase relative to the average PAT over the preceding year. This dramatic rise in bottom-line profitability is a clear indicator of effective cost management and enhanced revenue quality. The operating profit margin, measured as operating profit to net sales, expanded to 1.04%, the highest in recent history for the firm, signalling better control over expenses and pricing power.
Balance Sheet Strength and Efficiency Metrics Highlighted
Alongside profitability gains, Soma Textiles demonstrated a robust balance sheet with cash and cash equivalents peaking at ₹14.82 crores for the half-year period. This liquidity position provides the company with a strong buffer to navigate potential market volatility and invest in growth initiatives.
Efficiency ratios also improved markedly. The debtors turnover ratio reached 9.72 times, the highest recorded in the half-year, indicating faster collection cycles and improved working capital management. Such operational efficiencies are critical in the garments and apparels sector, where inventory and receivables management can significantly impact cash flows.
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Return on Capital Employed Remains a Concern
Despite the positive momentum, one area of concern remains the company’s return on capital employed (ROCE), which registered its lowest point at -1.69% for the half-year. This negative ROCE suggests that the company is yet to fully convert its capital investments into profitable returns, a factor that investors should monitor closely in upcoming quarters. The garments and apparels sector often faces margin pressures due to fluctuating raw material costs and competitive pricing, which may be impacting ROCE.
Stock Price and Market Performance Contextualised
On the stock market front, Soma Textiles closed at ₹110.65 on 16 Feb 2026, up 4.98% from the previous close of ₹105.40. The stock’s 52-week trading range spans from ₹34.66 to ₹164.00, reflecting significant volatility but also substantial upside potential over the longer term.
When compared to the broader market benchmark, the Sensex, Soma Textiles has delivered exceptional long-term returns. Over the past year, the stock has appreciated by 187.25%, vastly outperforming the Sensex’s 8.98% gain. Over a five-year horizon, the stock’s return of 2065.36% dwarfs the Sensex’s 58.83%, highlighting the company’s capacity for wealth creation despite recent short-term setbacks.
However, shorter-term returns have been more volatile, with the stock declining 2.94% over the past week and 10.37% over the last month, compared to the Sensex’s more modest declines of 1.56% and 0.97% respectively. Year-to-date, the stock has fallen 25.24%, indicating some profit-taking or sector-specific pressures that investors should consider.
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Mojo Score Upgrade Reflects Improved Outlook
Reflecting the company’s improved financial trajectory, MarketsMOJO upgraded Soma Textiles’ Mojo Grade from Sell to Hold on 23 Oct 2025, with a current Mojo Score of 58.0. This upgrade signals a more favourable risk-reward profile, although the company remains a cautious hold rather than a strong buy. The Market Cap Grade stands at 4, indicating a modest market capitalisation relative to peers in the garments and apparels sector.
Investors should note that while the recent quarterly performance is very positive, the company’s historical volatility and sector challenges warrant a measured approach. Continued monitoring of margin trends, capital efficiency, and cash flow generation will be critical to assessing whether this turnaround is sustainable.
Sector and Industry Considerations
The garments and apparels industry remains competitive, with fluctuating raw material prices, changing consumer preferences, and global supply chain dynamics influencing company performances. Soma Textiles’ ability to post record sales and improved margins in this environment is commendable, but the negative ROCE highlights the need for ongoing operational improvements.
Comparatively, many peers in the sector have struggled with margin contraction and working capital inefficiencies, making Soma’s recent gains a potential signal of emerging leadership in niche segments or product categories. However, investors should weigh these positives against the company’s relatively small market capitalisation and liquidity constraints.
Outlook and Investor Takeaways
Soma Textiles & Industries Ltd’s recent quarterly results mark a significant inflection point, with strong revenue growth, margin expansion, and improved cash management driving a positive financial trend. The company’s upgraded Mojo Grade and improved profitability metrics suggest that it is on a path to recovery after a period of underperformance.
Nonetheless, the negative ROCE and recent short-term stock price volatility indicate that challenges remain. Investors with a higher risk appetite may find the stock attractive given its long-term outperformance relative to the Sensex and the clear signs of operational improvement. More conservative investors might prefer to wait for further confirmation of sustained margin expansion and capital efficiency before increasing exposure.
Overall, Soma Textiles presents a compelling case study of a micro-cap garment and apparel company navigating sector headwinds to deliver a very positive financial turnaround, warranting close attention in the coming quarters.
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