Sri Nachammai Cotton Mills Ltd Reports Sharp Quarterly Decline Amid Negative Financial Trend

Quarterly Financial Performance Deteriorates Sharply

The December 2025 quarter results reveal a stark decline in Sri Nachammai Cotton Mills Ltd’s profitability and operational efficiency. The company posted a net profit after tax (PAT) of ₹-3.06 crores, marking a precipitous fall of 173.2% compared to the previous quarter. This negative PAT underscores the company’s inability to generate earnings amid rising costs and subdued demand.

Operating profit before depreciation, interest and taxes (PBDIT) also hit a nadir at ₹-1.99 crores, reflecting severe margin pressures. The operating profit to net sales ratio contracted to -11.88%, the lowest recorded in recent quarters, indicating that the company is currently incurring losses on its core operations. Profit before tax excluding other income (PBT less OI) further declined to ₹-3.62 crores, reinforcing the downward earnings trajectory.

Earnings per share (EPS) for the quarter stood at ₹-7.13, the lowest in the company’s recent history, signalling significant erosion in shareholder value. These figures collectively highlight a negative financial trend, with the company’s financial score plunging from -3 to -9 over the last three months, a clear indication of deteriorating fundamentals.

Comparative Market Performance and Historical Context

Despite the recent quarterly setbacks, Sri Nachammai Cotton Mills Ltd’s stock price remained unchanged at ₹31.95 on 13 Feb 2026, with intraday fluctuations between ₹28.76 and ₹31.95. The stock’s 52-week high and low stand at ₹44.94 and ₹25.00 respectively, reflecting significant volatility over the past year.

When benchmarked against the broader market, the company’s returns present a mixed picture. Over the past week, the stock outperformed the Sensex with a 3.10% gain versus the index’s 0.43%. Year-to-date, the stock has risen 3.60%, while the Sensex declined by 1.81%. However, over longer horizons, the stock has underperformed significantly. The one-year return is down 11.25% compared to the Sensex’s 9.85% gain, and over three years, the stock has fallen 11.86% while the Sensex surged 37.89%. Even over a decade, the stock’s 167.36% gain trails the Sensex’s 264.02% appreciation.

Mojo Score and Rating Update

MarketsMOJO’s proprietary scoring system has downgraded Sri Nachammai Cotton Mills Ltd’s Mojo Grade from Sell to Strong Sell as of 7 April 2025, reflecting the company’s worsening financial health and bleak outlook. The current Mojo Score stands at 9.0, signalling elevated risk for investors. The Market Capitalisation Grade remains modest at 4, consistent with the company’s micro-cap status within the Garments & Apparels sector.

The downgrade is primarily driven by the negative quarterly financial trend, absence of any key positive triggers, and deteriorating profitability metrics. The company’s inability to reverse margin contraction or generate positive operating cash flows has weighed heavily on its rating.

Sectoral and Industry Challenges

The Garments & Apparels sector has faced headwinds from rising raw material costs, supply chain disruptions, and shifting consumer preferences. Sri Nachammai Cotton Mills Ltd’s negative financial trend is emblematic of these broader sectoral pressures. Unlike some peers who have managed to expand margins through operational efficiencies or product diversification, the company has struggled to contain costs or improve sales volumes.

Given the lack of any key positive catalysts in the recent quarter, the company’s prospects remain uncertain. Investors should weigh the risks of continued margin erosion and losses against any potential turnaround strategies the management may announce in forthcoming quarters.

Investor Takeaway and Outlook

For investors, Sri Nachammai Cotton Mills Ltd’s recent quarterly performance signals caution. The sharp decline in profitability and negative financial trend suggest that the company is currently navigating a challenging phase with no immediate turnaround visible. While the stock has shown some short-term resilience relative to the Sensex, its longer-term underperformance and deteriorating fundamentals warrant a conservative stance.

Potential investors should closely monitor upcoming quarterly results for signs of margin stabilisation or revenue growth recovery. Meanwhile, existing shareholders may consider reassessing their exposure given the strong sell rating and ongoing financial headwinds.

In the broader context, the Garments & Apparels sector continues to evolve rapidly, with companies that innovate and optimise operations likely to outperform. Sri Nachammai Cotton Mills Ltd’s current trajectory underscores the importance of robust financial health and strategic agility in this competitive industry.

Historical Returns Contextualised

Examining the company’s historical returns reveals a nuanced picture. Over the past five and ten years, Sri Nachammai Cotton Mills Ltd has delivered cumulative returns of 125.80% and 167.36% respectively, outperforming many peers but still lagging behind the Sensex’s 62.34% and 264.02% gains over the same periods. This disparity highlights the company’s inconsistent performance and the volatility inherent in its stock price.

Recent negative quarterly results may further impact investor sentiment and stock performance in the near term, emphasising the need for careful analysis before committing capital.

Conclusion

Sri Nachammai Cotton Mills Ltd’s latest quarterly results mark a clear inflection point, with a shift to negative financial trends and deteriorating profitability metrics. The absence of positive triggers and the downgrade to a Strong Sell rating by MarketsMOJO reflect the company’s current challenges within the Garments & Apparels sector. Investors should approach the stock with caution, considering alternative opportunities within the sector that may offer better risk-reward profiles.

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