Vardhman Acrylics Ltd Reports Strong Quarterly Turnaround Amid Challenging Market

Quarterly Financial Performance Surges

In the December 2025 quarter, Vardhman Acrylics delivered its strongest financial results to date, with Profit Before Depreciation, Interest and Tax (PBDIT) reaching ₹7.09 crores, marking a significant improvement over previous quarters. The operating profit margin also expanded to a peak of 9.29%, underscoring enhanced operational efficiency and cost management within the garments and apparels sector.

Profit Before Tax (excluding other income) climbed to ₹6.25 crores, while the company reported a net profit (PAT) of ₹7.41 crores, both figures representing quarterly highs. Earnings Per Share (EPS) correspondingly rose to ₹0.92, signalling improved profitability on a per-share basis. These metrics collectively indicate a positive shift in the company’s financial trend, which has moved from flat to positive over the last three months, with the financial trend score improving from -5 to 13.

Operational Highlights and Concerns

While the quarterly results reflect a commendable upswing, certain operational metrics remain subdued. The Return on Capital Employed (ROCE) for the half-year period stands at a low 5.60%, suggesting that the company’s capital utilisation efficiency has yet to fully recover. Additionally, non-operating income constitutes a substantial 35.17% of Profit Before Tax, indicating that a significant portion of profits is derived from sources outside core operations, which may not be sustainable in the long term.

These factors highlight the dual nature of Vardhman Acrylics’ current financial health: strong quarterly earnings growth tempered by underlying structural challenges that could impact future profitability and capital returns.

Stock Price Movement and Market Context

Vardhman Acrylics’ stock price closed at ₹36.74 on 20 January 2026, marginally up by 0.25% from the previous close of ₹36.65. The stock traded within a range of ₹36.60 to ₹40.00 during the day, remaining near its 52-week low of ₹36.00 and well below its 52-week high of ₹54.25. This price behaviour reflects cautious investor sentiment amid mixed financial signals.

Comparatively, the company’s stock returns have underperformed the broader Sensex index across multiple time horizons. Year-to-date, Vardhman Acrylics has declined by 8.52%, whereas the Sensex has fallen by a lesser 3.43%. Over the past year, the stock has plummeted 28.20%, in stark contrast to the Sensex’s 8.09% gain. The three-year and five-year returns also reveal a significant underperformance, with the stock down 29.75% and 2.03% respectively, while the Sensex surged 39.97% and 72.30% over the same periods.

Industry and Sector Positioning

Operating within the garments and apparels sector, Vardhman Acrylics faces intense competition and fluctuating demand dynamics. The company’s recent financial improvements suggest it is beginning to capitalise on operational efficiencies and market opportunities. However, the relatively low Market Cap Grade of 4 and a Mojo Score of 31.0, accompanied by a Mojo Grade of Sell (upgraded from Strong Sell on 5 January 2026), indicate that the stock remains a cautious proposition for investors.

These ratings reflect the company’s current financial trajectory, which, while improving, still carries risks related to capital returns and reliance on non-operating income streams.

Outlook and Investor Considerations

Vardhman Acrylics’ recent quarterly performance signals a potential inflection point, with improved profitability and margin expansion offering a foundation for future growth. However, investors should weigh these gains against the company’s historically weak capital returns and the significant contribution of non-operating income to profits, which may not be sustainable.

Given the stock’s persistent underperformance relative to the Sensex and the sector, a cautious approach is warranted. The upgrade from Strong Sell to Sell reflects a modest improvement in outlook but stops short of endorsing a buy recommendation. Investors should monitor upcoming quarterly results closely for confirmation of sustained operational improvements and better capital efficiency.

Furthermore, the company’s current price near its 52-week low suggests limited upside in the near term unless accompanied by stronger fundamental catalysts.

Comparative Performance Metrics

Analysing the returns over various periods highlights the challenges faced by Vardhman Acrylics. While the 10-year return of 17.76% is positive, it pales in comparison to the Sensex’s 245.21% gain, underscoring the company’s struggle to keep pace with broader market growth. This long-term underperformance emphasises the need for strategic initiatives to enhance competitiveness and shareholder value.

In the short term, the company’s positive financial trend and record quarterly profits provide a glimmer of hope, but investors should remain vigilant for signs of consistent improvement before committing significant capital.

Summary

Vardhman Acrylics Ltd’s December 2025 quarter results mark a significant improvement in profitability and operational margins, reversing a previously flat financial trend. Despite these gains, the company’s long-term stock performance remains weak relative to the Sensex, and concerns over capital efficiency and reliance on non-operating income persist. The recent upgrade to a Sell rating reflects cautious optimism but advises prudence. Investors should closely monitor future earnings and strategic developments to assess whether this positive momentum can be sustained.

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