Vardhman Textiles Ltd Reports Sharp Quarterly Decline Amid Negative Financial Trend

Quarterly Financial Performance Deteriorates

The December 2025 quarter has been particularly disappointing for Vardhman Textiles, with the company’s financial trend score plunging to -14 from -4 over the preceding three months. This shift reflects a marked deterioration in operational and net profitability. The company’s Profit After Tax (PAT) for the quarter stood at ₹166.34 crores, representing a steep decline of 21.0% compared to the average PAT of the previous four quarters. This contraction is a clear indicator of the pressures on the company’s bottom line.

Operating profit before depreciation, interest, and taxes (PBDIT) also hit a low of ₹284.35 crores, underscoring the squeeze on core earnings. The operating profit margin, measured as operating profit to net sales, dropped to its lowest level at 11.35%, signalling margin compression likely driven by rising input costs or subdued pricing power in a competitive garments and apparels sector.

Further, Profit Before Tax excluding other income (PBT less OI) declined to ₹155.14 crores, the lowest recorded in recent quarters. Earnings per share (EPS) also fell to ₹5.85, marking a nadir for the company’s quarterly earnings metric. These figures collectively highlight a quarter of significant financial stress for Vardhman Textiles.

Stock Price and Market Performance

Reflecting these financial headwinds, Vardhman Textiles’ share price has experienced notable weakness. The stock closed at ₹395.00 on 22 January 2026, down 2.08% from the previous close of ₹403.40. The intraday trading range was between ₹391.75 and ₹407.00, with the stock currently trading closer to its 52-week low of ₹362.60 than its 52-week high of ₹539.50. This price action suggests investor caution amid the company’s deteriorating fundamentals.

When compared to the broader market, Vardhman Textiles has underperformed the Sensex across multiple time frames. Over the past week, the stock declined by 6.16%, significantly worse than the Sensex’s 1.77% fall. The one-month return shows an even starker contrast, with the stock down 12.76% versus the Sensex’s 3.56% decline. Year-to-date, the stock has lost 9.56%, while the Sensex has fallen by 3.89%. Over the last year, the stock’s return was negative 16.74%, in sharp contrast to the Sensex’s positive 8.01% gain. Although the stock has delivered positive returns over longer horizons—27.42% over three years and 86.21% over five years—it has lagged the Sensex’s 35.12% and 65.06% gains respectively. Over a decade, the stock’s 176.71% return trails the Sensex’s 241.83% appreciation, indicating a persistent underperformance trend.

Industry Context and Sector Challenges

The garments and apparels sector has faced a mixed environment in recent quarters, with fluctuating raw material prices, supply chain disruptions, and shifting consumer demand patterns impacting profitability across the board. Vardhman Textiles’ negative financial trend contrasts with some peers who have managed to maintain or improve margins through operational efficiencies or product mix optimisation.

However, the company’s deteriorating operating profit margin to 11.35% is a cause for concern, as it signals that cost pressures are not being fully passed on to customers or absorbed through productivity gains. This margin contraction, coupled with falling PAT and EPS, suggests that Vardhman Textiles is currently struggling to navigate the challenging macroeconomic and sector-specific headwinds.

Mojo Score and Analyst Ratings

Reflecting these financial difficulties, Vardhman Textiles’ Mojo Score has declined to 33.0, accompanied by a downgrade in its Mojo Grade from Hold to Sell as of 22 December 2025. This downgrade signals a cautious stance from analysts, highlighting concerns over the company’s near-term earnings visibility and financial health. The company’s market capitalisation grade remains low at 3, indicating a relatively modest market cap compared to its sector peers.

Investors should note that the downgrade and negative financial trend score are indicative of the need for close monitoring of upcoming quarters to assess whether the company can stabilise its margins and return to growth.

Outlook and Investor Considerations

Looking ahead, Vardhman Textiles faces a critical juncture. The company must address its margin pressures and restore profitability to regain investor confidence. Key areas to watch include raw material cost management, pricing strategies, and operational efficiencies. Additionally, any signs of stabilisation or improvement in the upcoming quarters could help reverse the negative financial trend and potentially trigger a reassessment of the company’s rating.

Investors should also weigh the company’s longer-term track record of delivering positive returns over five and ten years against the recent underperformance and current challenges. While the stock has historically outperformed the Sensex over five years by approximately 21 percentage points, the recent negative trend and downgrade suggest caution in the near term.

Given the current Sell rating and deteriorating financial metrics, a prudent approach would be to monitor quarterly results closely and consider alternative investment opportunities within the garments and apparels sector or other sectors with more favourable fundamentals.

Summary

Vardhman Textiles Ltd’s December 2025 quarter results reveal a sharp decline in profitability and a shift to a negative financial trend, with key metrics such as PAT, PBDIT, and EPS hitting multi-quarter lows. The company’s operating margin contraction to 11.35% highlights margin pressures amid a challenging sector environment. The stock has underperformed the Sensex across recent time frames, and the downgrade from Hold to Sell reflects analyst concerns. Investors should remain cautious and monitor the company’s ability to stabilise earnings and margins in the coming quarters.

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