Modi Rubber FY26: Other Income Carries a Loss-Making Core

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1. At a Glance

Prices referenced are not live; data is as of June 17, 2026.

Modi Rubber’s headline FY26 net profit landed at ₹0.64 Cr on ₹34.25 Cr revenue. The operating loss—before other income—widened to ₹25.96 Cr, a -76% operating margin. That pile of ₹34.69 Cr in other income (mostly rent, interest, dividend, and miscellaneous line items from subsidiaries and investments) is doing the entire job here: it’s the only reason the company reports profit at all. Strip it out and the rubber and resin-coated sand business loses ₹34 Cr on ₹34 Cr in sales.

The quarter ended March 2026 was worse than the full year implies: Q4 stood at -₹13.88 Cr net profit, a reversal from +₹5.08 Cr in Q3. Current liabilities are climbing (working capital days jumped from 136 to 502), and balance-sheet liquidity shrunk. The stock pays 509× trailing earnings—a function of earnings being near zero—and sits 0.48× book value.

What’s at stake: Is a balance sheet that lives off investment portfolios truly a manufacturing business anymore?

2. Introduction

Modi Rubber was incorporated in 1971 and operates as a part of Modi Group, a diversified industrial conglomerate with fingers in several pies. The core rubber business manufactures truck and bus tyres under the MARATHAN brand, along with tubes and flaps. The company maintains a sprawling distribution network: 62 depots, 20 C&F agents, and over 3,000 dealers.

Beyond tyres, Modi Rubber manufactures resin-coated sand—a niche product for foundries—and runs a salon division (a shrinking revenue contributor). The company exports to the USA, Middle East, Pakistan, and Afghanistan.

Financial position: debt stands at ₹22.73 Cr against a market cap of ₹325.81 Cr, making the company nearly debt-free on paper. However, the real story hides in the asset composition: ₹402.27 Cr sits in “Investments”—a portfolio of holdings in joint ventures and associates that has become central to the P&L.

3. Business Model: WTF Do They Even Do?

Modi Rubber is ostensibly a tyre and tubes manufacturer, but the financials tell a different story. The rubber segment contributes a sliver of revenue relative to the operating loss it generates.

The MARATHAN tyre brand operates through a dealer network, but capacity utilization is opaque—the company reports capacity at 1.25 million tyres (Modi Puram, Partapur, and Modi Nagar plants combined) against annual output that suggests the plants are running at a fraction of that.

What dominates the P&L is “Other Income,” now at ₹34.69 Cr per year. This bucket includes:

• Rent income from investment properties (~11% of total other income)
• Interest and dividend income from the investment portfolio (~30% combined)
• Management charges and rent from subsidiaries (~25%)
• Sale of mutual funds and traded goods (~6%)
• Miscellaneous income (~20%)

The joint ventures—Gujarat Guardian Limited (resin-coated sand) and Asahi Modi Materials—are loss-makers themselves or marginal. Modi Marco Aldany (fashion retail JV) hit COVID-era losses and shuttered stores. Spin Investment (a subsidiary) holds near-worthless loans to eroded associates. The investment portfolio in fixed deposits and mutual funds is the real asset, not the manufacturing plants.

The business model has inverted: Modi Rubber is now a holding company that owns manufacturing capacity it can’t fully utilize, financed by a property and investment portfolio.

4. Financials Overview

Figures are consolidated, in ₹ crore.

Annual Results (FY23, FY24, FY25, FY26):

Revenue grew 17% YoY—a surface-level positive. But the operating performance deteriorated sharply: EBITDA margin collapsed to -63%, worse than FY25’s -58%. (EBITDA = PBT + Interest + Depreciation; for FY26: 2.76 + 1.68 + 4.29 = 8.73 Cr PBT-equivalent before other income. Operating Profit -25.96 Cr; EBITDA reverses to -21.67 Cr once you isolate core operations.)

Net profit fell to ₹0.64 Cr from ₹20.46 Cr. Without the ₹34.69 Cr other income cushion, the company would have reported a ₹34 Cr loss.

Q4 FY26 (Mar 2026) Snapshot:

Q4 was a disaster. Sales spiked 120% YoY, but other income—which had been ₹14.27 Cr in Q3—turned negative at -₹0.79 Cr (likely a mark-to-market loss on investments). The operating loss widened, and the net result swung from a ₹1.16 Cr profit in Q1 FY26 to a ₹13.88 Cr loss in Q4.

5. Market Expectations & Historical Multiples

This section describes how the market is currently pricing the company and how that compares with its own history and peer group. It is descriptive, not predictive.

The market currently pays 509× earnings here, a function of earnings near zero rather than a judgment on the business. Over the past five years, Modi Rubber paid an average of 19× earnings; the peer set (MRF, Balkrishna, CEAT, Apollo, JK Tyre) clusters at 22×. The valuation multiple has no historical precedent and no peer anchor because there is no viable earnings base to anchor to.

The P/B of 0.48× suggests the market values the equity at less than half its stated book value of ₹270 per share. The balance sheet of ₹770.92 Cr in total assets, mostly investments and fixed assets, appears