1. At a Glance
Once a cement powerhouse under the B.K. Birla empire, Kesoram is now a post-demerger shell trying to squeeze life out of chemicals, transparent paper, and legacy assets. Q1 FY26 net loss? A not-so-modest ₹99 Cr. But book value sits at ₹14.5 vs CMP ₹6.2. Value trap or turnaround track?
2. Introduction with Hook
Remember when Kesoram was a cement king? Now it’s like watching a retired heavyweight boxer doing odd jobs to pay the bills. After hiving off its cement business in FY25 (cement was 94% of revenue!), what’s left is Rayon, TP & Chemicals — and a factory land sale that looks more like a distress sale than a smart pivot.
- Q1 FY26 Loss (Consolidated): ₹99.34 Cr
- Revenues: ₹61 Cr
- Book Value: ₹14.5 | CMP: ₹6.21
- Market Cap: ₹191 Cr
- ROE (TTM): An insane 2,034% (thanks, demerger gains)
3. Business Model (WTF Do They Even Do?)
What’s left post-demerger?
- Rayon Yarns (used in textiles)
- Transparent Paper (used in packaging & cigarettes)
- Chemicals (byproduct of Rayon ops)
Legacy Asset Monetization:
- Land at Kesoram Spun Pipes and Foundries (KSPF)
- Loan recoveries from subsidiaries (Cygnet)
- Equity investments and one-time revaluations
Not much manufacturing scale left. This is more asset-unlocking than operations-driven.
4. Financials Overview
| Metric | Q1 FY25 | Q4 FY25 | Q1 FY26 |
|---|---|---|---|
| Revenue | ₹67 Cr | ₹67 Cr | ₹61 Cr |
| Net Profit | ₹(61) Cr | ₹5,766 Cr* | ₹(99) Cr |
| OPM (%) | -17% | -38% | -17% |
| EPS | ₹(2.00) | ₹185.59 | ₹(3.20) |
*Q4 FY25 includes cement demerger windfall = not comparable
5. Valuation
| Metric | Value |
|---|---|
| CMP | ₹6.21 |
| Book Value | ₹14.5 |
| P/B | 0.43x |
| ROCE | -4.7% |
| ROE (TTM) | 2034% (skewed) |
EduFair™ Valuation Range: ₹5.50–₹9.50
(Asset-value dependent, not earnings-driven)
Undervalued? Yes. Investable? Depends on your pain tolerance.
6. What’s Cooking – News, Triggers, Drama
- Cement demerger now complete; this is the “after-party”
- Q1 FY26: ₹99 Cr loss, mainly due to asset impairments
- KSPF factory land write-down: ₹41.7 Cr
- Waiver of ₹44 Cr interest on subsidiary loans
- Cygnet land impairment of ₹48 Cr
- Board changes: New Company Secretary appointed, CEO reappointed
TLDR: It’s a clean-up act with more broom than boom.
7. Balance Sheet
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Equity | ₹311 Cr | ₹311 Cr | ₹311 Cr |
| Reserves | ₹(216) Cr | ₹141 Cr | ₹141 Cr |
| Total Liabilities | ₹3,435 Cr | ₹3,376 Cr | ₹813 Cr |
| Borrowings | ₹1,938 Cr | ₹2,270 Cr | ₹199 Cr |
| Fixed Assets | ₹1,736 Cr | ₹1,728 Cr | ₹602 Cr |
Key Moves:
- Borrowings fell drastically (from ₹2,270 Cr to ₹199 Cr)
- Asset base shrunk post-demerger
- Net worth positive again (barely)
8. Cash Flow – Sab Number Game Hai
| FY | CFO | CFI | CFF | Net |
|---|---|---|---|---|
| FY23 | ₹131 Cr | ₹49 Cr | ₹(248) Cr | ₹(68) Cr |
| FY24 | ₹(77) Cr | ₹75 Cr | ₹(4) Cr | ₹(6) Cr |
| FY25 | ₹37 Cr | ₹7 Cr | ₹(49) Cr | ₹(5) Cr |
Commentary:
- Operating cash turned positive in FY25
- Investment flow minimal
- Still negative free cash — not self-sustaining yet
9. Ratios – Sexy or Stressy?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | -2% | -5% | -4.7% |
| OPM | -21% | -20% | -17% |
| Interest Coverage | <1 | <1 | <1 |
| Debtor Days | 693 | 46 | 45.6 |
Improvement: Debtor days fell drastically.
Problem: Margins still below sea level.
10. P&L Breakdown – Show Me the Money
| Metric | FY23 | FY24 | FY25 (TTM) |
|---|---|---|---|
| Sales | ₹3,778 Cr | ₹246 Cr | ₹253 Cr |
| EBITDA | ₹271 Cr | ₹(52) Cr | ₹(54) Cr |
| Net Profit | ₹(194) Cr | ₹(381) Cr | ₹5,527 Cr* |
*Again, FY25 skewed by ₹5,788 Cr gain from cement demerger
Without that? This is a loss-making corpse with a shiny headstone.
11. Peer Comparison
| Company | Sales (Cr) | OPM | ROCE | P/B | ROE |
|---|---|---|---|---|---|
| UltraTech | ₹75,955 | 16.5% | 10.9% | 5.2x | 9.3% |
| ACC | ₹21,762 | 14.0% | 17.4% | 2.0x | 13.2% |
| Dalmia | ₹13,980 | 17.2% | 5.6% | 2.3x | 4.1% |
| Kesoram | ₹253 | -21.3% | -4.7% | 0.43x | 2,034%* |
*ROE based on one-off, not sustainable
Kesoram is clearly not comparable anymore — it’s now an asset play, not an operating cement firm.
12. Miscellaneous – Shareholding, Promoters
| Category | Jun ‘23 | Dec ‘23 | Jun ‘25 |
|---|---|---|---|
| Promoters | 43.4% | 43.34% | 43.34% |
| FIIs | 3.78% | 2.73% | 0.78% |
| DIIs | 10.6% | 15.95% | 8.18% |
| Public | 42.2% | 37.98% | 47.69% |
Retail is taking over.
Institutional interest is fading fast post demerger.
13. EduInvesting Verdict™
Kesoram is like that ex-royal family: once rich, now surviving on estate sales and nostalgia.
Pros:
- Debt reduced
- Book value more than double CMP
- Cash flow from asset sales kicking in
Cons:
- Zero operational growth
- Deep losses without one-offs
- Earnings power almost nil
- Management is just “managing decline”
Unless there’s a clear plan to revive Rayon/TP or turn land into cash cows, this is a deep-value zombie. Tradable on momentum or asset news, but not a long-term moated business… yet.
Metadata
Written by EduInvesting Analyst | 14 July 2025
Tags: Kesoram Industries, B.K. Birla Group, Cement Demerger, Turnaround Stocks, Rayon, Asset Monetization, Deep Value
