At a Glance
Kritika Wires Ltd’s Q1 FY26 numbers came out, and investors felt the shock (pun intended). PAT dropped 36% QoQ, operating margins fell to a sad 1.46%, and revenue slid to ₹206.9 Cr. The stock trades at ₹9.61 (down 50% YoY) but still commands a P/E of 27 – because why not? Promoters hold 63.32%, but have been cutting stakes over time. Two independent directors just resigned – drama much? Let’s untangle this wire ball.
Introduction
Steel wire might not sound sexy, but it holds up the power grids, fences, and half the industrial world. Kritika Wires rode the electrification boom with 48% profit CAGR over five years – impressive, but the recent numbers suggest the current isn’t flowing as strong. When your margins are thinner than a hair strand and directors start quitting, something’s sizzling behind the curtain.
Business Model (WTF Do They Even Do?)
Kritika Wires manufactures industrial steel wires and galvanised wires for State Electricity Boards, Power Grid Corporation, and others. It’s a commodity business where pricing power is as fragile as the wires they make. Any fluctuation in raw material (hello, LME prices) hits margins. The Jai Hanuman Group backs it, but this isn’t a moat-laden business – it’s all about scale, efficiency, and contracts.
Financials Overview
Q1 FY26 Snapshot
- Revenue: ₹206.9 Cr (-13% QoQ)
- OPM: 1.46% (vs -0.04% last quarter)
- PAT: ₹1.38 Cr (-36% QoQ)
- EPS: ₹0.05
Annual FY25 wasn’t glamorous either – revenue hit ₹745 Cr, PAT stagnated at ₹10 Cr, and OPM stayed at a painful 1%. The company has grown sales 57% TTM but profits declined (-16%).
Valuation
The market values Kritika like it’s a growth tech startup. Let’s apply some sanity:
1. P/E Method
- EPS FY25: ₹0.35
- Industry avg P/E: 15
- Fair Value = 0.35 × 15 = ₹5.25
2. EV/EBITDA
- EBITDA FY25: ₹9 Cr
- Multiple: 10× (generous)
- EV ≈ ₹90 Cr
- Fair Value per share ≈ ₹4–5
3. DCF (Flat growth, low margin)
- Conservative fair value ≈ ₹4.5–6
Current ₹9.6 → Overvalued given weak fundamentals.
What’s Cooking – News, Triggers, Drama
- Director Resignations – Two independent directors quit in Q1 FY26. Not a great sign.
- LME Transactions – Authorized trading, adding commodity exposure risk.
- Order Flow – Dependent on SEBs, Power Grid. Slow infra spending = weak demand.
- Promoter Selling – Stake down from 72.9% to 63.3%. Red flag? You decide.
Balance Sheet
| Assets (₹ Cr) | Liabilities (₹ Cr) |
|---|---|
| 180 | 180 |
| Net Worth | 94 |
| Borrowings | 51 |
Commentary: Decent equity base, but rising borrowings hint at leverage stress.
Cash Flow – Sab Number Game Hai
| Year | Ops (₹ Cr) | Invest (₹ Cr) | Finance (₹ Cr) |
|---|---|---|---|
| FY23 | -5 | 7 | -3 |
| FY24 | 14 | -11 | 14 |
| FY25 | 7 | -28 | 6 |
Commentary: Operating cash is inconsistent, investing outflows rising – feels like burning cash without big returns.
Ratios – Sexy or Stressy?
| Ratio | Value |
|---|---|
| ROE | 11.3% |
| ROCE | 15.0% |
| P/E | 27.4 |
| PAT M% | 1.1% |
| D/E | 0.54 |
Commentary: Margins anaemic, leverage creeping. Not sexy.
P&L Breakdown – Show Me the Money
| Year | Revenue (₹ Cr) | EBITDA (₹ Cr) | PAT (₹ Cr) |
|---|---|---|---|
| FY23 | 282 | 9 | 6 |
| FY24 | 432 | 13 | 10 |
| FY25 | 745 | 9 | 10 |
Commentary: Sales up, profits flat – classic margin compression.
Peer Comparison
| Company | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| APL Apollo | 20,885 | 801 | 54 |
| Welspun Corp | 14,392 | 1,622 | 15 |
| Shyam Metalics | 15,945 | 922 | 30 |
| Kritika Wires | 784 | 9 | 27 |
Commentary: Tiny player, priced like a mid-cap. Risky.
Miscellaneous – Shareholding, Promoters
- Promoters: 63.32% (down from 72.9%)
- FIIs: 0.06% (non-existent)
- DIIs: 0%
- Public: 36.6%
Promoter selling and lack of institutional support = weak confidence.
EduInvesting Verdict™
Kritika Wires looked like a growth story – 48% profit CAGR over five years and a decent order book. But the latest results show cracks: falling margins, flat profits, resignations, and promoter stake cuts. The stock is down 50% YoY and still trades at a high P/E.
Past Performance
- Strong sales growth, but profits never scaled.
- Margins stuck at 1–2% for years.
Headwinds
- Rising commodity costs.
- Low pricing power.
- Governance red flags (resignations, stake cuts).
SWOT
Strengths: Established client base (SEBs), improved debtor days, strong sales growth.
Weaknesses: Thin margins, promoter selling.
Opportunities: Infra push, export potential.
Threats: Price wars, LME volatility, corporate governance concerns.
Final Word
Kritika Wires is like a thin wire – it can stretch but may snap under too much load. Unless margins improve or management signals confidence, this remains a high-risk penny stock. Traders might play volatility, but investors? Proceed with a circuit breaker.
Written by EduInvesting Team | 30 July 2025SEO Tags: Kritika Wires, Q1 FY26 Results, Stock Analysis
