Kwality Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Kwality Ltd trades at ₹2.2, in a downtrend and 2 weeks into that stage. That is −26.7% against its own 200-day average. It sits at 23% of a 52-week range of ₹1 to ₹5. On relative strength it is currently behind the NIFTY 500 on a trailing-13-week view (6 weeks and counting).

Today the stock is in a downtrend — week 2 of stage 4, confirmed. At ₹2.2 it trades −26.7% versus its 200-day average and sits at 23% of its 52-week range (₹1–₹5).

Against the market, two honest reads. Cumulative: over the last 4.9 years the stock moved −98% while the NIFTY 500 moved +105% — behind the index over the full window. Recent form: on a trailing-13-week view the stock is currently behind (6 weeks and counting; last ahead the week of 2021-01-15) — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

→ The trend is one thing; the bill is another. Are you paying up for it? Next: the P/E sits at the 3rd percentile of its own range.

Valuation P/E is the price of ₹1 of annual profit: how many rupees the market pays for each rupee the company earns in a year.

Kwality Ltd trades at 1.5× P/E, near the bottom of its own range — cheaper only 3% of the time. Its long-run median P/E is 13.6×, measured across 3.2 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 1.5× is near the bottom of its own range — cheaper only 3% of the time, against a long-run median of 13.6× measured over 3.2 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

The price move, decomposed: over 3y, of the −70.6%/yr price move, ~−20.7%/yr came from earnings growth and ~−49.9 pp from the multiple (compressing). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is low against its own past, so the story rests on the earnings line underneath it, not the multiple.

→ Cheap or dear rides on the earnings. Are they actually growing? Next: the fundamental stage — where the business sits in its arc, and how growth has compounded.

Stage: No read Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Kwality Ltd reads as no read on its fundamental arc. Under eight usable quarters on the growth trio — not enough history for an honest trajectory read. The read is built from 9 quarters across 1 curve, on partial evidence.

Why it matters: with too little history, an honest page says so instead of guessing a trajectory.

The return-on-capital curve is not shown — net worth is negative, so a return on capital is not a meaningful number in any basis. This is a distressed balance sheet, and the stage is read from the growth curves alone.

One or more growth curves carry a base-effect spike — a large year-on-year move off a near-zero or loss-making comparable quarter. Those spikes are capped before the classifier reads the trajectory, and shown pinned on the chart, so a single distorted quarter does not drive the stage call.

Fewer than eight usable quarters on the growth curves — this page will not guess a trajectory from a stub of history.

→ The stage names the trajectory. Next: the revenue line that produces it, quarter by quarter.

4-Factor Sector Score

35.8/100 — rank 8 of 8 in FMCG - Dairy Products · 38% evidence confidence · provisional, ranked below fully-evidenced peers

Kwality Ltd scores 35.8 out of 100 against the 8 companies it is compared with in FMCG - Dairy Products, ranking 8. Fill the missing evidence before acting; the ranking is deliberately pulled toward neutral.

The four contributions add to the total exactly: 17.2 + 5.6 + 10 + 3 = 35.8. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if profit growth turns negative or margin improvement reverses while sector-relative strength deteriorates.

Revenue Revenue is the top line: everything the company billed its customers in the period.

Kwality Ltd reported ₹18.2 Cr of revenue in the Sep 21 quarter, −28.3% year on year. Over 10 years it has compounded at −22.8% a year. The last full year, FY21, came in at ₹120 Cr. The last four reported quarters add to ₹92.5 Cr.

Kwality Ltd reported ₹18.2 Cr of revenue in the Sep 21 quarter, −28.3% year on year. Over 10 years it has compounded at −22.8% a year. The last full year, FY21, came in at ₹120 Cr. The last four reported quarters add to ₹92.5 Cr.

FY21 revenue came in at ₹120 Cr (−20.5% on the year), capping 10 years at −22.8% compound. The latest quarter (Sep 21) printed ₹18.2 Cr, −28.3% year on year.

Pace check: the last four quarters averaged −28.3% growth against the decade's −22.8% — the current year is running slower than its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew −27.3% over the last 4 quarters against −59.2%/yr over the last 8 — accelerating.

→ Revenue slipped — did margins hold as it scaled? Next: −2.3% this quarter (+11.8 pp YoY).

Operating margin Operating margin is what is left of every ₹100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

Kwality Ltd's operating margin is −2.3% in the Sep 21 quarter, +11.8 percentage points against the same quarter a year ago. Across 12 fiscal years the operating margin has ranged −206.0% to 7.0%. The current quarter sits inside that band.

Kwality Ltd's operating margin is −2.3% in the Sep 21 quarter, +11.8 percentage points against the same quarter a year ago. Across 12 fiscal years the operating margin has ranged −206.0% to 7.0%. The current quarter sits inside that band.

The latest quarter's operating margin is −2.3%, +11.8 pp against the same quarter a year ago. Across 12 fiscal years the operating margin has ranged −206.0%–7.0%.

Why the margin moved: operating margin went +11.8 pp year on year while gross margin went +11.7 pp — the gain came mostly from the gross line: input costs and pricing.

→ Margins held — did that reach the bottom line? Next: profit null in the latest quarter.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Kwality Ltd posted a net loss of ₹6.9 Cr in the Sep 21 quarter. The full FY21 year was a loss of ₹1,400 Cr. That loss is 38.1% of the quarter's revenue. The same quarter a year earlier lost ₹14.5 Cr. 12 of the last 12 reported quarters were loss-making.

Kwality Ltd posted a net loss of ₹6.9 Cr in the Sep 21 quarter. The full FY21 year was a loss of ₹1,400 Cr. That loss is 38.1% of the quarter's revenue. The same quarter a year earlier lost ₹14.5 Cr. 12 of the last 12 reported quarters were loss-making.

Sep 21 profit was ₹−6.9 Cr, null year on year. On the full year, FY21 printed ₹−1,400 Cr (null).

→ Profit rose — but did the cash follow? Next: 104% of the last 3 years' profit arrived as cash.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 104% of Kwality Ltd's reported profit arrived as operating cash — the cash follows the profit. In FY21 that was ₹−2.0 Cr of operating cash against ₹−1,400 Cr of profit. After ₹−143 Cr of capital spending, ₹141 Cr was left as free cash.

FY21: operating cash of ₹−2.0 Cr against reported profit of ₹−1,400 Cr, leaving free cash of ₹141 Cr after ₹−143 Cr of capital spending. Across the last 3 fiscal years the conversion rate is 104% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

Why conversion sits at 104%: the cash cycle tightened 301 days between FY16 and FY21 — cash that used to wait in the cycle now reaches the bank sooner.

Router verdict: no single sink dominates — the next section checks both the working-capital cycle and the capital spending.

→ So follow the cash to where it goes. Next: a −198-day cycle and ₹−218 Cr of building.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

Kwality Ltd's cash conversion cycle runs −198 days in FY21, down from 103 days in FY16. Capital spending ran ₹−218 Cr over the last 3 years. At FY21 sales of ₹120 Cr each day of that cycle holds about ₹0.3 Cr, so roughly ₹−65.0 Cr sits inside the business at any moment.

FY21: debtors at 26 days, inventory at 7 days — roughly 0.2 months of stock waiting to sell; that is where the cash sits while it waits — for a full cycle of −198 days, tighter than FY16's 103.

The full loop: cash goes out to suppliers and production on day 0; stock waits 7 days to sell; customers pay about 26 days after that; and suppliers themselves are paid at 231 days — netting out to the −198-day cycle.

In money terms: at FY21 sales of ₹120 Cr, each day of the cycle holds about ₹0.3 Cr — so the −198-day loop keeps roughly ₹−65.0 Cr sitting inside the business at any moment.

On the investment side: capital spending of ₹−218 Cr over the last 3 fiscal years against ₹191 Cr of depreciation — spending at or below maintenance level. Capital work-in-progress stands at ₹3.0 Cr (FY21) — capacity paid for but not yet earning.

The synthesis: neither the cycle nor the build-out is hoarding the cash — the machine is reasonably clean.

→ Does all this activity actually earn its cost of capital? Next: ROCE is −190%.

Return on capital Return on capital employed (ROCE) is the profit the whole business earns on all the money in it — equity and debt together. It is the single best test of whether growth creates value or just size.

Kwality Ltd earns a ROCE of −190% in FY20. That is up from a trough of −191% in FY19. A return-on-invested-capital spread against the cost of capital is not computable from what is held here. The wiring behind it is −1,166.7% net margin on 0.90× asset turns.

FY20 ROCE is −190%, recovered from a FY19 trough of −191% — the full ladder below shows the fall and the climb, undoctored.

Why the return is what it is — the wiring (FY21): −1,166.7% net margin × 0.90× asset turns × −0.04× balance-sheet leverage ≈ 42.0% on equity. Margin does its share; leverage is modest — this is an earned return, not a borrowed one.

→ Returns like these — is the balance sheet borrowing to make them? Next: debt-to-equity is −0.76.

Debt Debt-to-equity says how much of the business is funded by borrowings; interest cover says how many times operating profit pays the interest bill. Low and high, respectively, is the safe corner.

Kwality Ltd's net worth is negative — it owes more than it owns — so a debt-to-equity ratio is not meaningful here. Operating profit covers the interest bill −0×. Over 5 years borrowings went from ₹1,520 Cr to ₹2,638 Cr. Capital spending ran ₹−218 Cr across the last 3 of those years.

FY21: borrowings of ₹2,638 Cr against equity of ₹−3,486 Cr — net worth is NEGATIVE: the company owes more than it owns, so a debt-to-equity ratio is not meaningful (it just goes negative). This is a balance sheet under water. Operating profit covers the interest bill −0×. Over 5 years borrowings went from ₹1,520 Cr to ₹2,638 Cr while capital spending ran ₹−218 Cr in just the last 3 — part of the build-out is riding on borrowed money.

→ Who owns this, and are they adding or leaving? Next: the register is quiet.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

No holder of Kwality Ltd moved a full percentage point over the last two years — the register is quiet. Foreign institutions moved +0.0 points over the same window, to 0.0%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Promoters: +0.0 points over 8 quarters to 24.0%; Foreign institutions: +0.0 points over 8 quarters to 0.0%; Domestic institutions: +0.0 points over 8 quarters to 0.1%.

→ One last check: does the safety math agree? Next: the balance-sheet safety line.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Kwality Ltd: the Z-score is not available for this stock, so we say so rather than invent one. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure. The debt, cash-flow and return sections above carry the balance-sheet evidence this page does hold, and each of them states its own reporting date.

The safety line in one sentence: the Z-score is not available for this stock, so we say so rather than invent one.

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