Keerthi Industries Limited announced its unaudited financial results for the quarter ended December 31, 2025, during a board meeting conducted through video conferencing on February 14, 2026. The Hyderabad-based company reported challenging financial performance across key operational metrics for the third quarter of fiscal year 2026.

Financial Performance Overview

The company's financial results for Q3 FY26 showed a significant decline in revenue compared to the previous year. Revenue from operations decreased substantially, while the company continued to face operational losses.

Operational Expenses and Cost Structure

The company's expense structure reflected various operational challenges during the quarter. Major expense categories included power and fuel costs, employee benefits, and material purchases.

Board Decisions and Corporate Actions

During the board meeting, directors approved several important corporate actions beyond the financial results. The company decided to transfer unclaimed dividend for Financial Year 2017-18 amounting to Rs. 7,95,618.90 to the Investor Education and Protection Fund Authority, in compliance with Section 124(5) and Section 124(6) of the Companies Act, 2013.

The board also approved amendments to the Policy on Related Party Transactions, aligning with SEBI (LODR) (Fifth Amendment) Regulations, 2025 dated November 18, 2025. This policy update was recommended by the Audit Committee and will be made available on the company's website.

Segment Performance and Operations

The company's cement division generated revenue of Rs. 1,588.88 lakhs during Q3 FY26, compared to Rs. 2,484.44 lakhs in the corresponding quarter of the previous year. The segment reported a loss before tax and finance cost of Rs. 857.71 lakhs for the quarter.

Discontinued Operations and Asset Classification

The company continues to manage its discontinued operations, particularly the Electronics Division business. On July 11, 2025, shareholders approved the transfer of the Electronics Division business to Hyderabad Bottling Co. Pvt. Ltd. as a going concern through a slump sale arrangement. The company has received consideration towards this transaction and is in the process of completing the transfer formalities.

Additionally, Keerthi Industries has identified land from its Sugar Division amounting to Rs. 487.58 lakhs as available for sale in its present condition. The company has received an advance of Rs. 580.56 lakhs against this land asset.

Earnings Per Share and Capital Structure

The company's paid-up equity share capital remained stable at Rs. 801.67 lakhs with a face value of Rs. 10 per share. The earnings per share from continuing operations showed a loss of Rs. 6.47 per share for Q3 FY26, compared to a loss of Rs. 11.65 per share in Q3 FY25.

Keerthi Industries Limited has received a credit rating reaffirmation from CARE Ratings Limited, maintaining its rating at 'CARE B; Stable' for bank facilities totaling ₹30.26 crore. The rating announcement, disclosed on January 8, 2026, under Regulation 30 of SEBI regulations, reflects the company's current operational challenges while acknowledging certain stabilizing factors.

Financial Performance Deterioration

The company experienced significant operational difficulties in FY25, with cement division capacity utilization declining sharply to 43% from 73% in FY24. This operational decline translated into substantial financial impact across key metrics:

Revenue from the cement division declined by 51.15% primarily due to reduced production volumes, though sales realization remained relatively stable at ₹4,592 per metric tonne in FY25 compared to ₹4,445 per metric tonne in FY24. The electronics division showed improvement, with revenue increasing to ₹23.07 crore in FY25 from ₹18.49 crore in FY24.

Rating Rationale and Key Factors

CARE Ratings' decision considers multiple factors affecting the company's creditworthiness. The rating reflects deterioration in operational performance, reliance on creditor stretching and promoter loans for debt obligations, and high working capital utilization of 99.54% for the twelve months ended October 2025.

However, several positive factors support the rating:

• Experienced management team led by Mrs. J Triveni and Mr. J S Rao with over 20 years of cement industry experience
• Integrated operations with captive limestone mines covering 271 acres with 34.50 million tonnes of reserves
• Promoter support through unsecured loans of ₹26.54 crore, subordinated to bank debt
• Recent debt repayment from electronics division sale proceeds

Operational Challenges and Market Position

Keerthi Industries operates with an installed cement capacity of 5.94 lakh tonnes per annum and clinker capacity of 5.28 lakh tonnes per annum. The company faces geographic concentration risk, primarily serving Andhra Pradesh and Telangana markets under the 'Suvarna Cements' brand.

The cement industry's cyclical nature and input price volatility continue to impact operations. Coal and pet coke price fluctuations significantly affect power and fuel expenses, with the industry experiencing elevated costs that peaked in August-September 2022 before moderating in FY24.

Liquidity Position and Debt Management

The company's liquidity position remains stretched, with negative gross cash accruals of ₹21.59 crore in FY25 against debt repayment obligations of ₹6.74 crore in FY26. Cash and bank balances stood at ₹0.30 crore as of March 31, 2025.

As of December 1, 2025, the company repaid outstanding term debt and working capital borrowings from Axis Bank using proceeds from the electronics division sale. Unsecured loans were reduced by ₹11.50 crore, with the outstanding balance at ₹20.97 crore as of November 30, 2025.

Outlook and Rating Sensitivities

The stable outlook reflects CARE Ratings' expectation of operational performance improvement with increased demand and selling prices. Positive rating factors include achieving total operating income above ₹200 crore while maintaining PBILDT margin at 10%, and sustaining PBILDT per tonne above ₹950.

Negative factors that could impact the rating include overall gearing deteriorating beyond 1x and any notable decline in operating income or profitability by more than 30% year-on-year. The rating agency continues to monitor the company's progress in addressing operational challenges while leveraging its integrated operations and experienced management team.