Lotus Chocolate Stock Crashes 10% After Reporting 96% YoY Decline in Q3 FY26 Net Profit

Lotus Chocolate Company Ltd shares crashed up to 10% in today's trading session after reporting significantly weak Q3 FY26 financial results. The Reliance Group company, which specializes in sourcing and processing cocoa beans to manufacture chocolates and cocoa derivatives, saw its stock price fall to a low of ₹677 compared to the previous day's closing price of ₹751.65.

Q3 FY26 Financial Performance

The company's Q3 FY26 results showed a sharp decline across key financial metrics. The following table highlights the year-over-year performance:

Metric	Q3 FY26	Q3 FY25	YoY Change
Revenue from Operations	₹142.11 crore	₹164.67 crore	-14%
Net Profit (PAT)	₹0.14 crore	₹3.72 crore	-96%
EBITDA	₹5.67 crore	₹6.29 crore	-10%
EBITDA Margin	4.00%	3.80%	+20 bps

On a quarter-over-quarter basis, the performance was equally concerning. Revenue fell 23% from ₹183.80 crore in Q2 FY26, while net profit declined 90% from ₹1.44 crore in the previous quarter.

Current Market Position

With a market capitalization of ₹899 crore, Lotus Chocolate is trading at a price-to-earnings ratio of 150, significantly higher than the industry average of 50. This elevated valuation multiple reflects the market's previous expectations, which have been challenged by the recent weak performance.

Strategic Business Transformation

Despite the poor quarterly results, the company is undergoing a significant strategic pivot from a B2B commodity-led model to a B2C consumer-focused business. This transformation aims to:

Build a scaled consumer franchise beyond bulk cocoa ingredients
Develop branded consumer products for better pricing power
Achieve more stable demand patterns and improved margin visibility
Reduce dependency on cyclical commodity dynamics

The company is investing in plant modernization, process innovation, and brand development to strengthen its long-term competitiveness in the consumer market.

Reliance Partnership and Support

Reliance Consumer Products Ltd acquired a 51% stake in Lotus Chocolate Company in May 2023. This strategic partnership provides several advantages:

Partnership Benefits	Details
Manufacturing Synergies	Utilization of cocoa processing and chocolate manufacturing facilities
Distribution Network	Access to Reliance's extensive distribution resources
Brand Development	Support from Reliance's branding expertise for B2C transition

Management Outlook

Mr. Natarajan M Venkataraman, Whole-time Director, commented on the company's strategic direction: "The Company is poised to transition from a commodity-led model to a consumer-led growth engine. In pursuance of this transition, the Company is also undertaking a structured review of existing B2B customer contracts to ensure alignment with the evolving consumer-led and integrated business model."

The management's focus on restructuring existing contracts indicates a comprehensive approach to the business model transformation, though the current quarter's results reflect the challenges inherent in such strategic shifts.

1 Day	5 Days	1 Month	6 Months	1 Year	5 Years
-9.00%	-12.50%	-18.57%	-48.00%	-46.67%	+3,389.80%

Lotus Chocolate has delivered disappointing third-quarter results, showing a dramatic decline across key financial metrics compared to the same period in the previous year. The chocolate manufacturer's performance reflects significant operational challenges during the quarter.

Financial Performance Overview

The company's financial results for the third quarter demonstrate substantial year-on-year deterioration across all major parameters:

Metric	Q3 Current Year	Q3 Previous Year	Change
Net Profit	₹1.40 million	₹37.00 million	-96.2%
Revenue	₹1.30 billion	₹1.47 billion	-11.6%
EBITDA	-₹109.00 million	₹58.00 million	-287.9%

Revenue and Profitability Analysis

Lotus Chocolate's revenue declined to ₹1.30 billion in the third quarter, representing an 11.6% decrease from ₹1.47 billion recorded in the corresponding quarter of the previous year. This revenue contraction of ₹170.00 million indicates reduced business volumes during the period.

The company's net profit performance was particularly concerning, falling dramatically by 96.2% to just ₹1.40 million from ₹37.00 million in the same quarter last year. This represents a profit decline of ₹35.60 million, severely impacting the company's bottom-line performance.

EBITDA Performance Deterioration

The most significant concern in Lotus Chocolate's quarterly results was the sharp deterioration in EBITDA performance. The company reported an EBITDA loss of ₹109.00 million in the current quarter, compared to a positive EBITDA of ₹58.00 million in the same period last year.

This negative swing of ₹167.00 million in EBITDA indicates substantial operational challenges, suggesting increased costs relative to revenue or reduced operational efficiency during the quarter.

Summary

Lotus Chocolate's third-quarter results highlight significant financial challenges, with the company experiencing substantial declines in profitability and operational performance. The combination of reduced revenue, dramatically lower net profit, and negative EBITDA performance indicates the company faced considerable operational difficulties during the quarter.