Textile stock falls 6% after company defaults on ₹29.67 Cr loan

Synopsis: Vardhman Polytex’s shares dipped 6%, as it revealed defaults of Rs 29.67 crore on its overall banking facilities worth Rs 55.67 crore. With half its loans stressed and its business largely funded by banks, sentiment among investors eroded despite its low valuations and strong past performance.

The shares of this company, which is into textiles and whose diverse yarn portfolio spans across cotton, cotton-polyester blends and value-added yarn, had its shares in a steep decline after the company published its default of bank debts. 

With the market cap of Rs 262 crore, the shares of Vardhman Polytex Ltd had hit their intraday low at Rs 5.71, falling more than 6 per cent from their intraday high today of Rs 6.10 after the news release. The shares are trading at a PE of 8.3, whereas their industry PE is at 19.1. The shares have given a return of 250-plus per cent in the last 5 years. 

About the default. 

Vardhman Polytex’s recent disclosure: Financial distress continues, with a substantial part of its bank loans drifting into the default category as of December 31, 2025. With an aggregate of Rs 55.67 crores of total revolving bank facilities, defaults stand at Rs 29.67 crores. This is in line with stricter SEBI norms regarding disclosures of material information.

From a balance sheet perspective, total financial debt of Rs 55.82 crore is mostly bank-funded, with no exposure to unlisted debt securities such as NCDs or NCRPS. Although absence of any capital-market borrowing mitigates risk from bondholder refinancing, it also increases vulnerability to banks; thus, negotiations/agreements with lenders become critical for continuity.

Strategically, a high proportion of default loans is indicative of some operational and cash flow management difficulties that must be attended to immediately. Otherwise, a situation may arise where the company continues facing difficulties in working capital and growth projects. Looking ahead, attention is bound to remain on repayment performance, support from lenders, and plans of management to place their finances on a sound track.

Financials

The revenue from operations for the company stood at Rs 62 crores in Q2 FY26 compared to Q2 FY25 revenue of Rs 64.4 crores, down by about 4 per cent YoY. However, the net profit stood at Rs 6.46 crore in Q2 FY26, up from Rs 63 lakh in Q2 FY25.

Vardhman Polytex Limited has an impressive background as an established textile manufacturing company and is known for quality, innovations, and sustainability-focused yarn manufacturing. It provides a varied range of yarns to the global and local markets through consistent manufacturing and quality manufacturing and sourcing practices around the globe, making the company one of the trusted players in the global textile value chain.

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