Lotus Chocolate Stock Plummets 56% After Reliance-Linked Firm Posts Profit Collapse
Overview
Reliance-backed Lotus Chocolate Company Ltd. shares have plunged over 56% in six months, hitting a 52-week low of ₹665. The steep fall follows a disastrous Q3FY26 earnings report, with net profit collapsing 96% to ₹0.14 crore and revenue shrinking 14%. Mounting debt and negative cash flows compound the company's challenges as it attempts a risky pivot to a B2C model, raising serious concerns for retail investors.
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Lotus Chocolate Faces Steep Decline Amidst Financial Woes
Lotus Chocolate Company Ltd., a firm with ties to the Reliance conglomerate, has witnessed a drastic fall in its stock value, shedding over 56% in just six months. The shares hit a 52-week low of ₹665 on January 14, 2026, marking a severe downturn from its peak price of ₹1,525.
Disastrous Q3FY26 Earnings Spark Sell-Off
The primary catalyst for this sharp correction is the company's abysmal Q3FY26 earnings report. Profit After Tax (PAT) plummeted by an alarming 96%, reducing net profit to a mere ₹0.14 crore from ₹3.72 crore in the previous year. Revenue also contracted by 14%, indicating a significant loss of market momentum. The Profit Before Tax (PBT) disintegrated by 86%, highlighting severe challenges in converting turnover into earnings.
Mounting Debt and Cash Flow Concerns
Beneath the headline figures, deeper financial stresses are evident. Interest expenses have surged over 66% in the first half of the year. The company's Debt to EBITDA ratio stands around 3.28 times, which restricts financial flexibility. Compounding these issues, operating cash flow has turned sharply negative, showing a decrease of approximately ₹130 crore for the year. Management has cited a "constrained liquidity environment," exacerbated by the expensive cocoa commodity cycle.
Risky Strategic Pivot Ahead
Lotus Chocolate is embarking on a strategic shift from being a commodity supplier to a consumer-facing (B2C) brand. This transition carries substantial execution risks. Planned production interruptions due to ongoing plant modernization are expected to impact business softness in the near term. Notably, domestic Mutual Funds have zero holdings in the stock, suggesting a lack of institutional confidence.
Valuation Disconnect Persists
Even after losing half its value, Lotus Chocolate is considered expensively valued. Compared to industry peers like Nestle India and Britannia, the stock historically traded at extremely high multiples. The current financial performance, characterized by a 96% profit drop, cannot justify these valuations. The stock is trading significantly below its 50-day and 200-day moving averages, signaling a loss of investor faith.
