Axel Polymers Q3 Results: Loss Narrows Amid GST Scrutiny

Introduction

Axel Polymers Limited has announced its unaudited financial results for the third quarter ending December 31, 2025, revealing a mixed performance. The company successfully narrowed its net loss compared to the previous year, but this improvement was set against a notable decline in revenue. Compounding the challenges is a significant show cause notice from GST authorities, which introduces considerable regulatory uncertainty. The Board of Directors approved the results on February 13, 2026, based on the Audit Committee's recommendation.

Q3 Financial Performance Breakdown

In the third quarter of fiscal year 2026, Axel Polymers reported a net loss of ₹62.05 lacs. This marks a 17.90% improvement from the ₹75.58 lacs loss recorded in the same quarter of the previous fiscal year. However, this progress on the profitability front was contrasted by a sharp fall in income. Revenue from operations for Q3FY26 stood at ₹885.69 lacs, a 20.28% decrease from ₹1,111.09 lacs in Q3FY25. The company's total revenue also saw a similar decline of 20.08%. Despite the lower revenue, the improved bottom line led to a substantial recovery in Earnings Per Share (EPS), which improved to ₹-0.06 from ₹-0.89 in the corresponding quarter last year.

Nine-Month Performance Analysis

The financial results for the nine-month period ending December 31, 2025, paint a similar picture of improved profitability despite shrinking revenues. The company's net loss for the nine months reduced dramatically to ₹56.95 lacs, a 72.78% improvement from the ₹209.17 lacs loss reported in the same period of the previous year. This significant reduction in losses highlights effective cost management or operational adjustments over the longer term. However, revenue from operations for the nine-month period fell by 53.47% to ₹3,127.54 lacs from ₹6,722.49 lacs, indicating persistent challenges in the market or demand for its products.

Cost Management and Operational Metrics

A closer look at the company's expenses reveals a strategic effort to manage costs. The cost of materials consumed in Q3FY26 decreased by 27.38% to ₹645.35 lacs from ₹888.56 lacs in Q3FY25, a reduction that outpaced the decline in revenue. This suggests better sourcing or efficiency in material usage. In contrast, employee benefits expense saw a slight increase to ₹101.99 lacs. Finance costs were marginally lower at ₹77.30 lacs, down from ₹80.86 lacs, indicating stable debt management.

Significant Regulatory Headwinds

The most critical challenge for Axel Polymers is a regulatory issue with GST authorities. The company received a show cause notice from the Commissioner of Central GST & Central Excise, Vadodara II. This notice follows search proceedings conducted at its factory on July 3, 2024. The notice alleges irregularities related to the availment and passing of Input Tax Credit (ITC) without the actual movement of goods. The period under scrutiny spans from FY2021-22 to FY2024-25. The authorities have proposed an ITC reversal of approximately ₹31.57 crore, along with interest and penalties. This development poses a substantial financial risk and could have a material impact on the company's financial health if the ruling is unfavorable.

Capital Structure and Shareholding

During the period, Axel Polymers expanded its capital base. The paid-up equity share capital increased to ₹1,101.11 lacs as of December 31, 2025, up from ₹851.67 lacs a year earlier. This infusion of capital likely provided the company with necessary liquidity and contributed to the improved EPS figure by spreading the loss over a larger number of shares.

Market Outlook and Conclusion

Axel Polymers is currently navigating a complex environment. While the management has demonstrated an ability to curtail losses and improve operational profitability, the steep decline in revenue remains a primary concern. The ongoing GST investigation and the substantial potential liability of ₹31.57 crore cast a long shadow over the company's future. Investors will be closely watching for updates on the resolution of this regulatory matter, as its outcome will be a key determinant of the company's financial stability and growth prospects. The company's ability to revive its revenue growth while managing this significant legal challenge will be crucial in the upcoming quarters.