Arex Industries Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹123.00₹0.00 (0.00%)

DalalBaazaar Score

67 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

Driven by short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Short-term liquidity is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:09 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Arex Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Arex Industries Limited manufactures, sells, and trades in various woven and printed labels in India and internationally.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees227

Annual revenue₹50 Cr

How does it make money?

Turns over ₹50 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹15 left at the operating level before interest, tax and depreciation. Each of its 227 employees supports ₹21.9 lakh of revenue a year, the signature of a people-led business.

EBITDA margin14.7%

Net margin3.0%

Revenue / employee₹21.9 lakh

Who are its competitors?

The closest listed comparisons in its industry are MARUTI SUZUKI INDIA LTD., TITAN COMPANY LIMITED, TRENT LTD, AVENUE SUPERMARTS LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

MARUTI SUZUKI INDIA LTD.P/E 25.2x · ROE 13.4%

TITAN COMPANY LIMITEDP/E 68.5x · ROE 36.7%

TRENT LTDP/E 87.2x · ROE 25.9%

AVENUE SUPERMARTS LIMITEDP/E 69.9x · ROE 12.7%

What is its competitive advantage?Little sign of one

Returns on capital of 10.1% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE10.1%

ROE5.3%

Peer median ROE25.9%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +10% while net margin moved +92% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+10%

Margin effect+92%

DalalBaazaar Score

67/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of -0.35 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast

Quality vs. Valuation

Company Quality

67/ 100

Good

How good the business is, ignoring the share price entirely.

Valuation

85/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

A good business currently available at an undemanding price — the combination this framework is built to look for.

Historical Valuation

Current P/E

4.4x

3Y Median

25.3x

40 monthly readings · mean 40.0x · range 13.3x–130.6x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 83% below its 3y median of 25.3x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 94% below the peer median of 69.2x.

vs. its own history

Cheap

25.3x median over 40 months · -83%

vs. sector peers

Cheap

69.2x median of 4 peers · -94%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

4.4x

P/B

1.64x

EV/EBITDA

7.5x

PEG

0.16

Dividend Yield

2.03%

What's Good / What's Bad

🟢 What's Going Well4

Debt is being paid down
Total debt is down 40% over 3 years.
Return on capital is rising
ROCE has improved from 6.4% to 10.1%.
Valuation below its historical average
At 4.4x the stock trades 83% below its own median of 25.3x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Short-term liquidity is tight
Current ratio of 1.00 — near-term obligations exceed near-term assets.

Red Flags

2 items require attention · 2 watch

🟡Interest coverage is deterioratingFinancial
Cover has fallen from 4.4x to 2.8x.
🟡Short-term liquidity is tightFinancial
Current ratio of 1.00 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 40% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 83% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 94% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹3 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Growth barely outpaces inflation
Revenue compounding at 3.3% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Micro Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 13%✓ 14.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Interest cover stays above 3x✗ 2.8x
How much operating profit can fall before interest stops being comfortably covered.
3Revenue growth stays above 4% a year✗ 3.3% CAGR
Latest reported year was 26.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
4Free cash flow remains positive✓ ₹3 Cr
Profit that never becomes cash eventually stops being profit.
5Debt / EBITDA stays below 2x✓ 1.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.

Investment Checklist

7 / 11 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✗ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

7 good · 3 neutral · 1 weak

Market Cap

₹44 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

4.4x

Cheap

Cheap against the generic band

P/B Ratio

1.64x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹27.9

Profitable

Profitable on a per-share basis

ROE

5.3%

Weak

Weak capital efficiency

ROCE

10.1%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.38x

Low

Conservative leverage

Revenue Growth (YoY)

26.8%

Healthy

Healthy top-line growth

Profit Growth (YoY)

3446.4%

Healthy

Profits growing at a healthy clip

Dividend Yield

2.03%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹3 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹123

Operating Margin

16.1%

Good

Healthy core-business profitability

Net Margin

19.1%

Good

Strong bottom-line conversion

Current Ratio

1.00

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

-0.35

Defensive

Steadier than the market

52W Range Position

49%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

127.4 / 128.7

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

39.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹45 Cr	₹51 Cr	₹51 Cr	₹50 Cr	+3.3%
EBITDA	₹7 Cr	₹9 Cr	₹9 Cr	₹7 Cr	+1.9%
EBITDA Margin	15.3%	17.9%	17.3%	14.7%	—
PAT (Net Profit)	₹1 Cr	₹3 Cr	₹3 Cr	₹1 Cr	+28.3%
EPS	₹1.77	₹6.42	₹7.32	₹4.12	+32.5%
ROE	2.4%	8.0%	10.3%	5.3%	—
ROCE	6.4%	12.4%	14.4%	10.1%	—
Total Debt	₹18 Cr	₹10 Cr	₹12 Cr	₹11 Cr	-15.8%
Free Cash Flow	₹7 Cr	₹8 Cr	₹7 Cr	₹3 Cr	-25.9%

🟢 Revenue has grown at 3.3% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (1.9% a year).

🟡 EBITDA Margin has held roughly flat at 14.7% over 3 years.

🟢 PAT (Net Profit) has grown at 28.3% a year over 3 years.

🟢 EPS has grown at 32.5% a year over 3 years.

🟢 ROE has risen from 2.4% to 5.3% over 3 years (+2.9 pts).

🟢 ROCE has risen from 6.4% to 10.1% over 3 years (+3.7 pts).

🟢 Total Debt has shrunk at 15.8% a year over 3 years.

🔴 Free Cash Flow has shrunk at 25.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹45 Cr

Total Liabilities

₹17 Cr

Total Debt

₹11 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹8 Cr

Capex

-₹5 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

86.0%

Corporate Actions

Dividend Rate

₹2.5

Ex-Dividend Date

16 Sept 2026

Peer Comparison

Company	P/E	ROE
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TITAN COMPANY LIMITED	68.5x	36.7%
TRENT LTD	87.2x	25.9%
AVENUE SUPERMARTS LIMITED	69.9x	12.7%

Recent News

1 positive1 negative4 general

AREX INDUSTRIES LTD. Share Price

Upstox, 14 Oct

Compare with AREX IND.

Equitymaster, 14 Oct

Arex Industries sets Sept 16 record date for ₹2.50 final dividend

scanx.trade, 29 JulCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Arex Industries Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 31 Aug

Arex Industries Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

Arex Industries FY26 Results: Net profit drops 44% to ₹148.2 lakh

scanx.trade, 24 AugResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟢Business QualityStrong14.5/20

🟢Financial HealthStrong13.9/20

🟢GrowthStrong13.1/20

🟡ProfitabilityModerate8.9/15

🟢ValuationAttractive11.8/15

🔴RiskHigh4.4/10

Attractive on both counts

A good business currently available at an undemanding price — the combination this framework exists to look for. The work left is qualitative: whether the advantage the numbers imply is one you can identify and expect to last.

This thesis breaks if

✓EBITDA margin holds above 13%14.7%
✗Interest cover stays above 3x2.8x
✗Revenue growth stays above 4% a year3.3% CAGR
✓Free cash flow remains positive₹3 Cr
✓Debt / EBITDA stays below 2x1.5x