United Cotfab Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹12.95₹0.00 (0.00%)

DalalBaazaar Score

55 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Very High

Driven by moderate debt load, negative free cash flow, 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. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 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 United Cotfab Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

United Cotfab Limited engages in the manufacturing of open-end yarn for the textile industry in India. The company offers cotton open-end yarn for use in the production of textiles, sewing, crocheting, knitting, weaving, embroidery, and rope making.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees118

Annual revenue₹155 Cr

How does it make money?

Turns over ₹155 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation. Each of its 118 employees supports ₹1.31 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin7.6%

Net margin2.4%

Revenue / employee₹1.31 Cr

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 8.8% 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.

ROCE8.8%

ROE7.1%

Peer median ROE25.9%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +34896% 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+34896%

Margin effect-92%

DalalBaazaar Score

55/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Beta of 1.53 — amplifies market moves in both directions
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

52/ 100

Average

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

Valuation

88/ 100

Cheap

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

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

6.0x

3Y Median

15.1x

30 monthly readings · mean 77.8x · range 7.5x–933.3x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 61% below its 3y median of 15.1x. 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 91% below the peer median of 69.2x.

vs. its own history

Cheap

15.1x median over 30 months · -61%

vs. sector peers

Cheap

69.2x median of 4 peers · -91%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

6.0x

P/B

0.41x

EV/EBITDA

6.5x

PEG

0.03

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well4

Return on equity is rising
ROE has improved from 1.4% to 6.9%.
Return on capital is rising
ROCE has improved from 0.5% to 8.8%.
Valuation below its historical average
At 6.0x the stock trades 61% below its own median of 15.1x.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 47.5% to 7.6% over 3 years.
Debt is rising
Total debt is up 44% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 39.8 points, from 47.5% to 7.6%.
🟡Debt is increasingFinancial
Total debt is up 44% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 61% 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 91% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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?

Margins are being competed away
EBITDA margin has fallen from 47.5% to 7.6%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
The debt load needs earnings to hold up
Debt is 4.7x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
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.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

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

1Revenue growth stays above 454% a year✓ 604.7% CAGR
Latest reported year was 34.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 6%✓ 7.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 4.7x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Free cash flow remains positive✗ -₹14 Cr
Profit that never becomes cash eventually stops being profit.
5Interest cover stays above 3x✗ 2.7x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

5 / 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

5 good · 4 neutral · 2 weak

Market Cap

₹22 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

6.0x

Cheap

Cheap against the generic band

P/B Ratio

0.41x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹2.17

Profitable

Profitable on a per-share basis

ROE

7.1%

Weak

Weak capital efficiency

ROCE

8.8%

Moderate

Moderate return on the capital in the business

Debt/Equity

1.01x

Moderate

Moderate leverage

Revenue Growth (YoY)

34.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

37.9%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹17 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹12.95

ROA

4.6%

Average

Average asset productivity

Operating Margin

9.7%

Average

Average margins

Net Margin

2.3%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.15

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

1.53

High swing

Swings more than the market in both directions

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

13.5 / 13.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

21.0

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹0 Cr	₹40 Cr	₹125 Cr	₹155 Cr	+604.7%
EBITDA	₹0 Cr	₹7 Cr	₹11 Cr	₹12 Cr	+283.1%
EBITDA Margin	47.5%	17.7%	8.9%	7.6%	—
PAT (Net Profit)	₹0 Cr	₹2 Cr	₹3 Cr	₹4 Cr	+199.3%
EPS	₹0.08	₹1.09	₹1.72	—	—
ROE	1.4%	13.5%	5.4%	6.9%	—
ROCE	0.5%	11.0%	8.9%	8.8%	—
Total Debt	₹38 Cr	₹48 Cr	₹38 Cr	₹55 Cr	+12.9%
Free Cash Flow	-₹37 Cr	-₹3 Cr	-₹20 Cr	-₹14 Cr	—

🟢 Revenue has grown at 604.7% a year over 3 years.

🟢 EBITDA has grown at 283.1% a year over 3 years.

🔴 EBITDA Margin has fallen from 47.5% to 7.6% over 3 years (-39.8 pts).

🟢 PAT (Net Profit) has grown at 199.3% a year over 3 years.

🟢 ROE has risen from 1.4% to 6.9% over 3 years (+5.5 pts).

🟢 ROCE has risen from 0.5% to 8.8% over 3 years (+8.3 pts).

🔴 Total Debt has grown at 12.9% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹131 Cr

Total Liabilities

₹76 Cr

Total Debt

₹55 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹0 Cr

Capex

-₹14 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

71.6%

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

6 general

Compare with

Equitymaster, 16 Oct

United Cotfab passes all 10 resolutions at third annual general meeting

scanx.trade, 02 Oct

United Cotfab share price makes a lukewarm debut, stock opens with a mere 7% premium at ₹75 apiece on BSE SME

Livemint, 24 Jun

United Polyfab shareholders approve all nine AGM resolutions

scanx.trade, 03 Oct

United Cotfab IPO day 1: Issue booked nearly 3 times, check subscription status, price band and listing date

Upstox, 13 Jun

Ahmedabad based United Cotfab Limited's IPO Opens on 13th June 2024

Business Standard, 11 Jun

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

🔴Business QualityWeak8.7/20

🟡Financial HealthAdequate10.4/20

🟡GrowthModest12.9/20

🟡ProfitabilityModerate7.1/15

🟢ValuationAttractive13.2/15

🔴RiskHigh2.7/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 454% a year604.7% CAGR
✓EBITDA margin holds above 6%7.6%
✗Debt / EBITDA falls below 3x4.7x
✗Free cash flow remains positive-₹14 Cr
✗Interest cover stays above 3x2.7x