Cravatex Limited

Consumer Cyclical — Leisure · NSE

₹341.20−₹4.90 (−1.42%)

DalalBaazaar Score

44 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, 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. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

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

What does this company do?

Cravatex Limited, through its subsidiaries, engages in trading in branded sports goods and fitness equipment textiles in India and internationally. It also operates a license of FILA and Sergio Tacchini brand.

IndustryLeisure

SectorConsumer Cyclical

Employees8

Annual revenue₹151 Cr

How does it make money?

Turns over ₹151 Cr a year. Of every ₹100 of sales, about ₹5 reaches shareholders as profit, with ₹7 left at the operating level before interest, tax and depreciation. Each of its 8 employees supports ₹18.86 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin6.8%

Net margin4.5%

Revenue / employee₹18.86 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 7.3% 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.

ROCE7.3%

ROE5.7%

Peer median ROE25.9%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved -70% while net margin moved -62% 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-70%

Margin effect-62%

DalalBaazaar Score

44/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 33.1% a year
✗ Profit has declined at 51.3% a year

Quality vs. Valuation

Company Quality

37/ 100

Weak

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

Valuation

87/ 100

Cheap

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

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

10.3x

Sector Median

69.2x

median of 4 sector peers

🟢Against its sector it trades 85% below the peer median of 69.2x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

69.2x median of 4 peers · -85%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

10.3x

P/B

0.74x

EV/EBITDA

1.3x

PEG

0.25

Dividend Yield

3.81%

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from -3.2% to 6.8% over 3 years.
Debt is being paid down
Total debt is down 16% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 63.8% to 5.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 76.3% to 7.3% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 2 high · 1 watch

🔴High leverageFinancial
Debt/Equity of 1.52x — earnings must service borrowings before shareholders see anything.
🔴Profit up while operating cash flow fallsFinancial
Reported profit rose but cash generated by operations declined — worth checking whether earnings are being supported by non-cash items or working capital.
🟡Profit is decliningFinancial
Net profit is down 88% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -3.2% to 6.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 16% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 85% 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?

Leverage amplifies any setback
Debt/Equity of 1.52x. Interest is payable whether or not the business has a good year.
Returns on shareholder capital are falling
ROE has dropped from 63.8% to 5.7%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
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

1EBITDA margin holds above 5%✓ 6.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✓ ₹1 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 8%✗ 7.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 10 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

Price history

Quick Metrics

7 good · 1 neutral · 3 weak

Market Cap

₹88 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

10.3x

Cheap

Cheap against the generic band

P/B Ratio

0.74x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹33.28

Profitable

Profitable on a per-share basis

ROE

5.7%

Weak

Weak capital efficiency

ROCE

7.3%

Weak

Low return on total capital employed

Debt/Equity

1.52x

High

High leverage

Revenue Growth (YoY)

29.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

40.8%

Healthy

Profits growing at a healthy clip

Dividend Yield

3.81%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹1 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹341.2

Operating Margin

2.0%

Weak

Thin margins leave little room for error

Net Margin

5.0%

Average

Average bottom-line conversion

Current Ratio

5.62

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.31

Defensive

Steadier than the market

52W Range Position

37%

Mid-range

Technical Snapshot

RSI (14)

40.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹503 Cr	₹203 Cr	₹174 Cr	₹151 Cr	-33.1%
EBITDA	-₹16 Cr	₹9 Cr	₹8 Cr	₹10 Cr	—
EBITDA Margin	-3.2%	4.2%	4.9%	6.8%	—
PAT (Net Profit)	₹59 Cr	₹5 Cr	₹5 Cr	₹7 Cr	-51.3%
EPS	₹228.05	₹18.68	₹18.68	₹26.3	-51.3%
ROE	63.8%	4.9%	4.5%	5.7%	—
ROCE	76.3%	6.4%	6.2%	7.3%	—
Total Debt	₹2 Cr	₹3 Cr	₹2 Cr	₹2 Cr	-5.7%
Free Cash Flow	₹144 Cr	₹18 Cr	₹1 Cr	₹1 Cr	-81.8%

🔴 Revenue has shrunk at 33.1% a year over 3 years.

🟢 EBITDA has turned positive, from -₹16 Cr to ₹10 Cr.

🟢 EBITDA Margin has risen from -3.2% to 6.8% over 3 years (+10.1 pts).

🔴 PAT (Net Profit) has shrunk at 51.3% a year over 3 years.

🔴 EPS has shrunk at 51.3% a year over 3 years.

🔴 ROE has fallen from 63.8% to 5.7% over 3 years (-58.1 pts).

🔴 ROCE has fallen from 76.3% to 7.3% over 3 years (-68.9 pts).

🟢 Total Debt has shrunk at 5.7% a year over 3 years.

🔴 Free Cash Flow has shrunk at 81.8% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹146 Cr

Total Liabilities

₹27 Cr

Total Debt

₹2 Cr

Cash & Equivalents

₹77 Cr

Operating Cash Flow

₹1 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

83.0%

Corporate Actions

Dividend Rate

₹13

Ex-Dividend Date

24 Jul 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

2 positive1 mixed3 general

Cravatex (NSE: CRAVATEX): Q1 Profit Turnaround and Final Dividend

Kalkine India, 06 OctCapital return

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

Cravatex Ltd (NSE: CRAVATEX) Business Profile and Investor Overview

Kalkine India, 09 Sept

Bulk Deals | Ashish Chugh picks stake in Cravatex, Madhuri Madhusudan Kela buys additional shares in Sangam India

Moneycontrol.com, 14 Jun

EIH to JB Chemicals: 10 key stocks to trade ex-dividend on Wednesday, 30 July 2025

Livemint, 30 JulCapital return

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

Metro Brands acquires 100% shareholding of Cravatex Brands

CNBC TV18, 19 Oct

Metro brands to acquire Cravatex Brands

BusinessLine, 20 OctM&A

🟡Mixed / dependsAcquisitions change the balance sheet before they change the earnings. Look at what was paid, how it was funded, and whether debt rose.

Watch Items

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

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟢Financial HealthStrong14.5/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak4.6/15

🟢ValuationAttractive12.6/15

🔴RiskHigh4.3/10

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 5%6.8%
✓Free cash flow remains positive₹1 Cr
✓Debt / EBITDA stays below 2x0.2x
✗ROCE stays above 8%7.3%