Deepak Spinners Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹143.05−₹2.35 (−1.62%)

DalalBaazaar Score

47 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Low

Driven by micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. Whether sales start growing again is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:00 pm

Understanding the Business

Company site ↗

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

What does this company do?

Deepak Spinners Limited manufactures and sells synthetic staple and man-made fiber blended yarns in India and internationally.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees3,158

Annual revenue₹532 Cr

How does it make money?

Turns over ₹532 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹5 left at the operating level before interest, tax and depreciation. Each of its 3,158 employees supports ₹16.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹16.9 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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 3.0% 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.

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 -5% while net margin moved -90% 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-5%

Margin effect-90%

DalalBaazaar Score

47/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 1.6% a year
✗ Profit has declined at 55.1% a year

Quality vs. Valuation

Company Quality

39/ 100

Weak

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.

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

9.9x

3Y Median

67.0x

40 monthly readings · mean 52.7x · range 3.9x–120.7x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 85% below its 3y median of 67.0x. 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 86% below the peer median of 69.2x.

vs. its own history

Cheap

67.0x median over 40 months · -85%

vs. sector peers

Cheap

69.2x median of 4 peers · -86%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

5.5x

PEG

—

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 38% over 3 years.
Cash generation is improving
Free cash flow is up 208% over 3 years.
Very low debt
Debt/Equity of 0.13x leaves the balance sheet with plenty of headroom.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 17.0% to 1.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 22.3% to 3.0% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Significant margin compressionFinancial
EBITDA margin has fallen 8.3 points, from 12.9% to 4.6%.
🟡Profit is decliningFinancial
Net profit is down 91% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 38% 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 85% 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 86% 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 ₹7 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 12.9% to 4.6%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Returns on shareholder capital are falling
ROE has dropped from 17.0% to 1.6%. 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.
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 3%✓ 4.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Interest cover stays above 3x✗ 2.9x
How much operating profit can fall before interest stops being comfortably covered.
3Free cash flow remains positive✓ ₹7 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✗ 3.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

6 good · 2 neutral · 3 weak

Market Cap

₹103 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

9.9x

Cheap

Cheap against the generic band

P/B Ratio

0.45x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹14.39

Profitable

Profitable on a per-share basis

ROE

1.6%

Weak

Weak capital efficiency

ROCE

3.0%

Weak

Low return on total capital employed

Debt/Equity

0.13x

Low

Conservative leverage

Revenue Growth (YoY)

-1.4%

Shrinking

Sales are contracting

Profit Growth (YoY)

135.7%

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

₹7 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

1.6%

Weak

Thin margins leave little room for error

Net Margin

1.9%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.82

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.64

Defensive

Steadier than the market

52W Range Position

82%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

142.9 / 138.9

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

56.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹559 Cr	₹471 Cr	₹522 Cr	₹532 Cr	-1.6%
EBITDA	₹72 Cr	₹24 Cr	₹7 Cr	₹24 Cr	-30.4%
EBITDA Margin	12.9%	5.2%	1.4%	4.6%	—
PAT (Net Profit)	₹40 Cr	₹1 Cr	-₹10 Cr	₹4 Cr	-55.1%
EPS	₹55.76	₹1.81	₹-14.17	₹5.06	-55.1%
ROE	17.0%	0.6%	-4.5%	1.6%	—
ROCE	22.3%	2.4%	-4.4%	3.0%	—
Total Debt	₹50 Cr	₹44 Cr	₹37 Cr	₹30 Cr	-14.9%
Free Cash Flow	₹2 Cr	₹8 Cr	₹8 Cr	₹7 Cr	+45.5%

🟡 Revenue has been broadly flat over 3 years (-1.6% a year).

🔴 EBITDA has shrunk at 30.4% a year over 3 years.

🔴 EBITDA Margin has fallen from 12.9% to 4.6% over 3 years (-8.3 pts).

🔴 PAT (Net Profit) has shrunk at 55.1% a year over 3 years.

🔴 EPS has shrunk at 55.1% a year over 3 years.

🔴 ROE has fallen from 17.0% to 1.6% over 3 years (-15.4 pts).

🔴 ROCE has fallen from 22.3% to 3.0% over 3 years (-19.3 pts).

🟢 Total Debt has shrunk at 14.9% a year over 3 years.

🟢 Free Cash Flow has grown at 45.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹318 Cr

Total Liabilities

₹89 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹19 Cr

Capex

-₹12 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

62.2%

Corporate Actions

Ex-Dividend Date

23 Aug 2024

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 positive5 general

Deepak Spinners Share Price Near 52-Week High, 3.02% Up

Univest, 30 Sept

Deepak Spinners Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

Deepak Spinners sets 44th AGM for August 13, 2026

scanx.trade, 20 Jul

Deepak Spinners Rallies 20%, Hits Record High After Dolly Khanna Picks Stake

NDTV Profit, 17 Apr

Nitin Spinners: This textile stock hit new high, zoomed 104% from Jan low

Business Standard, 25 Aug

Deepak Spinners returns to profit in FY26, revenue rises

scanx.trade, 26 MayResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

Revenue growth is negative (-1.4%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health · Valuation

WeakBusiness Quality · Growth · Profitability · Risk

Points for each in the Score ↑

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. 1 high-severity red flag sits above this conclusion and should be read first.

2 of 5 tripwires tripped — Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑