Dhanalaxmi Roto Spinners Limited

Basic Materials — Paper & Paper Products · BSE

₹69.00+₹2.31 (+3.46%)

DalalBaazaar Score

52 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity, falling profits.

In simple words: Reasonable but unspectacular business quality, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Dhanalaxmi Roto Spinners Limited trades in paper and wood pulp in India.

IndustryPaper & Paper Products

SectorBasic Materials

Employees6

Annual revenue₹276 Cr

How does it make money?

Turns over ₹276 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹3 left at the operating level before interest, tax and depreciation. Each of its 6 employees supports ₹46.01 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹46.01 Cr

Who are its competitors?

The closest listed comparisons in its industry are TATA STEEL LIMITED, JSW STEEL LIMITED, ULTRATECH CEMENT LIMITED, ASIAN PAINTS 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 14.5% 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 ROE22.3%

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 +37% while net margin moved -25% 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+37%

Margin effect-25%

DalalBaazaar Score

52/ 100

Moderate

Weighted across six categories. Every point is explained below.

• ROCE of 14.5% is adequate but not distinctive
✗ ROCE has fallen by 10.8 points — returns are eroding
✗ EBITDA margin of 3.5% is thin — little cushion if costs rise
✗ Net margin of 2.4% is slim
• Revenue has compounded at 11.1% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

48/ 100

Average

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

Valuation

70/ 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

7.9x

3Y Median

7.4x

40 monthly readings · mean 6.7x · range 2.6x–13.1x

Sector Median

28.7x

median of 4 sector peers

🟡Currently trading close to its 3y median of 7.4x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 73% below the peer median of 28.7x.

vs. its own history

Fair

7.4x median over 40 months · +6%

vs. sector peers

Cheap

28.7x median of 4 peers · -73%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

3.4x

PEG

7.30

What's Good / What's Bad

🟢 What's Going Well2

Cash generation is improving
Free cash flow is up 794% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 5.2% to 3.5% over 3 years.
Return on equity is falling
ROE has dropped from 18.3% to 11.0% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 25.3% to 14.5% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 2 high

🔴High leverageFinancial
Debt/Equity of 3.44x — earnings must service borrowings before shareholders see anything.
🔴Inventory building faster than salesFinancial
Inventory up 362% against revenue up 37% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 73% 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 5.2% to 3.5%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 3.44x. Interest is payable whether or not the business has a good year.
Returns on shareholder capital are falling
ROE has dropped from 18.3% to 11.0%. 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

1Revenue growth stays above 8% a year✓ 11.1% CAGR
Latest reported year was -6.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 1%✓ 3.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹16 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.2x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 12%✓ 14.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

4 / 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

4 good · 4 neutral · 3 weak

Market Cap

₹54 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

7.9x

Cheap

Cheap against the generic band

P/B Ratio

0.86x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹8.77

Profitable

Profitable on a per-share basis

ROE

11.0%

Moderate

Moderate capital efficiency

ROCE

14.5%

Moderate

Moderate return on the capital in the business

Debt/Equity

3.44x

High

High leverage

Revenue Growth (YoY)

-6.1%

Shrinking

Sales are contracting

Profit Growth (YoY)

-0.9%

Falling

Profits are shrinking

Dividend Yield

1.45%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹16 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

4.6%

Weak

Thin margins leave little room for error

Net Margin

2.4%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.57

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.22

Defensive

Steadier than the market

52W Range Position

14%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

69.3 / 72.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

42.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹201 Cr	₹197 Cr	₹185 Cr	₹276 Cr	+11.1%
EBITDA	₹10 Cr	₹17 Cr	₹12 Cr	₹10 Cr	-2.6%
EBITDA Margin	5.2%	8.5%	6.6%	3.5%	—
PAT (Net Profit)	₹7 Cr	₹13 Cr	₹9 Cr	₹7 Cr	+1.1%
EPS	₹8.53	₹33.52	₹10.95	₹8.81	+1.1%
ROE	18.3%	26.7%	15.0%	11.0%	—
ROCE	25.3%	36.8%	20.5%	14.5%	—
Total Debt	₹2 Cr	₹1 Cr	₹7 Cr	₹2 Cr	-3.1%
Free Cash Flow	₹2 Cr	₹23 Cr	-₹7 Cr	₹16 Cr	+107.5%

🟢 Revenue has grown at 11.1% a year over 3 years.

🔴 EBITDA has shrunk at 2.6% a year over 3 years.

🔴 EBITDA Margin has fallen from 5.2% to 3.5% over 3 years (-1.7 pts).

🟡 PAT (Net Profit) has been broadly flat over 3 years (1.1% a year).

🟡 EPS has been broadly flat over 3 years (1.1% a year).

🔴 ROE has fallen from 18.3% to 11.0% over 3 years (-7.3 pts).

🔴 ROCE has fallen from 25.3% to 14.5% over 3 years (-10.8 pts).

🟢 Total Debt has shrunk at 3.1% a year over 3 years.

🟢 Free Cash Flow has grown at 107.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹101 Cr

Total Liabilities

₹38 Cr

Cash & Equivalents

₹24 Cr

Operating Cash Flow

₹16 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

68.9%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

11 Sept 2026

Peer Comparison

Company	P/E	ROE
TATA STEEL LIMITED	19.8x	10.8%
JSW STEEL LIMITED	12.0x	24.7%
ULTRATECH CEMENT LIMITED	37.6x	11.1%
ASIAN PAINTS LIMITED	46.9x	22.3%

Recent News

2 positive4 general

Dhanalaxmi Roto Spinners Ltd is Rated Strong Sell

MarketsMojo, 15 Oct

Dhanalaxmi Roto promoter group member buys 15,000 shares on BSE

scanx.trade, 28 Sept

Buy Before March 26 To Get Free Shares! 1:1 Bonus Issue Coming — What Investors Should Do Now?

Goodreturns, 13 MarCapital return

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

Bonus shares: THESE three stocks to trade ex-bonus next week (Beta Drugs, Dhanalaxmi Roto Spinners, and KBC Global)

Livemint, 22 Mar

15 Stocks in Focus This Week for Dividends, Bonuses, and Rights Issues

Groww, 24 Mar

Dividend stocks alert! Last chance to qualify- Kalyan Jewellers, Aarti Industries, Blue Jet, Bajaj Healthcare, others

Livemint, 11 SeptCapital return

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

Watch Items

Revenue growth is negative (-6.1%) 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 ↑

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.

All 5 tripwires holding · see Key things to watch ↑