Eastern Treads Limited

Consumer Cyclical — Auto Parts · BSE

₹31.02+₹1.86 (+6.38%)

DalalBaazaar Score

21 / 100

🔴 Weak

Verdict

HIGH RISK

Risk

Very High

Driven by negative shareholders' equity — the company owes more than it owns, short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

In simple words: The company owes more than it owns — years of losses have wiped out its net worth, but sales are shrinking. Solvency — whether it can keep funding itself at all — is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 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 Eastern Treads Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Eastern Treads Limited manufactures, sells, and deals in tread rubber, rubber-based adhesives, tyre retreading accessories, and retreading services in India.

IndustryAuto Parts

SectorConsumer Cyclical

Employees179

Annual revenue₹61 Cr

How does it make money?

Turns over ₹61 Cr a year. Of every ₹100 of sales, about ₹0 reaches shareholders as profit, with ₹3 left at the operating level before interest, tax and depreciation. Each of its 179 employees supports ₹33.8 lakh of revenue a year, the signature of a people-led business.

EBITDA margin2.5%

Net margin0.1%

Revenue / employee₹33.8 lakh

Who are its competitors?

The closest listed comparisons in its industry are BOSCH LIMITED, MARUTI SUZUKI INDIA LTD., TVS MOTOR COMPANY LTD, EICHER MOTORS LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

BOSCH LIMITEDP/E 56.9x · ROE 15.9%

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

TVS MOTOR COMPANY LTDP/E 56.8x · ROE 35.8%

EICHER MOTORS LTDP/E 34.7x · ROE 23.0%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +4% while net margin moved -101% 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+4%

Margin effect-101%

DalalBaazaar Score

21/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Shareholders' equity is negative — accumulated losses exceed the capital in the business

Quality vs. Valuation

Company Quality

21/ 100

Weak

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

Valuation

30/ 100

Expensive

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

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

258.5x

Sector Median

45.7x

median of 4 sector peers

⚠️Against its sector it trades 466% above the peer median of 45.7x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Expensive

45.7x median of 4 peers · +466%

vs. generic bands

N/A

Multiples unreliable — equity base is negative

P/E (Trailing)

258.5x

P/B

—

EV/EBITDA

27.3x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well1

Margins are improving
EBITDA margin is up from -5.1% to 2.5% over 3 years.

🔴 What Needs Attention2

Negative shareholders' equity
Liabilities exceed assets — this is a solvency question that sits above every other consideration here.
Short-term liquidity is tight
Current ratio of 0.59 — near-term obligations exceed near-term assets.

Red Flags

3 items require attention · 2 high · 1 watch

🔴Negative shareholders' equityFinancial
Liabilities exceed assets — accumulated losses have wiped out the company's net worth.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.0x — little room if earnings dip.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.59 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -5.1% to 2.5%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.

🔴 Bear CaseWhat could go wrong?

Solvency comes before everything else
Liabilities exceed assets. Until net worth is rebuilt, the equity is a claim on a business that owes more than it owns, and further losses or a funding squeeze can leave shareholders with nothing.
The debt load needs earnings to hold up
Debt is 17.0x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
A premium to the sector to defend
It trades 466% above the peer median. That premium needs a reason that persists, or it closes.
Growth barely outpaces inflation
Revenue compounding at 1.3% 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.
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 1%✓ 2.5%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 17.0x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Interest cover stays above 3x✗ 1.0x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✗ 1.3% CAGR
Latest reported year was -15.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹0 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

3 / 9 checks passed

✗ Shareholders' equity is positive (assets exceed liabilities)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ 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

3 good · 4 neutral · 4 weak

Market Cap

₹16 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

258.5x

Expensive

Expensive — verify against sector peers

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

₹0.12

Profitable

Profitable on a per-share basis

ROE

Not meaningful

Negative equity

Return on equity can't be read when equity itself is negative

ROCE

Not available

No data

Source didn't return this field

Debt/Equity

Not meaningful

Negative equity

Shareholders' equity is negative, so this ratio can't be read

Revenue Growth (YoY)

-15.6%

Shrinking

Sales are contracting

Profit Growth (YoY)

102.8%

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

₹0 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹31.02

Operating Margin

3.9%

Weak

Thin margins leave little room for error

Net Margin

0.1%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.59

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.17

Defensive

Steadier than the market

52W Range Position

61%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

29.8 / 30.0

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

54.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹58 Cr	₹58 Cr	₹58 Cr	₹61 Cr	+1.3%
EBITDA	-₹3 Cr	₹1 Cr	-₹1 Cr	₹2 Cr	—
EBITDA Margin	-5.1%	1.5%	-1.2%	2.5%	—
PAT (Net Profit)	-₹7 Cr	-₹3 Cr	-₹3 Cr	₹0 Cr	—
EPS	₹-13.82	₹-5.63	₹-5.42	₹0.15	—
ROCE	-72.9%	-107.5%	—	—	—
Total Debt	₹28 Cr	₹22 Cr	₹24 Cr	₹26 Cr	-1.8%
Free Cash Flow	₹4 Cr	₹3 Cr	-₹0 Cr	₹0 Cr	-71.0%

🟡 Revenue has been broadly flat over 3 years (1.3% a year).

🟢 EBITDA has turned positive, from -₹3 Cr to ₹2 Cr.

🟢 EBITDA Margin has risen from -5.1% to 2.5% over 3 years (+7.6 pts).

🟢 PAT (Net Profit) has turned positive, from -₹7 Cr to ₹0 Cr.

🟢 EPS has turned positive, from ₹-13.82 to ₹0.15.

🟡 Total Debt has been broadly flat over 3 years (-1.8% a year).

🔴 Free Cash Flow has shrunk at 71.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹35 Cr

Total Liabilities

₹48 Cr

Total Debt

₹26 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹2 Cr

Capex

-₹2 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

82.5%

Corporate Actions

Ex-Dividend Date

29 Jun 2017

Peer Comparison

Company	P/E	ROE
BOSCH LIMITED	56.9x	15.9%
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TVS MOTOR COMPANY LTD	56.8x	35.8%
EICHER MOTORS LTD	34.7x	23.0%

Recent News

1 mixed5 general

Eastern Treads Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

Eastern Treads schedules AGM for Sept 29, proposes Navas Meeran as MD

scanx.trade, 04 Sept

Eastern Treads Ltd. Financials – Balance Sheet, Profit & Loss, Cash Flow

Value Research, 30 Aug

Eastern Treads re-appoints RGN Price and Co. as Internal Auditor

scanx.trade, 20 May

Q4 results 2026: Lenskart to Grasim among companies to declare Q4 results today; check full list here

Livemint, 20 MayResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

Eastern Treads returns to profit in FY26

scanx.trade, 21 May

Watch Items

Revenue growth is negative (-15.6%) 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.
2 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

🔴Business QualityWeak6/20

🔴Financial HealthStretched1/20

🔴GrowthWeak7.6/20

🔴ProfitabilityWeak1.5/15

🔴ValuationDemanding4.5/15

🔴RiskHigh0.5/10

Avoid until solvency is resolved

Eastern Treads Limited owes more than it owns. Whatever the operating numbers show, the equity is a residual claim on a business with negative net worth, and that question has to be settled before any of the rest is worth weighing. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 1%2.5%
✗Debt / EBITDA falls below 3x17.0x
✗Interest cover stays above 3x1.0x
✗Revenue growth stays above 4% a year1.3% CAGR
✓Free cash flow remains positive₹0 Cr