Gokak Textiles Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹62.21−₹4.59 (−6.87%)

DalalBaazaar Score

16 / 100

🔴 Poor

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, the company is currently loss-making.

In simple words: The company owes more than it owns — years of losses have wiped out its net worth, with both sales and profits growing well. 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, 6:10 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 Gokak Textiles Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Gokak Textiles Limited manufactures and sells yarns, fabrics, and garments in India. The company operates through Textiles and Power segments.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees657

Annual revenue₹78 Cr

How does it make money?

Turns over ₹78 Cr a year. Of every ₹100 of sales, about ₹-47 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 657 employees supports ₹11.9 lakh of revenue a year, the signature of a people-led business.

EBITDA margin5.7%

Net margin-47.1%

Revenue / employee₹11.9 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.

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 -5.5% 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.

ROCE-5.5%

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 -31% while net margin moved +73% 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-31%

Margin effect+73%

DalalBaazaar Score

16/ 100

Poor

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

15/ 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.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

N/A

Multiples unreliable — equity base is negative

P/E (Trailing)

Not meaningful

P/B

—

EV/EBITDA

73.1x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 11% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 15.2% to 5.7% over 3 years.
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 0.34 — near-term obligations exceed near-term assets.

Red Flags

7 items require attention · 5 high · 2 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 -0.4x — little room if earnings dip.
🔴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.
🔴The company is lossmakingFinancial
Net profit of -₹37 Cr in the latest reported year.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 9.6 points, from 15.2% to 5.7%.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from -0.5x to -0.4x.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.34 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

No clear supporting case emerges from the available numbers.

🔴 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.
Margins are being competed away
EBITDA margin has fallen from 15.2% to 5.7%. 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 65.0x 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.

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

1EBITDA margin holds above 4%✓ 5.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 65.0x
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✗ -0.4x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹16 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

6 / 10 checks passed

✗ Shareholders' equity is positive (assets exceed liabilities)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ 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

₹40 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not meaningful

Loss-making

Earnings are negative, so a P/E multiple can't be read here

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

₹-45.08

Loss-making

Negative earnings per share — the business is losing money

ROE

Not meaningful

Negative equity

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

ROCE

-5.5%

Distorted

Distorted by the negative net worth — read this alongside the solvency flag, not on its own

Debt/Equity

Not meaningful

Negative equity

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

Revenue Growth (YoY)

52.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

17.4%

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

₹16 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹62.21

Operating Margin

6.2%

Average

Average margins

Net Margin

-32.9%

Weak

Very little revenue reaches the bottom line

Current Ratio

0.34

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.72

Defensive

Steadier than the market

52W Range Position

28%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

66.2 / 61.9

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

53.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹112 Cr	₹128 Cr	₹97 Cr	₹78 Cr	-11.4%
EBITDA	₹17 Cr	₹18 Cr	₹17 Cr	₹4 Cr	-36.3%
EBITDA Margin	15.2%	14.3%	17.2%	5.7%	—
PAT (Net Profit)	-₹30 Cr	-₹15 Cr	-₹44 Cr	-₹37 Cr	—
EPS	₹-46.92	₹-23.48	₹-68.37	₹-56.46	—
ROCE	-0.8%	2.6%	-6.8%	-5.5%	—
Total Debt	₹323 Cr	₹268 Cr	₹295 Cr	₹288 Cr	-3.8%
Free Cash Flow	-₹13 Cr	₹13 Cr	₹41 Cr	₹16 Cr	—

🔴 Revenue has shrunk at 11.4% a year over 3 years.

🔴 EBITDA has shrunk at 36.3% a year over 3 years.

🔴 EBITDA Margin has fallen from 15.2% to 5.7% over 3 years (-9.6 pts).

🔴 ROCE has fallen from -0.8% to -5.5% over 3 years (-4.7 pts).

🟢 Total Debt has shrunk at 3.8% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹13 Cr to ₹16 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹258 Cr

Total Liabilities

₹350 Cr

Total Debt

₹288 Cr

Cash & Equivalents

₹4 Cr

Operating Cash Flow

₹16 Cr

Capex

-₹1 Cr

Shareholding (proxy)

Institutional Holding

4.5%

Insider Holding

73.6%

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

1 mixed5 general

Compare GOKAK TEXTILES with

Equitymaster, 14 Oct

Gokak Textiles AGM voting results: All FY26 resolutions passed with majority

scanx.trade, 24 SeptResults

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

Gokak Textiles Announces Deemed Statutory Closure of Garment Division at Belagavi

EquityBulls, 06 Oct

Gokak Textiles (NSE: GOKAKTEX): Catalysts and Risks Ahead

Kalkine India, 10 Sept

Cotton Market Size, Share, Trends & Analysis Report, 2033

Market Data Forecast, 26 Aug

Shapoorji Pallonji Group stocks zoom 20% as RBI asks Tata Sons to list

Business Standard, 15 Sept

Watch Items

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

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak1.5/15

🔴ValuationDemanding4.5/15

🔴RiskHigh0.5/10

Avoid until solvency is resolved

Gokak Textiles 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. 5 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 4%5.7%
✗Debt / EBITDA falls below 3x65.0x
✗Interest cover stays above 3x-0.4x
✓Free cash flow remains positive₹16 Cr