Gujarat Cotex Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹2.45+₹0.01 (+0.41%)

DalalBaazaar Score

52 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, the company is currently loss-making, micro-cap size, which brings thin liquidity.

In simple words: The company is currently losing money, though profits are falling even as sales grow. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:46 pm

Understanding the Business

Company site ↗

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

What does this company do?

Gujarat Cotex Limited manufactures, bleaches, weaves, prints, and sells textile fabrics and other materials in India. It also engages in the trading of plot lands; and hotel business.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees5

Annual revenue₹38 Cr

How does it make money?

Turns over ₹38 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 5 employees supports ₹7.69 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹7.69 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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 3.1% 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 +131% while net margin moved +361% 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+131%

Margin effect+361%

DalalBaazaar Score

52/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 1.5% is weak

Quality vs. Valuation

Company Quality

55/ 100

Average

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

Valuation

36/ 100

Expensive

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.

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

No P/E — the company is lossmaking

EV/EBITDA

21.2x

PEG

—

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 0.4% to 2.9% over 3 years.
Debt is being paid down
Total debt is down 38% over 3 years.
Cash generation is improving
Free cash flow is up 625% over 3 years.
Return on capital is rising
ROCE has improved from 0.4% to 3.1%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

2 items require attention · 1 high · 1 watch

🔴High leverageFinancial
Debt/Equity of 6.36x — earnings must service borrowings before shareholders see anything.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 18.0x to 5.4x.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 0.4% to 2.9%. 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 38% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
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 6.36x. Interest is payable whether or not the business has a good year.
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

1Revenue growth stays above 24% a year✓ 32.2% CAGR
Latest reported year was 30.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 1%✓ 2.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✓ ₹2 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 8%✗ 3.1%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

5 / 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

3 good · 2 neutral · 6 weak

Market Cap

₹23 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

0.52x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹-0.3

Loss-making

Negative earnings per share — the business is losing money

ROE

1.5%

Weak

Weak capital efficiency

ROCE

3.1%

Weak

Low return on total capital employed

Debt/Equity

6.36x

High

High leverage

Revenue Growth (YoY)

30.5%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-92.9%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

₹2 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

2.7%

Weak

Thin margins leave little room for error

Net Margin

-0.3%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.15

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.31

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

2.5 / 2.8

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

50.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹17 Cr	₹17 Cr	₹27 Cr	₹38 Cr	+32.2%
EBITDA	₹0 Cr	₹0 Cr	₹0 Cr	₹1 Cr	+166.4%
EBITDA Margin	0.4%	1.7%	1.5%	2.9%	—
PAT (Net Profit)	₹0 Cr	₹0 Cr	₹0 Cr	₹0 Cr	+120.0%
EPS	₹0.01	₹0.08	₹0.1	₹0.07	+122.6%
ROE	0.1%	2.9%	3.2%	1.5%	—
ROCE	0.4%	3.0%	3.1%	3.1%	—
Total Debt	₹1 Cr	₹1 Cr	₹3 Cr	₹0 Cr	-14.6%
Free Cash Flow	₹0 Cr	-₹4 Cr	-₹1 Cr	₹2 Cr	+93.6%

🟢 Revenue has grown at 32.2% a year over 3 years.

🟢 EBITDA has grown at 166.4% a year over 3 years.

🟢 EBITDA Margin has risen from 0.4% to 2.9% over 3 years (+2.5 pts).

🟢 PAT (Net Profit) has grown at 120.0% a year over 3 years.

🟢 EPS has grown at 122.6% a year over 3 years.

🟢 ROE has risen from 0.1% to 1.5% over 3 years (+1.4 pts).

🟢 ROCE has risen from 0.4% to 3.1% over 3 years (+2.7 pts).

🟢 Total Debt has shrunk at 14.6% a year over 3 years.

🟢 Free Cash Flow has grown at 93.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹18 Cr

Total Liabilities

₹12 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹2 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

40.2%

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

6 general

Penny stock under ₹5 hits 5% upper circuit after this business diversification move

Livemint, 17 Aug

Gujarat Cotex Limited Announces Rights Issue of ₹ 4,273.20 Lakhs Opening April 10, 2026

scanx.trade, 10 Apr

Penny Stock Below Rs 5: This Textile Stock Proposes New ‘Prabhat Oils’ and ‘Prabhat Infratech’ Divisions; Check Details

Dalal Street Investment Journal, 17 Aug

Penny Stock Rally Explained: What Gujarat Cotex Rights Issue Means

Samco, 27 Apr

Gujarat Cotex Ltd. Plans To Raise Rs. 42.73 Crore From Rights Issue; Last date For On-Market Renunciation Of REs Is May 5

Outlook Business, 02 May

Gujarat Cotex Rights Issue 2026 Date, Price, Allotment, Ratio

IPO Watch, 25 Mar

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

StrongFinancial Health · Growth

MiddlingValuation

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

1 of 5 tripwires tripped — ROCE stays above 8% · see Key things to watch ↑