Karnika Industries Limited

Sector n/a · NSE

₹311.35−₹0.20 (−0.06%)

DalalBaazaar Score

67 / 100

🟢 Good

Verdict

REASONABLE

Risk

Moderate

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

In simple words: Strong business and financial position, with both sales and profits growing well. Nothing on this snapshot stands out as an immediate concern — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 pm

Constructive picture on fundamentals. Profitability, leverage and growth metrics are broadly healthy on this snapshot. That said, valuation should still be checked against direct sector peers (not just the generic P/E bands used here) before treating this as a buy signal.

Understanding the Business

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

How does it make money?

Turns over ₹248 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹17 left at the operating level before interest, tax and depreciation.

EBITDA margin16.6%

Net margin11.3%

What is its competitive advantage?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 44.6%. Returns that high normally get competed away; when they persist, something is protecting them. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

ROCE44.6%

ROE29.0%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved +99% while net margin moved +71% 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+99%

Margin effect+71%

DalalBaazaar Score

67/ 100

Good

Weighted across six categories. Every point is explained below.

✗ Micro Cap: thinner liquidity and sharper drawdowns are normal

Quality vs. Valuation

Company Quality

78/ 100

Good

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

Valuation

18/ 100

Expensive

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

A good business, but the price already reflects that. The quality is real; the question is whether you are overpaying for it today.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

No P/E available

P/E (Trailing)

—

P/B

—

EV/EBITDA

48.8x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 13.3% to 16.6% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
High return on capital employed
ROCE of 44.6% is the mark of a business that converts capital into profit efficiently.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Debt is rising
Total debt is up 44% over 3 years — worth checking what it funded.
Return on equity is falling
ROE has dropped from 45.6% to 29.0% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 89.1% to 44.6% — often a sign of competition or overexpansion.

Red Flags

1 item require attention · 1 watch

🟡Debt is increasingFinancial
Total debt is up 44% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 44.6% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Margin expansion has further to run
EBITDA margin has risen from 13.3% to 16.6%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
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?

Returns on shareholder capital are falling
ROE has dropped from 45.6% to 29.0%. 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.

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

1Revenue growth stays above 19% a year✓ 25.9% CAGR
Latest reported year was 44.2%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 15%✓ 16.6%
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✓ 1.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 42%✓ 44.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

9 / 9 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
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

5 good · 6 neutral · 0 weak

Market Cap

₹1,930 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not available

No data

Source didn't return this field

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

Not available

No data

Source didn't return this field

ROE

29.0%

Strong

Strong capital efficiency

ROCE

44.6%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.78x

Moderate

Moderate leverage

Revenue Growth (YoY)

44.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

55.1%

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

₹311.35

Gross Margin

21.3%

Proxy

Operating margin unavailable — showing gross margin instead

Net Margin

11.3%

Good

Strong bottom-line conversion

Current Ratio

1.60

Comfortable

Healthy short-term liquidity

Technical Snapshot

SMA 20 / SMA 50

124.8 / 120.0

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

68.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹125 Cr	₹127 Cr	₹172 Cr	₹248 Cr	+25.9%
EBITDA	₹17 Cr	₹21 Cr	₹28 Cr	₹41 Cr	+35.5%
EBITDA Margin	13.3%	16.3%	16.3%	16.6%	—
PAT (Net Profit)	₹8 Cr	₹10 Cr	₹18 Cr	₹28 Cr	+50.6%
EPS	₹1.32	₹1.63	₹2.91	—	—
ROE	45.6%	19.0%	25.4%	29.0%	—
ROCE	89.1%	33.3%	39.4%	44.6%	—
Total Debt	₹52 Cr	₹52 Cr	₹60 Cr	₹76 Cr	+13.0%
Free Cash Flow	-₹55 Cr	-₹10 Cr	₹1 Cr	₹16 Cr	—

🟢 Revenue has grown at 25.9% a year over 3 years.

🟢 EBITDA has grown at 35.5% a year over 3 years.

🟢 EBITDA Margin has risen from 13.3% to 16.6% over 3 years (+3.3 pts).

🟢 PAT (Net Profit) has grown at 50.6% a year over 3 years.

🔴 ROE has fallen from 45.6% to 29.0% over 3 years (-16.6 pts).

🔴 ROCE has fallen from 89.1% to 44.6% over 3 years (-44.6 pts).

🔴 Total Debt has grown at 13.0% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹55 Cr to ₹16 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹215 Cr

Total Liabilities

₹117 Cr

Total Debt

₹76 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹16 Cr

Capex

-₹0 Cr

Recent News

3 mixed3 general

We Ran A Stock Scan For Earnings Growth And Karnika Industries (NSE:KARNIKA) Passed With Ease

Simply Wall Street, 13 OctResults

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

Karnika Industries Share Price rises 8.41% on valuation

Univest, 12 OctPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

SageOne buys 3.2% stake in kidswear manufacturer Karnika Industries

Moneycontrol.com, 06 Jul

Karnika Industries Ltd Peer Comparison – Compare with Others

Value Research, 31 Aug

This Small-Cap Textile Stock Jumps 7% on Tuesday After Samit Vartak-Led SageOne Fund Buys 19,91,000 Shares Through Bulk Deal

Dalal Street Investment Journal, 07 Jul

Karnika Industries share price Jumps 7% as SageOne Buys 3.2% Stake

Univest, 07 JulPrice move

🟡Mixed / dependsA price move, which is not by itself a change in the business. Worth finding the cause before reading it as either good or bad.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Sector/industry classification unavailable — verify manually for peer comparison.
3 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

🟡Business QualityAdequate12.6/20

🟢Financial HealthStrong16.6/20

🟢GrowthStrong18.5/20

🟢ProfitabilityStrong10.4/15

🟡ValuationFair7.5/15

🔴RiskHigh1.8/10

Good business, demanding price

The quality is real and the price already reflects it. Buying here is a bet that the business keeps compounding for long enough to grow into the multiple — which good businesses often do, but it removes the margin for error that a lower price would have given you.

This thesis breaks if

✓Revenue growth stays above 19% a year25.9% CAGR
✓EBITDA margin holds above 15%16.6%
✓Free cash flow remains positive₹16 Cr
✓Debt / EBITDA stays below 2x1.8x
✓ROCE stays above 42%44.6%