K G Denim Limited

Consumer Cyclical — Apparel Manufacturing · BSE

₹14.42+₹0.07 (+0.49%)

DalalBaazaar Score

19 / 100

🔴 Poor

Verdict

HIGH RISK

Risk

Very High

Driven by negative shareholders' equity — the company owes more than it owns, negative free cash flow, 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 K G Denim Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

K G Denim Limited manufactures and sells denim, apparel, and home fabrics internationally. The company operates through the Textile, Power, and Garment segments. The company offers home textile products, readymade garments, and apparel products. It operates a power plant.

IndustryApparel Manufacturing

SectorConsumer Cyclical

Employees134

Annual revenue₹41 Cr

How does it make money?

Turns over ₹41 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹40 left at the operating level before interest, tax and depreciation. Each of its 134 employees supports ₹30.8 lakh of revenue a year, the signature of a people-led business.

EBITDA margin39.8%

Net margin0.8%

Revenue / employee₹30.8 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 12.2% 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.

ROCE12.2%

Peer median ROE25.9%

What has been driving growth?

Sales and margins have both contributed to where profit is now. Over 3 years revenue moved -92% while net margin moved -114% 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-92%

Margin effect-114%

DalalBaazaar Score

19/ 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

18/ 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

3.0x

Sector Median

69.2x

median of 4 sector peers

🟢Against its sector it trades 96% below the peer median of 69.2x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Cheap

69.2x median of 4 peers · -96%

vs. generic bands

N/A

Multiples unreliable — equity base is negative

P/E (Trailing)

3.0x

P/B

—

EV/EBITDA

19.6x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well1

Margins are improving
EBITDA margin is up from -0.3% to 39.8% over 3 years.

🔴 What Needs Attention3

Debt is rising
Total debt is up 43% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Negative shareholders' equity
Liabilities exceed assets — this is a solvency question that sits above every other consideration here.

Red Flags

5 items require attention · 3 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 1.0x — 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.
🟡Debt is increasingFinancial
Total debt is up 43% over 3 years.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹38 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -0.3% to 39.8%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 96% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 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 17.4x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
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
3 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

1EBITDA margin holds above 38%✓ 39.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 17.4x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹38 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.0x
How much operating profit can fall before interest stops being comfortably covered.

Investment Checklist

5 / 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

₹37 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

3.0x

Cheap

Cheap against the generic band

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

₹4.85

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

12.2%

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)

-64.7%

Shrinking

Sales are contracting

Profit Growth (YoY)

100.9%

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

-₹38 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹14.42

Operating Margin

-128.2%

Weak

Thin margins leave little room for error

Net Margin

36.7%

Good

Strong bottom-line conversion

Current Ratio

1.19

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.45

Defensive

Steadier than the market

52W Range Position

26%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

14.2 / 14.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

48.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹511 Cr	₹252 Cr	₹64 Cr	₹41 Cr	-56.8%
EBITDA	-₹1 Cr	-₹0 Cr	-₹30 Cr	₹16 Cr	—
EBITDA Margin	-0.3%	-0.1%	-47.4%	39.8%	—
PAT (Net Profit)	-₹28 Cr	-₹26 Cr	-₹36 Cr	₹0 Cr	—
EPS	₹-10.92	₹-9.99	₹-13.97	₹0.12	—
ROE	-60.3%	-111.9%	—	—	—
ROCE	-16.5%	-19.5%	-10.2%	12.2%	—
Total Debt	₹200 Cr	₹218 Cr	₹245 Cr	₹285 Cr	+12.6%
Free Cash Flow	₹47 Cr	₹6 Cr	-₹2 Cr	-₹38 Cr	—

🔴 Revenue has shrunk at 56.8% a year over 3 years.

🟢 EBITDA has turned positive, from -₹1 Cr to ₹16 Cr.

🟢 EBITDA Margin has risen from -0.3% to 39.8% over 3 years (+40.0 pts).

🟢 PAT (Net Profit) has turned positive, from -₹28 Cr to ₹0 Cr.

🟢 EPS has turned positive, from ₹-10.92 to ₹0.12.

🟢 ROCE has risen from -16.5% to 12.2% over 3 years (+28.7 pts).

🔴 Total Debt has grown at 12.6% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹47 Cr to -₹38 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹367 Cr

Total Liabilities

₹381 Cr

Total Debt

₹285 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹38 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

69.3%

Corporate Actions

Ex-Dividend Date

17 Sept 2019

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

2 positive4 general

KG Denim Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 08 Sept

KG Denim seeks shareholder nod to sell land in Coimbatore

scanx.trade, 09 Jun

K G Denim returns to profitability in FY26, approves asset sale

scanx.trade, 29 May

Kings Infra Ventures consolidated net profit rises 90.44% in the March 2026 quarter

Business Standard, 30 MayResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

KG Denim Limited Reports Q3FY26 Loss of ₹413 Lakhs, Submits Publication Compliance

scanx.trade, 19 Feb

Small-Cap Stock Under Rs 100 Confirms Record Date For Stock Split & Bonus Issue, Stock At 52W-Low; Buy?

Goodreturns, 26 MarCapital 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 (-64.7%) 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.
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

🔴GrowthWeak5/20

🔴ProfitabilityWeak1.5/15

🔴ValuationDemanding4.5/15

🔴RiskHigh0.5/10

Avoid until solvency is resolved

K G Denim 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. 3 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 38%39.8%
✗Debt / EBITDA falls below 3x17.4x
✗Free cash flow remains positive-₹38 Cr
✗Interest cover stays above 3x1.0x