KG Petrochem Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹193.85+₹8.60 (+4.64%)

DalalBaazaar Score

43 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

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

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. The direction of profits is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:07 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 KG Petrochem Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

KG Petrochem Limited manufactures, markets, and sells textile products in India and internationally. It offers garments, technical textiles, and allied products; and terry towels.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees1,273

Annual revenue₹291 Cr

How does it make money?

Turns over ₹291 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹9 left at the operating level before interest, tax and depreciation. Each of its 1,273 employees supports ₹22.9 lakh of revenue a year, the signature of a people-led business.

EBITDA margin8.8%

Net margin1.5%

Revenue / employee₹22.9 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 6.1% 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.

ROCE6.1%

ROE1.5%

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 +4% while net margin moved -46% 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-46%

DalalBaazaar Score

43/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of 6.1% is below 10% — capital is not working hard
✗ ROCE has fallen by 3.9 points — returns are eroding
✗ EBITDA margin of 8.8% is thin — little cushion if costs rise
✗ Net margin of 1.0% is slim
• Revenue has compounded at 1.3% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

41/ 100

Weak

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

Valuation

59/ 100

Fair

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

36.4x

3Y Median

20.9x

40 monthly readings · mean 53.5x · range 13.4x–167.1x

Sector Median

69.2x

median of 4 sector peers

⚠️Current valuation is approximately 74% above its 3y median of 20.9x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 47% below the peer median of 69.2x.

vs. its own history

Expensive

20.9x median over 40 months · +74%

vs. sector peers

Cheap

69.2x median of 4 peers · -47%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

36.4x

P/B

0.54x

EV/EBITDA

7.3x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Debt is being paid down
Total debt is down 32% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 11.3% to 8.8% over 3 years.
Return on capital is falling
ROCE has declined from 10.0% to 6.1% — often a sign of competition or overexpansion.
Valuation above its historical average
At 36.4x the stock trades 74% above its own median of 20.9x.

Red Flags

3 items require attention · 1 high · 2 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 2.0x — little room if earnings dip.
🟡Profit is decliningFinancial
Net profit is down 44% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 2.5 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Deleveraging frees up earnings
Debt is down 32% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Cheaper than its peers
It trades 47% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹9 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.
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?

Margins are being competed away
EBITDA margin has fallen from 11.3% to 8.8%. 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 3.3x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
The price already assumes success
The stock trades 74% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
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.
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.

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

1EBITDA margin holds above 7%✓ 8.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.3x
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✗ 2.0x
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 -38.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹9 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

6 / 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

4 good · 3 neutral · 4 weak

Market Cap

₹101 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

36.4x

Fair

Fairly valued against the generic band

P/B Ratio

0.54x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹5.33

Profitable

Profitable on a per-share basis

ROE

1.5%

Weak

Weak capital efficiency

ROCE

6.1%

Weak

Low return on total capital employed

Debt/Equity

0.31x

Low

Conservative leverage

Revenue Growth (YoY)

-38.6%

Shrinking

Sales are contracting

Profit Growth (YoY)

-77.1%

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

₹9 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹193.85

ROA

0.4%

Weak

Assets generate little profit

Operating Margin

2.0%

Weak

Thin margins leave little room for error

Net Margin

1.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.58

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.06

Defensive

Steadier than the market

52W Range Position

31%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

187.3 / 177.0

Bullish alignment (short > long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

39.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹281 Cr	₹305 Cr	₹344 Cr	₹291 Cr	+1.3%
EBITDA	₹32 Cr	₹22 Cr	₹28 Cr	₹25 Cr	-6.9%
EBITDA Margin	11.3%	7.2%	8.2%	8.8%	—
PAT (Net Profit)	₹8 Cr	₹1 Cr	₹6 Cr	₹4 Cr	-17.5%
EPS	₹15.19	₹1.79	₹10.55	₹8.53	-17.5%
ROE	4.6%	0.5%	3.0%	2.4%	—
ROCE	10.0%	5.0%	7.6%	6.1%	—
Total Debt	₹124 Cr	₹121 Cr	₹121 Cr	₹85 Cr	-11.9%
Free Cash Flow	₹25 Cr	₹15 Cr	₹17 Cr	₹9 Cr	-29.6%

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

🔴 EBITDA has shrunk at 6.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 11.3% to 8.8% over 3 years (-2.5 pts).

🔴 PAT (Net Profit) has shrunk at 17.5% a year over 3 years.

🔴 EPS has shrunk at 17.5% a year over 3 years.

🔴 ROE has fallen from 4.6% to 2.4% over 3 years (-2.2 pts).

🔴 ROCE has fallen from 10.0% to 6.1% over 3 years (-3.9 pts).

🟢 Total Debt has shrunk at 11.9% a year over 3 years.

🔴 Free Cash Flow has shrunk at 29.6% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹334 Cr

Total Liabilities

₹148 Cr

Total Debt

₹85 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹15 Cr

Capex

-₹6 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

94.8%

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

KG Petrochem Lower Circuit Today: Price, Data and Peers

Univest, 15 Oct

KG Petrochem postpones board meeting to Aug 14 for Q1FY26 results

scanx.trade, 12 AugResults

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

EMMBI INDUSTRIES Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 15 Oct

CFEL Stock Price and Chart — NSE:CFEL

TradingView, 18 Aug

Government raises onion buffer stock purchase price 24% to Rs 15.80/kg

The Economic Times, 01 Jun

As petrochem costs soar, 80% of Gujarat’s detergent MSMEs shut down, say associations

The Indian Express, 12 Apr

Watch Items

Revenue growth is negative (-38.6%) 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.

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟢Financial HealthStrong14.7/20

🔴GrowthWeak5.9/20

🔴ProfitabilityWeak4.5/15

🟡ValuationFair7.5/15

🔴RiskHigh4.4/10

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 7%8.8%
✗Debt / EBITDA falls below 3x3.3x
✗Interest cover stays above 3x2.0x
✗Revenue growth stays above 4% a year1.3% CAGR
✓Free cash flow remains positive₹9 Cr