Kitex Garments Limited

Consumer Cyclical — Apparel Manufacturing · NSE

₹123.00+₹6.81 (+5.86%)

DalalBaazaar Score

37 / 100

🔴 Weak

Verdict

CAUTION

Risk

Very High

Driven by moderate debt load, the company is currently loss-making, micro-cap size, which brings thin liquidity.

In simple words: The company is currently losing money, 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, 6:09 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 Kitex Garments Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Kitex Garments Limited manufactures and sells fabric and readymade garments for infants and children in India, the United States, and internationally. It also manufactures and exports knitted fabrics and infant garments.

IndustryApparel Manufacturing

SectorConsumer Cyclical

Employees4,512

Annual revenue₹626 Cr

How does it make money?

Turns over ₹626 Cr a year. Of every ₹100 of sales, about ₹1 reaches shareholders as profit, with ₹13 left at the operating level before interest, tax and depreciation. Each of its 4,512 employees supports ₹13.9 lakh of revenue a year, the signature of a people-led business.

EBITDA margin12.7%

Net margin0.9%

Revenue / employee₹13.9 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 1.9% 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.

ROCE1.9%

ROE0.6%

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 +19% while net margin moved -91% 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+19%

Margin effect-91%

DalalBaazaar Score

37/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ ROE of 0.6% is weak
✗ ROE has fallen by 6.1 points over the period

Quality vs. Valuation

Company Quality

37/ 100

Weak

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

Valuation

25/ 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

No P/E — the company is lossmaking

P/E (Trailing)

Not meaningful

P/B

2.34x

EV/EBITDA

44.4x

PEG

—

Dividend Yield

0.41%

What's Good / What's Bad

🟢 What's Going Well2

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention4

Margins are compressing
EBITDA margin has slipped from 22.3% to 12.7% over 3 years.
Debt is rising
Total debt is up 4698% over 3 years — worth checking what it funded.
Return on equity is falling
ROE has dropped from 6.7% to 0.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 8.0% to 1.9% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 3 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 4698% over 3 years, from ₹25 Cr to ₹1,199 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.2x — little room if earnings dip.
🔴Significant margin compressionFinancial
EBITDA margin has fallen 9.6 points, from 22.3% to 12.7%.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 15.5x to 1.2x.
🟡Profit is decliningFinancial
Net profit is down 90% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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 22.3% to 12.7%. 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 15.1x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Growth barely outpaces inflation
Revenue compounding at 5.8% 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.
Returns on shareholder capital are falling
ROE has dropped from 6.7% to 0.6%. 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.
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 11%✓ 12.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 15.1x
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✗ 1.2x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✓ 5.8% CAGR
Latest reported year was -19.5%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹18 Cr
Profit that never becomes cash eventually stops being profit.

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

1 good · 4 neutral · 6 weak

Market Cap

₹2,454 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

2.34x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹-1.2

Loss-making

Negative earnings per share — the business is losing money

ROE

0.6%

Weak

Weak capital efficiency

ROCE

1.9%

Weak

Low return on total capital employed

Debt/Equity

0.97x

Moderate

Moderate leverage

Revenue Growth (YoY)

-19.5%

Shrinking

Sales are contracting

Profit Growth (YoY)

-95.7%

Falling

Profits are shrinking

Dividend Yield

0.41%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹18 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹123

P/E (Forward)

6.5x

Operating Margin

-4.7%

Weak

Thin margins leave little room for error

Net Margin

-3.8%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.50

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.50

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

117.5 / 124.2

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

59.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹528 Cr	₹577 Cr	₹910 Cr	₹626 Cr	+5.8%
EBITDA	₹118 Cr	₹114 Cr	₹219 Cr	₹80 Cr	-12.3%
EBITDA Margin	22.3%	19.7%	24.1%	12.7%	—
PAT (Net Profit)	₹58 Cr	₹56 Cr	₹139 Cr	₹6 Cr	-53.2%
EPS	₹2.88	₹2.82	₹6.95	₹0.3	-53.0%
ROE	6.7%	6.2%	13.4%	0.6%	—
ROCE	8.0%	5.3%	8.8%	1.9%	—
Total Debt	₹25 Cr	₹681 Cr	₹1,082 Cr	₹1,199 Cr	+263.4%
Free Cash Flow	-₹121 Cr	-₹655 Cr	-₹451 Cr	₹18 Cr	—

🟢 Revenue has grown at 5.8% a year over 3 years.

🔴 EBITDA has shrunk at 12.3% a year over 3 years.

🔴 EBITDA Margin has fallen from 22.3% to 12.7% over 3 years (-9.6 pts).

🔴 PAT (Net Profit) has shrunk at 53.2% a year over 3 years.

🔴 EPS has shrunk at 53.0% a year over 3 years.

🔴 ROE has fallen from 6.7% to 0.6% over 3 years (-6.1 pts).

🔴 ROCE has fallen from 8.0% to 1.9% over 3 years (-6.1 pts).

🔴 Total Debt has grown at 263.4% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹121 Cr to ₹18 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,042 Cr

Total Liabilities

₹1,803 Cr

Total Debt

₹1,199 Cr

Cash & Equivalents

₹114 Cr

Operating Cash Flow

₹346 Cr

Capex

-₹328 Cr

Shareholding (proxy)

Institutional Holding

0.7%

Insider Holding

66.0%

Corporate Actions

Dividend Rate

₹0.5

Ex-Dividend Date

18 Sept 2026

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 positive1 mixed1 negative3 general

Kitex Garments Share Price Update After New 52-Week Low

Univest, 20 Aug

What Kitex Garments Limited's (NSE:KITEX) 25% Share Price Gain Is Not Telling You

Simply Wall Street, 08 FebPrice 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.

Kitex Garments approves QIP and dividend; institutions vote against capital raise

scanx.trade, 25 SeptCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

India Ratings and Research downgrades ratings of Kitex Garments to 'BBB+/A2'

Business Standard, 27 AugAnalyst view

🔴Potentially negativeAn analyst opinion changing, which moves the price without changing the business.

Kitex Garments Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 30 Aug

Kochi-based apparel manufacturer plans ₹3,000 crore fundraising via QIP

CNBC TV18, 14 Aug

Watch Items

Revenue growth is negative (-19.5%) on the latest reported period — check if this is one-off or a trend.
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

🔴Business QualityWeak6.2/20

🟡Financial HealthAdequate11.8/20

🔴GrowthWeak6.2/20

🔴ProfitabilityWeak3.4/15

🔴ValuationDemanding5.1/15

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

This thesis breaks if

✓EBITDA margin holds above 11%12.7%
✗Debt / EBITDA falls below 3x15.1x
✗Interest cover stays above 3x1.2x
✓Revenue growth stays above 4% a year5.8% CAGR
✓Free cash flow remains positive₹18 Cr