Konark Synthetic Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹42.47₹0.00 (0.00%)

DalalBaazaar Score

44 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: Strong business and financial position, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Konark Synthetic Limited, together with its subsidiaries, engages in the manufacturing and trading of yarn and fabric in India and internationally.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees25

Annual revenue₹47 Cr

How does it make money?

Turns over ₹47 Cr a year. Of every ₹100 of sales, about ₹0 reaches shareholders as profit, with ₹4 left at the operating level before interest, tax and depreciation. Each of its 25 employees supports ₹1.86 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.86 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?The numbers suggest a real one

ROCE has stayed above 15% in every year available and stands at 45.0%. Returns that high normally get competed away; when they persist, something is protecting them, and its ROE of 66.2% against a peer median of 25.9% is consistent with that. What that something is — brand, scale, switching costs, regulation — the accounts cannot tell you.

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 -2% while net margin moved -101% 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-2%

Margin effect-101%

DalalBaazaar Score

44/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 0.5% a year
✗ Latest-year revenue growth of -9.5% is below the longer-term trend — momentum is fading

Quality vs. Valuation

Company Quality

48/ 100

Average

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

Valuation

34/ 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.

Historical Valuation

Current P/E

132.7x

2Y Median

143.7x

27 monthly readings · mean 148.8x · range 92.3x–258.3x

Sector Median

69.2x

median of 4 sector peers

🟡Currently trading close to its 2y median of 143.7x — the market is paying about what it usually pays for this company.

⚠️Against its sector it trades 92% above the peer median of 69.2x.

vs. its own history

Fair

143.7x median over 27 months · -8%

vs. sector peers

Expensive

69.2x median of 4 peers · +92%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

28.1x

PEG

—

What's Good / What's Bad

🟢 What's Going Well3

Debt is being paid down
Total debt is down 76% over 3 years.
Cash generation is improving
Free cash flow is up 115% over 3 years.
High return on capital employed
ROCE of 45.0% is the mark of a business that converts capital into profit efficiently.

🔴 What Needs Attention0

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

Red Flags

5 items require attention · 3 high · 2 watch

🔴High leverageFinancial
Debt/Equity of 148.31x — earnings must service borrowings before shareholders see anything.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.1x — 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.
🟡Margins are compressingFinancial
EBITDA margin is down 2.8 points over 3 years.
🟡Inventory building faster than salesFinancial
Inventory up 28% against revenue up -2% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 45.0% 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.
Deleveraging frees up earnings
Debt is down 76% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 6.5% to 3.7%. 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 13.8x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
A premium to the sector to defend
It trades 92% above the peer median. That premium needs a reason that persists, or it closes.
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

1EBITDA margin holds above 2%✓ 3.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 13.8x
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✗ 1.1x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹1 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 42%✓ 45.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

5 good · 2 neutral · 4 weak

Market Cap

₹25 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

132.7x

Expensive

Expensive — verify against sector peers

P/B Ratio

157.30x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹0.32

Profitable

Profitable on a per-share basis

ROE

66.2%

Strong

Strong capital efficiency

ROCE

45.0%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

148.31x

High

High leverage

Revenue Growth (YoY)

-9.5%

Shrinking

Sales are contracting

Profit Growth (YoY)

103.4%

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

₹1 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

4.1%

Weak

Thin margins leave little room for error

Net Margin

0.4%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.07

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

1.27

Market-like

Moves roughly in line with the market

52W Range Position

52%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

42.7 / 44.6

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

0.0

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹47 Cr	₹44 Cr	₹47 Cr	₹47 Cr	-0.5%
EBITDA	₹3 Cr	₹4 Cr	₹3 Cr	₹2 Cr	-17.7%
EBITDA Margin	6.5%	10.2%	6.7%	3.7%	—
PAT (Net Profit)	-₹11 Cr	₹0 Cr	-₹3 Cr	₹0 Cr	—
EPS	₹-18.94	₹0.26	₹-5.31	₹0.18	—
ROE	—	0.5%	-15337.3%	66.2%	—
ROCE	—	28.1%	150.8%	45.0%	—
Total Debt	₹100 Cr	₹31 Cr	₹30 Cr	₹24 Cr	-38.1%
Free Cash Flow	₹1 Cr	₹1 Cr	₹2 Cr	₹1 Cr	+29.0%

🟡 Revenue has been broadly flat over 3 years (-0.5% a year).

🔴 EBITDA has shrunk at 17.7% a year over 3 years.

🔴 EBITDA Margin has fallen from 6.5% to 3.7% over 3 years (-2.8 pts).

🟢 PAT (Net Profit) has turned positive, from -₹11 Cr to ₹0 Cr.

🟢 EPS has turned positive, from ₹-18.94 to ₹0.18.

🟢 ROE has risen from 0.5% to 66.2% over 3 years (+65.7 pts).

🟢 ROCE has risen from 28.1% to 45.0% over 3 years (+16.9 pts).

🟢 Total Debt has shrunk at 38.1% a year over 3 years.

🟢 Free Cash Flow has grown at 29.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹37 Cr

Total Liabilities

₹37 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹1 Cr

Capex

-₹0 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

84.0%

Corporate Actions

Ex-Dividend Date

20 Sept 2011

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 mixed4 general

Konark Synthetic shareholders adopt FY26 financial statements, reappoint director

scanx.trade, 01 Oct

Konark Synthetic sets Sep 24 record date for 42nd AGM

scanx.trade, 08 Sept

Q2 Results Today: Hero MotoCorp, Lemon Tree Hotels, HAL, Glenmark Pharma among 1181 companies to post earnings on Nov 14

Livemint, 14 NovResults

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

The Sun Temple of Konark: Impassioned plea for a new structure (Book Review)

Business Standard, 02 Nov

HEG Advanced Materials: August 2026 Share Transfer Update

InvestyWise, 08 Sept

Watch Items

Revenue growth is negative (-9.5%) 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.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongProfitability

MiddlingBusiness Quality · Financial Health

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

2 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Interest cover stays above 3x · see Key things to watch ↑