The Lakshmi Mills Company Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹8,140.00+₹45.50 (+0.56%)

DalalBaazaar Score

40 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment, falling profits.

In simple words: The business is earning a fairly low return on the money invested in it, though profits are falling even as sales grow. Valuation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 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 The Lakshmi Mills Company Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

The Lakshmi Mills Company Limited manufactures and sells yarns and fabrics in India and internationally. It operates through two segments, Textiles and Rental Services.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees319

Annual revenue₹214 Cr

How does it make money?

Turns over ₹214 Cr a year. Of every ₹100 of sales, about ₹-7 reaches shareholders as profit, with ₹14 left at the operating level before interest, tax and depreciation. Each of its 319 employees supports ₹67.1 lakh of revenue a year, the signature of a people-led business.

EBITDA margin14.4%

Net margin-7.3%

Revenue / employee₹67.1 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 2.0% 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.

ROCE2.0%

ROE-2.2%

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 -8% while net margin moved +235% 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-8%

Margin effect+235%

DalalBaazaar Score

40/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 2.6% a year
✗ Profit fell 232.6% in the latest year

Quality vs. Valuation

Company Quality

38/ 100

Weak

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

Valuation

49/ 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

59.0x

Sector Median

69.2x

median of 4 sector peers

🟡Against its sector it is priced broadly in line with the peer median of 69.2x.

vs. its own history

Not enough price and earnings history

vs. sector peers

Fair

69.2x median of 4 peers · -15%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

59.0x

P/B

0.79x

EV/EBITDA

21.0x

PEG

—

Dividend Yield

0.12%

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 3.2% to 14.4% over 3 years.
Debt is being paid down
Total debt is down 26% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Very low debt
Debt/Equity of 0.11x leaves the balance sheet with plenty of headroom.

🔴 What Needs Attention1

Receivables growing faster than sales
Receivables are up 113% against revenue growth of -8% — customers are taking longer to pay.

Red Flags

3 items require attention · 3 high

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.8x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹16 Cr in the latest reported year.
🔴Receivables growing faster than salesFinancial
Receivables up 113% against revenue up -8% — sales are being booked faster than they are collected.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 3.2% to 14.4%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 26% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Self-funding with balance-sheet headroom
Positive free cash flow of ₹2 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Sales are being booked faster than collected
Receivables are up 113% against revenue up -8%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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.
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 12%✓ 14.4%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 2.6x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Interest cover stays above 3x✗ 1.8x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹2 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ 2.0%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

4 / 10 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

Price history

Quick Metrics

4 good · 3 neutral · 4 weak

Market Cap

₹566 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

59.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

0.79x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹137.89

Profitable

Profitable on a per-share basis

ROE

-2.2%

Weak

Weak capital efficiency

ROCE

2.0%

Weak

Low return on total capital employed

Debt/Equity

0.11x

Low

Conservative leverage

Revenue Growth (YoY)

8.4%

Modest

Modest growth

Profit Growth (YoY)

-232.6%

Falling

Profits are shrinking

Dividend Yield

0.12%

Modest

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

Free Cash Flow

₹2 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹8,140

Operating Margin

9.8%

Average

Average margins

Net Margin

3.9%

Average

Average bottom-line conversion

Current Ratio

1.06

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.29

Defensive

Steadier than the market

52W Range Position

94%

Near high

Near its 52-week high

Technical Snapshot

RSI (14)

66.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹231 Cr	₹234 Cr	₹238 Cr	₹214 Cr	-2.6%
EBITDA	₹7 Cr	₹6 Cr	₹25 Cr	₹31 Cr	+60.8%
EBITDA Margin	3.2%	2.7%	10.3%	14.4%	—
PAT (Net Profit)	-₹5 Cr	-₹14 Cr	-₹5 Cr	-₹16 Cr	—
EPS	₹-72.06	₹-198.3	₹-67.22	₹-223.56	—
ROE	-0.8%	-1.6%	-0.5%	-2.2%	—
ROCE	0.0%	-1.0%	0.7%	2.0%	—
Total Debt	₹110 Cr	₹140 Cr	₹134 Cr	₹81 Cr	-9.7%
Free Cash Flow	-₹22 Cr	-₹27 Cr	₹18 Cr	₹2 Cr	—

🔴 Revenue has shrunk at 2.6% a year over 3 years.

🟢 EBITDA has grown at 60.8% a year over 3 years.

🟢 EBITDA Margin has risen from 3.2% to 14.4% over 3 years (+11.2 pts).

🔴 ROE has fallen from -0.8% to -2.2% over 3 years (-1.4 pts).

🟢 ROCE has risen from 0.0% to 2.0% over 3 years (+2.0 pts).

🟢 Total Debt has shrunk at 9.7% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹22 Cr to ₹2 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹898 Cr

Total Liabilities

₹186 Cr

Total Debt

₹81 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹8 Cr

Capex

-₹6 Cr

Shareholding (proxy)

Institutional Holding

2.4%

Insider Holding

80.0%

Corporate Actions

Dividend Rate

₹10

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

2 mixed4 general

Lakshmi Mills Company Ltd Faces Technical Momentum Shift Amid Bearish Signals

MarketsMojo, 15 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Lakshmi Mills Company Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 30 Aug

Lakshmi Mills sends AGM notice; urges shareholders to update KYC details

scanx.trade, 26 Aug

Lakshmi Mills Company Ltd. Share Price Live Today

CNBC TV18, 03 Jan

Lakshmi Mills Company reports standalone net profit of Rs 3.11 crore in the June 2026 quarter

Business Standard, 14 AugResults

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

Lakshmi Mills 116th AGM passes all 4 resolutions with 99.99% approval

scanx.trade, 25 Sept

Watch Items

Trading very close to its 52-week high — momentum-driven entries here carry more mean-reversion risk.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate9/20

🟢Financial HealthStrong13.7/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak3.2/15

🟡ValuationFair7.7/15

🔴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 12%14.4%
✗Debt / EBITDA stays below 2x2.6x
✗Interest cover stays above 3x1.8x
✓Free cash flow remains positive₹2 Cr
✗ROCE stays above 8%2.0%