Lux Industries Limited

Consumer Cyclical — Apparel Manufacturing · NSE

₹1,182.00+₹35.10 (+3.06%)

DalalBaazaar Score

42 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by negative free cash flow, 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, though profits are falling even as sales grow. Cash generation is currently 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 Lux Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Lux Industries Limited engages in the manufacture and sale of knitwear for men, women, and kids in India and internationally.

IndustryApparel Manufacturing

SectorConsumer Cyclical

Employees4,856

Annual revenue₹2,915 Cr

How does it make money?

Turns over ₹2,915 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹7 left at the operating level before interest, tax and depreciation. Each of its 4,856 employees supports ₹60.0 lakh of revenue a year, the signature of a people-led business.

EBITDA margin7.3%

Net margin3.6%

Revenue / employee₹60.0 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 9.3% 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.

ROCE9.3%

ROE5.7%

Peer median ROE25.9%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 16.2% and earnings to grow about 40.6% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+16.2%

Est. earnings growth+40.6%

Analysts1

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +23% while net margin moved -41% 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+23%

Margin effect-41%

DalalBaazaar Score

42/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROCE of 9.3% is below 10% — capital is not working hard
✗ ROCE has fallen by 4.8 points — returns are eroding
✗ EBITDA margin of 7.3% is thin — little cushion if costs rise
✗ Net margin of 3.5% is slim
• Revenue has compounded at 7.2% a year, which is the base these returns are earned on

Quality vs. Valuation

Company Quality

38/ 100

Weak

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

Valuation

62/ 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

34.7x

3Y Median

30.8x

40 monthly readings · mean 30.5x · range 15.0x–55.2x

Sector Median

69.2x

median of 4 sector peers

⚠️Current valuation is approximately 13% above its 3y median of 30.8x. 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 50% below the peer median of 69.2x.

vs. its own history

Fair

30.8x median over 40 months · +13%

vs. sector peers

Cheap

69.2x median of 4 peers · -50%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

34.7x

P/B

1.94x

EV/EBITDA

19.3x

PEG

—

Dividend Yield

0.17%

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention5

Margins are compressing
EBITDA margin has slipped from 9.6% to 7.3% over 3 years.
Debt is rising
Total debt is up 132% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 9.8% to 5.7% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 14.1% to 9.3% — often a sign of competition or overexpansion.

Red Flags

5 items require attention · 1 high · 4 watch

🔴Debt has risen sharplyFinancial
Total debt is up 132% over 3 years, from ₹266 Cr to ₹616 Cr.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 12.2x to 4.8x.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹204 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 27% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 2.4 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 50% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
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 9.6% to 7.3%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Growth barely outpaces inflation
Revenue compounding at 7.2% 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 9.8% to 5.7%. 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.
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 5%✓ 7.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 2.9x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Free cash flow remains positive✗ -₹204 Cr
Profit that never becomes cash eventually stops being profit.
4Revenue growth stays above 5% a year✓ 7.2% CAGR
Latest reported year was 0.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5ROCE stays above 8%✓ 9.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

6 / 12 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
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

2 good · 6 neutral · 3 weak

Market Cap

₹3,554 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

34.7x

Fair

Fairly valued against the generic band

P/B Ratio

1.94x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹34.04

Profitable

Profitable on a per-share basis

ROE

5.7%

Weak

Weak capital efficiency

ROCE

9.3%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.34x

Low

Conservative leverage

Revenue Growth (YoY)

0.8%

Modest

Modest growth

Profit Growth (YoY)

-6.1%

Falling

Profits are shrinking

Dividend Yield

0.17%

Modest

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

Free Cash Flow

-₹204 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹1,182

P/E (Forward)

17.0x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

5.6%

Average

Average margins

Net Margin

3.5%

Average

Average bottom-line conversion

Current Ratio

2.18

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.64

Defensive

Steadier than the market

52W Range Position

36%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1149.1 / 1167.8

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

50.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,364 Cr	₹2,314 Cr	₹2,570 Cr	₹2,915 Cr	+7.2%
EBITDA	₹228 Cr	₹214 Cr	₹262 Cr	₹211 Cr	-2.5%
EBITDA Margin	9.6%	9.3%	10.2%	7.3%	—
PAT (Net Profit)	₹142 Cr	₹130 Cr	₹165 Cr	₹104 Cr	-9.9%
EPS	₹47.23	₹43.07	₹54.97	₹34.52	-9.9%
ROE	9.8%	8.3%	9.6%	5.7%	—
ROCE	14.1%	12.1%	13.7%	9.3%	—
Total Debt	₹266 Cr	₹209 Cr	₹315 Cr	₹616 Cr	+32.4%
Free Cash Flow	₹96 Cr	₹208 Cr	-₹117 Cr	-₹204 Cr	—

🟢 Revenue has grown at 7.2% a year over 3 years.

🔴 EBITDA has shrunk at 2.5% a year over 3 years.

🔴 EBITDA Margin has fallen from 9.6% to 7.3% over 3 years (-2.4 pts).

🔴 PAT (Net Profit) has shrunk at 9.9% a year over 3 years.

🔴 EPS has shrunk at 9.9% a year over 3 years.

🔴 ROE has fallen from 9.8% to 5.7% over 3 years (-4.1 pts).

🔴 ROCE has fallen from 14.1% to 9.3% over 3 years (-4.8 pts).

🔴 Total Debt has grown at 32.4% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹96 Cr to -₹204 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹3,089 Cr

Total Liabilities

₹1,268 Cr

Total Debt

₹616 Cr

Cash & Equivalents

₹91 Cr

Operating Cash Flow

-₹149 Cr

Capex

-₹55 Cr

Shareholding (proxy)

Institutional Holding

5.4%

Insider Holding

75.9%

Corporate Actions

Dividend Rate

₹2

Ex-Dividend Date

18 Sept 2026

Analyst Consensus

Recommendations

1 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹1,391

+17.7% vs CMP

Target Range

₹1,391 – ₹1,391

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

Lux Industries Share Price Rises 10.09%

Univest, 05 OctPrice 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.

Compare with

Equitymaster, 17 Oct

Lux Industries Ltd. Key Financial Ratios – Valuation, Profitability & More

Value Research, 03 Sept

Fewer Investors Than Expected Jumping On Lux Industries Limited (NSE:LUXIND)

Simply Wall Street, 05 Feb

Mukul Agrawal-backed Lux Industries Share Jumps 9% After Reebok Licensing Deal

HDFC Sky, 10 JulPrice 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.

Lux Industries shares in focus after company approves major three-way demerger plan

Alice Blue, 24 Apr

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟡Financial HealthAdequate11.8/20

🔴GrowthWeak6.2/20

🔴ProfitabilityWeak4.6/15

🟡ValuationFair8.1/15

🟡RiskModerate5.4/10

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 5%7.3%
✗Debt / EBITDA stays below 2x2.9x
✗Free cash flow remains positive-₹204 Cr
✓Revenue growth stays above 5% a year7.2% CAGR
✓ROCE stays above 8%9.3%