Modern Threads (India) Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹46.29−₹1.28 (−2.69%)

DalalBaazaar Score

40 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: Reasonable but unspectacular business quality, with both sales and profits growing well. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:06 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Modern Threads (India) Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Modern Threads (India) Limited manufactures and sells wool and blended worsted yarn products in India.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Annual revenue₹290 Cr

How does it make money?

Turns over ₹290 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹8 left at the operating level before interest, tax and depreciation.

EBITDA margin7.8%

Net margin4.2%

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 13.8% 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.

ROCE13.8%

ROE8.4%

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 -94% 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-94%

DalalBaazaar Score

40/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 0.6% a year
✗ Profit has declined at 61.5% a year

Quality vs. Valuation

Company Quality

35/ 100

Weak

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

Valuation

73/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

8.9x

3Y Median

8.1x

34 monthly readings · mean 20.9x · range 0.6x–57.2x

Sector Median

69.2x

median of 4 sector peers

⚠️Current valuation is approximately 11% above its 3y median of 8.1x. 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 87% below the peer median of 69.2x.

vs. its own history

Fair

8.1x median over 34 months · +11%

vs. sector peers

Cheap

69.2x median of 4 peers · -87%

vs. generic bands

Cheap

Below 15x

P/E (Trailing)

8.9x

P/B

—

EV/EBITDA

8.4x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.22x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention6

Margins are compressing
EBITDA margin has slipped from 10.8% to 7.8% over 3 years.
Debt is rising
Total debt is up 593729% 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 207.2% to 8.4% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 203.0% to 13.8% — often a sign of competition or overexpansion.
Inventory building faster than sales
Inventory is up 46% against revenue growth of -2% — stock may not be moving.

Red Flags

5 items require attention · 1 high · 4 watch

🔴Debt has risen sharplyFinancial
Total debt is up 593729% over 3 years, from ₹0 Cr to ₹33 Cr.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹16 Cr in the latest year.
🟡Profit is decliningFinancial
Net profit is down 94% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 3.0 points over 3 years.
🟡Inventory building faster than salesFinancial
Inventory up 46% against revenue up -2% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 87% 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 10.8% to 7.8%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Returns on shareholder capital are falling
ROE has dropped from 207.2% to 8.4%. 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.
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 6%✓ 7.8%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Free cash flow remains positive✗ -₹16 Cr
Profit that never becomes cash eventually stops being profit.
3Debt / EBITDA stays below 2x✓ 1.5x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
4ROCE stays above 11%✓ 13.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
5Interest cover stays above 4x✓ 6.9x
How much operating profit can fall before interest stops being comfortably covered.

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 · 5 neutral · 1 weak

Market Cap

₹161 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

8.9x

Cheap

Cheap against the generic band

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

₹5.19

Profitable

Profitable on a per-share basis

ROE

8.4%

Moderate

Moderate capital efficiency

ROCE

13.8%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.22x

Low

Conservative leverage

Revenue Growth (YoY)

13.2%

Healthy

Healthy top-line growth

Profit Growth (YoY)

261.8%

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

-₹16 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹46.29

Operating Margin

0.0%

Weak

Thin margins leave little room for error

Net Margin

0.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.70

Comfortable

Healthy short-term liquidity

52W Range Position

36%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

47.1 / 50.3

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

45.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹295 Cr	₹295 Cr	₹256 Cr	₹290 Cr	-0.6%
EBITDA	₹32 Cr	₹32 Cr	₹5 Cr	₹22 Cr	-10.9%
EBITDA Margin	10.8%	10.8%	2.1%	7.8%	—
PAT (Net Profit)	₹214 Cr	₹25 Cr	₹3 Cr	₹12 Cr	-61.5%
EPS	₹61.57	₹7.31	₹0.97	₹3.51	-61.5%
ROE	207.2%	19.7%	2.5%	8.4%	—
ROCE	203.0%	21.7%	4.4%	13.8%	—
Total Debt	₹0 Cr	₹0 Cr	₹21 Cr	₹33 Cr	+1710.9%
Free Cash Flow	₹8 Cr	₹14 Cr	-₹16 Cr	-₹16 Cr	—

🟡 Revenue has been broadly flat over 3 years (-0.6% a year).

🔴 EBITDA has shrunk at 10.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 10.8% to 7.8% over 3 years (-3.0 pts).

🔴 PAT (Net Profit) has shrunk at 61.5% a year over 3 years.

🔴 EPS has shrunk at 61.5% a year over 3 years.

🔴 ROE has fallen from 207.2% to 8.4% over 3 years (-198.8 pts).

🔴 ROCE has fallen from 203.0% to 13.8% over 3 years (-189.2 pts).

🔴 Total Debt has grown at 1710.9% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹8 Cr to -₹16 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹255 Cr

Total Liabilities

₹109 Cr

Total Debt

₹33 Cr

Cash & Equivalents

₹5 Cr

Operating Cash Flow

-₹3 Cr

Capex

-₹13 Cr

Shareholding (proxy)

Institutional Holding

7.7%

Insider Holding

69.5%

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

6 general

Modern Threads (India) vs Nifty 50: Returns Compared

Univest, 07 Oct

Modern Threads Share Price and Technical Analysis

Kalkine India, 18 Sept

Modern Threads (India) Limited Signs 25-Year Power Purchase Agreement for 5 MW Solar Capacity

scanx.trade, 30 Apr

Is Modern Threads India the Best Stock in Its Sector? A Look at the Numbers

Univest, 01 Oct

Volume Gainers, August 17, 2026, 3:30 PM IST

HDFC Sky, 17 Aug

TNA SOLUTIONS LTD. Stock/Share price , NSE/BSE Forecast News and Live Quotes

Equitymaster, 10 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
1 metric couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

🔴Business QualityWeak6.2/20

🟢Financial HealthStrong13/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak4.6/15

🟢ValuationAttractive11.3/15

🔴RiskHigh2.5/10

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 6%7.8%
✗Free cash flow remains positive-₹16 Cr
✓Debt / EBITDA stays below 2x1.5x
✓ROCE stays above 11%13.8%
✓Interest cover stays above 4x6.9x