Precot Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹629.00+₹21.65 (+3.56%)

DalalBaazaar Score

52 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Nothing obvious stands out as stretched — the usual checks on business quality and management still apply.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:59 pm

Understanding the Business

Company site ↗

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

What does this company do?

Precot Limited manufactures and sells yarn and technical textile products in India and internationally. It offers hygienic products, such as cotton pads and balls, exfoliating pads, cotton wool rolls, cotton spunlace rolls, and absorbent cotton fiber.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees1,250

Annual revenue₹852 Cr

How does it make money?

Turns over ₹852 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹13 left at the operating level before interest, tax and depreciation. Each of its 1,250 employees supports ₹68.2 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹68.2 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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 12.7% 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.

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 -7% while net margin moved -249% 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-7%

Margin effect-249%

DalalBaazaar Score

52/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 2.5% a year

Quality vs. Valuation

Company Quality

48/ 100

Average

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

Valuation

80/ 100

Cheap

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

14.6x

2Y Median

33.8x

28 monthly readings · mean 34.8x · range 20.9x–57.9x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 57% below its 2y median of 33.8x. Cheaper than its own history, which is worth a reason too: the market may be pricing in something the backward-looking numbers do not show.

🟢Against its sector it trades 79% below the peer median of 69.2x.

vs. its own history

Cheap

33.8x median over 28 months · -57%

vs. sector peers

Cheap

69.2x median of 4 peers · -79%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

10.2x

PEG

—

What's Good / What's Bad

🟢 What's Going Well3

Margins are improving
EBITDA margin is up from 3.3% to 12.6% over 3 years.
Return on equity is rising
ROE has improved from -6.4% to 7.5%.
Return on capital is rising
ROCE has improved from -0.1% to 12.7%.

🔴 What Needs Attention0

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

Red Flags

2 items require attention · 1 high · 1 watch

🔴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.
🟡Low reported insider holdingOwnership
Reported insider holding is 0.0%. For Indian companies this field is an unreliable proxy — check the official promoter shareholding in the exchange filing.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 3.3% to 12.6%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Priced below its own history
The stock trades 57% below its own median multiple. If the business performs as it has and simply re-rates back to normal, that gap is return on its own.
Cheaper than its peers
It trades 79% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

The debt load needs earnings to hold up
Debt is 3.2x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
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 11%✓ 12.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.2x
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✗ 2.7x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹20 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 10%✓ 12.7%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 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

₹755 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

14.6x

Cheap

Cheap against the generic band

P/B Ratio

1.57x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹42.97

Profitable

Profitable on a per-share basis

ROE

7.5%

Weak

Weak capital efficiency

ROCE

12.7%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.72x

Moderate

Moderate leverage

Revenue Growth (YoY)

19.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

135.4%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.64%

Modest

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

Free Cash Flow

₹20 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

16.9%

Good

Healthy core-business profitability

Net Margin

5.5%

Average

Average bottom-line conversion

Current Ratio

1.14

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.30

Defensive

Steadier than the market

52W Range Position

55%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

622.4 / 676.4

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

45.7

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹919 Cr	₹802 Cr	₹831 Cr	₹852 Cr	-2.5%
EBITDA	₹30 Cr	₹80 Cr	₹117 Cr	₹108 Cr	+53.0%
EBITDA Margin	3.3%	10.0%	14.1%	12.6%	—
PAT (Net Profit)	-₹26 Cr	₹17 Cr	₹33 Cr	₹36 Cr	—
EPS	₹-21.69	₹13.99	—	₹29.87	—
ROE	-6.4%	4.0%	7.3%	7.5%	—
ROCE	-0.1%	9.6%	16.7%	12.7%	—
Total Debt	₹379 Cr	₹373 Cr	₹329 Cr	₹347 Cr	-2.8%
Free Cash Flow	₹17 Cr	₹47 Cr	₹71 Cr	₹20 Cr	+5.5%

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

🟢 EBITDA has grown at 53.0% a year over 3 years.

🟢 EBITDA Margin has risen from 3.3% to 12.6% over 3 years (+9.4 pts).

🟢 PAT (Net Profit) has turned positive, from -₹26 Cr to ₹36 Cr.

🟢 EPS has turned positive, from ₹-21.69 to ₹29.87.

🟢 ROE has risen from -6.4% to 7.5% over 3 years (+13.9 pts).

🟢 ROCE has risen from -0.1% to 12.7% over 3 years (+12.8 pts).

🟢 Total Debt has shrunk at 2.8% a year over 3 years.

🟢 Free Cash Flow has grown at 5.5% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹932 Cr

Total Liabilities

₹451 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹90 Cr

Capex

-₹70 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

0.0%

Corporate Actions

Dividend Rate

₹4

Ex-Dividend Date

13 Aug 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

Precot Limited's (NSE:PRECOT) Stock is Soaring But Financials Seem Inconsistent: Will The Uptrend Continue?

Simply Wall Street, 04 Feb

Is Precot the Best Stock in Its Sector? A Look at the Numbers

Univest, 05 Oct

Precot Limited (NSE: PRECOT) Share Price Falls 4% After Recent Rally Loses Momentum

Kalkine India, 10 AprPrice 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.

Precot Ltd incorporates wholly owned subsidiary in Dubai

scanx.trade, 09 Jul

Precot Q4 Net Profit Drops 25.4% to ₹11.7 Crore Despite 13.6% Revenue Expansion

Sahi, 16 MayCapacity

🟡Mixed / dependsCapacity additions can raise revenue over two to three years, but the capital spend usually pressures free cash flow first. Worth checking whether the capex is funded from operations or from borrowing.

Momentum Stocks: Diamond Power jumps 9%, Precot and Zen Technologies rally on strong momentum

Moneycontrol.com, 06 Jul

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
Reported insider holding is low — cross-check the official promoter shareholding % in the company's exchange filing.

DalalBaazaar Thesis

StrongFinancial Health · Valuation

MiddlingBusiness Quality · Profitability

WeakGrowth · 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. 1 high-severity red flag sits 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 ↑