Rain Industries Limited

Basic Materials — Specialty Chemicals · NSE

₹227.99+₹3.46 (+1.54%)

DalalBaazaar Score

36 / 100

🔴 Weak

Verdict

CAUTION

Risk

High

Driven by moderate debt load, negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: The business is earning a fairly low return on the money invested in it, 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, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Rain Industries Limited, together with its subsidiaries, manufactures and sells carbon, advanced materials, and cement products in India and internationally. The company operates through three segments: Carbon, Advanced Materials, and Cement.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees2,323

Annual revenue₹16,791 Cr

How does it make money?

Turns over ₹16,791 Cr a year. Of every ₹100 of sales, about ₹0 reaches shareholders as profit, with ₹13 left at the operating level before interest, tax and depreciation. Each of its 2,323 employees supports ₹7.23 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹7.23 Cr

Who are its competitors?

The closest listed comparisons in its industry are ASIAN PAINTS LIMITED, PIDILITE INDUSTRIES LTD, SRF LTD, UPL 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 7.9% 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 ROE22.3%

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved -20% while net margin moved -96% 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-20%

Margin effect-96%

DalalBaazaar Score

36/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 7.0% a year
✗ Profit has declined at 69.1% a year

Quality vs. Valuation

Company Quality

30/ 100

Weak

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

Valuation

69/ 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

14.3x

4Y Median

3.8x

44 monthly readings · mean 31.5x · range 2.5x–181.4x

Sector Median

40.4x

median of 4 sector peers

⚠️Current valuation is approximately 278% above its 4y median of 3.8x. 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 65% below the peer median of 40.4x.

vs. its own history

Expensive

3.8x median over 44 months · +278%

vs. sector peers

Cheap

40.4x median of 4 peers · -65%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

7.5x

PEG

—

What's Good / What's Bad

🟢 What's Going Well0

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

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 17.1% to 0.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 15.4% to 7.9% — often a sign of competition or overexpansion.

Red Flags

4 items require attention · 2 high · 2 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.5x — 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.
🟡Profit is decliningFinancial
Net profit is down 97% over 3 years.
🟡Margins are compressingFinancial
EBITDA margin is down 4.3 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 65% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 17.4% to 13.1%. 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 4.5x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
The price already assumes success
The stock trades 278% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Returns on shareholder capital are falling
ROE has dropped from 17.1% to 0.6%. 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.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 11%✓ 13.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 4.5x
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✗ 1.5x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹437 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ 7.9%
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 · 4 neutral · 2 weak

Market Cap

₹7,668 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

14.3x

Cheap

Cheap against the generic band

P/B Ratio

0.96x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹15.97

Profitable

Profitable on a per-share basis

ROE

8.5%

Moderate

Moderate capital efficiency

ROCE

7.9%

Weak

Low return on total capital employed

Debt/Equity

1.30x

Moderate

Moderate leverage

Revenue Growth (YoY)

17.4%

Healthy

Healthy top-line growth

Profit Growth (YoY)

389.4%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.44%

Modest

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

Free Cash Flow

-₹367 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

P/E (Forward)

-150.0x

Improving

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

ROA

5.1%

Average

Average asset productivity

Operating Margin

13.5%

Average

Average margins

Net Margin

2.9%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.78

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

1.13

Market-like

Moves roughly in line with the market

52W Range Position

84%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

217.3 / 212.1

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

56.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY22	FY23	FY24	FY25	3Y CAGR
Revenue	₹20,906 Cr	₹18,052 Cr	₹15,267 Cr	₹16,791 Cr	-7.0%
EBITDA	₹3,628 Cr	₹1,818 Cr	₹1,514 Cr	₹2,197 Cr	-15.4%
EBITDA Margin	17.4%	10.1%	9.9%	13.1%	—
PAT (Net Profit)	₹1,439 Cr	-₹938 Cr	-₹564 Cr	₹43 Cr	-69.1%
EPS	₹42.77	₹-27.89	₹-16.78	₹1.26	-69.1%
ROE	17.1%	-12.8%	-8.5%	0.6%	—
ROCE	15.4%	1.9%	4.6%	7.9%	—
Total Debt	₹9,731 Cr	₹8,690 Cr	₹8,494 Cr	₹9,824 Cr	+0.3%
Free Cash Flow	₹367 Cr	₹2,468 Cr	₹1,290 Cr	₹437 Cr	+6.0%

🔴 Revenue has shrunk at 7.0% a year over 3 years.

🔴 EBITDA has shrunk at 15.4% a year over 3 years.

🔴 EBITDA Margin has fallen from 17.4% to 13.1% over 3 years (-4.3 pts).

🔴 PAT (Net Profit) has shrunk at 69.1% a year over 3 years.

🔴 EPS has shrunk at 69.1% a year over 3 years.

🔴 ROE has fallen from 17.1% to 0.6% over 3 years (-16.5 pts).

🔴 ROCE has fallen from 15.4% to 7.9% over 3 years (-7.4 pts).

🟡 Total Debt has been broadly flat over 3 years (0.3% a year).

🟢 Free Cash Flow has grown at 6.0% a year over 3 years.

Balance Sheet & Cash Flow — FY2025

Total Assets

₹20,760 Cr

Total Liabilities

₹13,069 Cr

Cash & Equivalents

₹926 Cr

Operating Cash Flow

₹897 Cr

Capex

-₹461 Cr

Shareholding (proxy)

Institutional Holding

7.4%

Insider Holding

46.8%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

14 Aug 2026

Peer Comparison

Company	P/E	ROE
ASIAN PAINTS LIMITED	46.9x	22.3%
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

2 positive4 general

Stock to buy today: Rain Industries (₹237.30) – BUY

BusinessLine, 16 Oct

Top 2 stocks to buy for short-term: Sagility, Rain Industries by Nagaraj Shetti - Check stop loss, targets

Livemint, 14 Oct

Just Three Days Till Rain Industries Limited (NSE:RAIN) Will Be Trading Ex-Dividend

Simply Wall Street, 10 AugCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Rain Industries (RAIN.NS) Climbs 2.22% to ₹212.63, Nears Key Resistance Zone - Throwback Trade

https://www.siam.in/, 06 Oct

Rain Industries Reports ₹12.26 Crore Standalone Net Profit, Declares ₹1.00 Dividend

Sahi, 06 AugCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

Rain Industries delivers 60% return after Fair Value signal By Investing.com

Investing.com India, 14 Jun

Watch Items

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

DalalBaazaar Thesis

StrongValuation

WeakBusiness Quality · Financial Health · Growth · Profitability · Risk

Points for each in the Score ↑

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. 2 high-severity red flags sit above this conclusion and should be read first.

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Interest cover stays above 3x; ROCE stays above 8% · see Key things to watch ↑