Raj Rayon Industries Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹22.51−₹0.45 (−1.96%)

DalalBaazaar Score

56 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by moderate debt load, short-term liabilities exceed short-term assets, micro-cap size, which brings thin liquidity.

In simple words: Strong business and financial position, but sales are shrinking. Short-term liquidity is 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 Raj Rayon Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Raj Rayon Industries Limited engages in the manufacture and trade of polyester chips, and polyester and processed yarns in India. The company offers trilobal, cationic, cotluk, colored, fire retardant, anti-microbial, tri-lobal, and octa-lobal yarns.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees412

Annual revenue₹1,180 Cr

How does it make money?

Turns over ₹1,180 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 412 employees supports ₹2.86 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin5.6%

Net margin2.9%

Revenue / employee₹2.86 Cr

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?Some evidence

ROCE of 15.7% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE15.7%

ROE21.7%

Peer median ROE25.9%

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +760% while net margin moved -132% 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+760%

Margin effect-132%

DalalBaazaar Score

56/ 100

Moderate

Weighted across six categories. Every point is explained below.

✓ Beta of -0.97 — historically steadier than the index
✗ Micro Cap: thinner liquidity and sharper drawdowns are normal
✗ Profits have swung sharply from year to year — earnings are hard to forecast

Quality vs. Valuation

Company Quality

60/ 100

Average

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

Valuation

56/ 100

Fair

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

52.3x

2Y Median

152.8x

28 monthly readings · mean 205.5x · range 48.0x–393.0x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 66% below its 2y median of 152.8x. 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 24% below the peer median of 69.2x.

vs. its own history

Cheap

152.8x median over 28 months · -66%

vs. sector peers

Cheap

69.2x median of 4 peers · -24%

vs. generic bands

Expensive

Above 35x

P/E (Trailing)

52.3x

P/B

9.61x

EV/EBITDA

22.3x

PEG

4.19

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well5

Margins are improving
EBITDA margin is up from 1.1% to 5.6% over 3 years.
Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Return on equity is rising
ROE has improved from -11.9% to 21.7%.
Return on capital is rising
ROCE has improved from -6.7% to 15.7%.
Valuation below its historical average
At 52.3x the stock trades 66% below its own median of 152.8x.

🔴 What Needs Attention2

Debt is rising
Total debt is up 76% over 3 years — worth checking what it funded.
Short-term liquidity is tight
Current ratio of 0.86 — near-term obligations exceed near-term assets.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 76% over 3 years, from ₹126 Cr to ₹222 Cr.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.86 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 1.1% to 5.6%. 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 66% 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 24% 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 3.4x 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

1Revenue growth stays above 79% a year✓ 104.9% CAGR
Latest reported year was -21.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 4%✓ 5.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Debt / EBITDA falls below 3x✗ 3.4x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
4Interest cover stays above 3x✓ 3.0x
How much operating profit can fall before interest stops being comfortably covered.
5Free cash flow remains positive✓ ₹71 Cr
Profit that never becomes cash eventually stops being profit.

Investment Checklist

5 / 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 · 3 neutral · 3 weak

Market Cap

₹1,268 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

52.3x

Expensive

Expensive — verify against sector peers

P/B Ratio

9.61x

Rich

Steep premium to book — needs high, durable returns to justify

EPS (TTM)

₹0.43

Profitable

Profitable on a per-share basis

ROE

21.7%

Strong

Strong capital efficiency

ROCE

15.7%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

1.42x

Moderate

Moderate leverage

Revenue Growth (YoY)

-21.4%

Shrinking

Sales are contracting

Profit Growth (YoY)

12.5%

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

₹71 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹22.51

Operating Margin

6.0%

Average

Average margins

Net Margin

3.1%

Average

Average bottom-line conversion

Current Ratio

0.86

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

-0.97

Defensive

Steadier than the market

52W Range Position

48%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

20.9 / 21.6

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

65.9

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹137 Cr	₹745 Cr	₹849 Cr	₹1,180 Cr	+104.9%
EBITDA	₹2 Cr	₹27 Cr	₹33 Cr	₹66 Cr	+250.6%
EBITDA Margin	1.1%	3.7%	3.9%	5.6%	—
PAT (Net Profit)	-₹12 Cr	₹4 Cr	₹14 Cr	₹34 Cr	—
EPS	₹-0.22	₹0.07	₹0.17	₹0.42	—
ROE	-11.9%	3.7%	11.3%	21.7%	—
ROCE	-6.7%	8.9%	7.2%	15.7%	—
Total Debt	₹126 Cr	₹176 Cr	₹239 Cr	₹222 Cr	+20.8%
Free Cash Flow	-₹140 Cr	-₹14 Cr	-₹69 Cr	₹71 Cr	—

🟢 Revenue has grown at 104.9% a year over 3 years.

🟢 EBITDA has grown at 250.6% a year over 3 years.

🟢 EBITDA Margin has risen from 1.1% to 5.6% over 3 years (+4.5 pts).

🟢 PAT (Net Profit) has turned positive, from -₹12 Cr to ₹34 Cr.

🟢 EPS has turned positive, from ₹-0.22 to ₹0.42.

🟢 ROE has risen from -11.9% to 21.7% over 3 years (+33.6 pts).

🟢 ROCE has risen from -6.7% to 15.7% over 3 years (+22.4 pts).

🔴 Total Debt has grown at 20.8% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹140 Cr to ₹71 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹598 Cr

Total Liabilities

₹442 Cr

Total Debt

₹222 Cr

Cash & Equivalents

₹12 Cr

Operating Cash Flow

₹119 Cr

Capex

-₹48 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

97.8%

Corporate Actions

Ex-Dividend Date

06 Sept 2011

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

1 positive5 general

Raj Rayon Industries Upper Circuit Streak: Day 4 Price and Data

Univest, 13 Oct

Raj Rayon Industries (RAJRILTD) Share/Stock Price Live, NSE

TechGraph, 08 Oct

Raj Rayon Industries (RAJRILTD.NS) Slips 1.71% to ₹20.14 as Stock Hovers Near Key Support - Retracement Entry

https://www.siam.in/, 22 Sept

Raj Rayon Industries Ltd Locks at Upper Circuit With 2% Gain — Buyers Queue, Sellers Absent

MarketsMojo, 12 Oct

Raj Rayon Industries Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 30 Aug

Raj Rayon Industries FY26 Net Profit Rises to Rs 3,399.28 Lakh; Results Published in Newspapers

scanx.trade, 15 MayResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

Revenue growth is negative (-21.4%) on the latest reported period — check if this is one-off or a trend.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate11.5/20

🟡Financial HealthAdequate9.8/20

🟢GrowthStrong13/20

🟢ProfitabilityStrong10.6/15

🔴ValuationDemanding6.7/15

🔴RiskHigh4.4/10

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.

This thesis breaks if

✓Revenue growth stays above 79% a year104.9% CAGR
✓EBITDA margin holds above 4%5.6%
✗Debt / EBITDA falls below 3x3.4x
✓Interest cover stays above 3x3.0x
✓Free cash flow remains positive₹71 Cr