R & B Denims Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹8.23−₹0.29 (−3.40%)

DalalBaazaar Score

54 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

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

In simple words: Reasonable but unspectacular business quality, 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, 7:02 pm

Understanding the Business

Company site ↗

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

What does this company do?

R & B Denims Limited, together with its subsidiary, manufactures and sells denim textile products in India.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees354

Annual revenue₹457 Cr

How does it make money?

Turns over ₹457 Cr a year. Of every ₹100 of sales, about ₹4 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 354 employees supports ₹1.29 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.29 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.

Compared side by side in Peers ↓

What is its competitive advantage?Little sign of one

Returns on capital of 14.5% 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?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +80% while net margin moved -37% 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+80%

Margin effect-37%

DalalBaazaar Score

54/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 8.5% is weak
✗ ROE has fallen by 10.3 points over the period

Quality vs. Valuation

Company Quality

49/ 100

Average

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

Valuation

81/ 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

10.4x

1.3Y Median

16.4x

15 monthly readings · mean 26.4x · range 8.9x–55.9x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 37% below its 1.3y median of 16.4x. 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 85% below the peer median of 69.2x.

vs. its own history

Cheap

16.4x median over 15 months · -37%

vs. sector peers

Cheap

69.2x median of 4 peers · -85%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

5.8x

PEG

2.36

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.29x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on equity is falling
ROE has dropped from 18.8% to 8.5% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 21.3% to 14.5% — often a sign of competition or overexpansion.

Red Flags

6 items require attention · 2 high · 4 watch

🔴Receivables growing faster than salesFinancial
Receivables up 185% against revenue up 80% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 289% against revenue up 80% — stock may not be moving.
🟡Debt is increasingFinancial
Total debt is up 43% over 3 years.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹18 Cr in the latest year.
🟡Margins are compressingFinancial
EBITDA margin is down 3.0 points over 3 years.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 29% over 3 years — each existing share owns a smaller slice of the company.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Priced below its own history
The stock trades 37% 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 85% 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 14.6% to 11.6%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Sales are being booked faster than collected
Receivables are up 185% against revenue up 80%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
Returns on shareholder capital are falling
ROE has dropped from 18.8% to 8.5%. 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.
Several serious flags at once
2 high-severity checks triggered. Individually each has an explanation; together they raise the chance that something structural is wrong rather than a one-off.

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

1Revenue growth stays above 16% a year✓ 21.7% CAGR
Latest reported year was 16.3%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 10%✓ 11.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹18 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 1.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 12%✓ 14.5%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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 · 4 neutral · 2 weak

Market Cap

₹235 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

10.4x

Cheap

Cheap against the generic band

P/B Ratio

1.11x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹0.79

Profitable

Profitable on a per-share basis

ROE

8.5%

Moderate

Moderate capital efficiency

ROCE

14.5%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.29x

Low

Conservative leverage

Revenue Growth (YoY)

16.3%

Healthy

Healthy top-line growth

Profit Growth (YoY)

-31.1%

Falling

Profits are shrinking

Dividend Yield

None

No dividend yield reported — usually means no payout, but verify if one was recently initiated

Free Cash Flow

-₹18 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

3.8%

Weak

Thin margins leave little room for error

Net Margin

2.7%

Weak

Very little revenue reaches the bottom line

Current Ratio

2.62

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.14

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

8.9 / 9.1

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

24.4

Oversold zone

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹253 Cr	₹344 Cr	₹364 Cr	₹457 Cr	+21.7%
EBITDA	₹37 Cr	₹53 Cr	₹58 Cr	₹53 Cr	+12.8%
EBITDA Margin	14.6%	15.4%	16.0%	11.6%	—
PAT (Net Profit)	₹15 Cr	₹19 Cr	₹27 Cr	₹17 Cr	+4.4%
EPS	₹0.71	₹0.88	₹1.02	₹0.63	-4.0%
ROE	18.8%	11.5%	15.0%	8.5%	—
ROCE	21.3%	17.7%	20.2%	14.5%	—
Total Debt	₹52 Cr	₹68 Cr	₹94 Cr	₹74 Cr	+12.7%
Free Cash Flow	₹38 Cr	₹18 Cr	₹15 Cr	-₹18 Cr	—

🟢 Revenue has grown at 21.7% a year over 3 years.

🟢 EBITDA has grown at 12.8% a year over 3 years.

🔴 EBITDA Margin has fallen from 14.6% to 11.6% over 3 years (-3.0 pts).

🟢 PAT (Net Profit) has grown at 4.4% a year over 3 years.

🔴 EPS has shrunk at 4.0% a year over 3 years.

🔴 ROE has fallen from 18.8% to 8.5% over 3 years (-10.3 pts).

🔴 ROCE has fallen from 21.3% to 14.5% over 3 years (-6.8 pts).

🔴 Total Debt has grown at 12.7% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹38 Cr to -₹18 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹356 Cr

Total Liabilities

₹104 Cr

Cash & Equivalents

₹2 Cr

Operating Cash Flow

₹9 Cr

Capex

-₹27 Cr

Shareholding (proxy)

Institutional Holding

1.8%

Insider Holding

71.4%

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 mixed1 negative4 general

R&B Denims Ltd is Rated Hold

MarketsMojo, 18 Oct

R&B Denims Limited Secures INR 2.16 Billion Multi-Million Meter Sales Orders

scanx.trade, 13 Oct

R&B Denims Lower Circuit Today: Price, Data and Peers

Univest, 16 Oct

ED raids RM Drip and R&B Denims: Investigates 6 cities including Mumbai

Bhaskar English, 16 Oct

R&B Denims Share Price Hits 52-Week High After 16-Day Rally | Stock Market Today

Samco, 16 FebPrice 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.

SEBI conducts searches at RM Drip, R&B Denims in SME stock manipulation probe

BusinessLine, 27 AprRegulatory

🔴Potentially negativeRegulatory and legal actions carry a financial cost and a governance question. The second usually matters more than the first.

Watch Items

Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.
RSI is in oversold territory — could mean either a bargain or a stock still falling for good reason. Check the 'why' before assuming reversal.

DalalBaazaar Thesis

StrongFinancial Health · Valuation

MiddlingGrowth

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

1 of 5 tripwires tripped — Free cash flow remains positive · see Key things to watch ↑