Salona Cotspin Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹269.75+₹5.10 (+1.93%)

DalalBaazaar Score

39 / 100

🔴 Weak

Verdict

CAUTION

Risk

High

Driven by high debt relative to equity, micro-cap size, which brings thin liquidity, a very high earnings multiple, which leaves little margin for disappointment.

In simple words: The business is earning a fairly low return on the money invested in it, with both sales and profits growing well. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 7:03 pm

Understanding the Business

Company site ↗

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

What does this company do?

Salona Cotspin Limited engages in the manufacture and sale of cotton yarn, knitted fabrics, and garments in India and internationally. It offers ring spun, compact, open end, blend, melange, slub, organic, regenagri, recycle cotton, and contamination free yarn products.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees623

Annual revenue₹560 Cr

How does it make money?

Turns over ₹560 Cr a year. Of every ₹100 of sales, about ₹0 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 623 employees supports ₹89.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹89.9 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?Some evidence

ROCE of 16.3% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

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 +27% while net margin moved -93% 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+27%

Margin effect-93%

DalalBaazaar Score

39/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ ROE of 1.9% is weak
✗ ROE has fallen by 21.8 points over the period

Quality vs. Valuation

Company Quality

40/ 100

Weak

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

Valuation

47/ 100

Fair

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

Weak on business quality and not cheap enough to compensate.

Historical Valuation

Current P/E

62.0x

3Y Median

23.9x

40 monthly readings · mean 31.7x · range 7.7x–90.8x

Sector Median

69.2x

median of 4 sector peers

⚠️Current valuation is approximately 159% above its 3y median of 23.9x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟡Against its sector it is priced broadly in line with the peer median of 69.2x.

vs. its own history

Expensive

23.9x median over 40 months · +159%

vs. sector peers

Fair

69.2x median of 4 peers · -10%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

9.7x

PEG

1.31

What's Good / What's Bad

🟢 What's Going Well2

Cash flow has turned positive
Free cash flow moved from negative to positive over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention3

Margins are compressing
EBITDA margin has slipped from 7.9% to 6.1% over 3 years.
Return on equity is falling
ROE has dropped from 23.7% to 1.9% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 25.5% to 16.3% — often a sign of competition or overexpansion.

Red Flags

3 items require attention · 2 high · 1 watch

🔴High leverageFinancial
Debt/Equity of 2.26x — earnings must service borrowings before shareholders see anything.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.2x — little room if earnings dip.
🟡Profit is decliningFinancial
Net profit is down 91% over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

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 7.9% to 6.1%. 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 5.6x 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 159% 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 23.7% to 1.9%. 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.

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

1EBITDA margin holds above 4%✓ 6.1%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 5.6x
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✗ 1.2x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 6% a year✓ 8.2% CAGR
Latest reported year was 25.1%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹68 Cr
Profit that never becomes cash eventually stops being profit.

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 · 3 neutral · 3 weak

Market Cap

₹142 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

62.0x

Expensive

Expensive — verify against sector peers

P/B Ratio

1.70x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹4.35

Profitable

Profitable on a per-share basis

ROE

1.9%

Weak

Weak capital efficiency

ROCE

16.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

2.26x

High

High leverage

Revenue Growth (YoY)

25.1%

Healthy

Healthy top-line growth

Profit Growth (YoY)

47.4%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.22%

Modest

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

Free Cash Flow

₹68 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

4.2%

Weak

Thin margins leave little room for error

Net Margin

0.4%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.12

Adequate

Adequate, but no real cushion

Beta (vs Nifty)

0.24

Defensive

Steadier than the market

52W Range Position

58%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

269.3 / 264.7

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

45.2

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹442 Cr	₹674 Cr	₹615 Cr	₹560 Cr	+8.2%
EBITDA	₹35 Cr	₹30 Cr	₹32 Cr	₹34 Cr	-0.7%
EBITDA Margin	7.9%	4.5%	5.1%	6.1%	—
PAT (Net Profit)	₹18 Cr	₹6 Cr	₹3 Cr	₹2 Cr	-55.4%
EPS	₹33.39	₹11.64	₹5.95	₹2.97	-55.4%
ROE	23.7%	7.7%	3.8%	1.9%	—
ROCE	25.5%	14.1%	15.1%	16.3%	—
Total Debt	₹157 Cr	₹257 Cr	₹239 Cr	₹190 Cr	+6.5%
Free Cash Flow	-₹9 Cr	-₹84 Cr	₹37 Cr	₹68 Cr	—

🟢 Revenue has grown at 8.2% a year over 3 years.

🟡 EBITDA has been broadly flat over 3 years (-0.7% a year).

🔴 EBITDA Margin has fallen from 7.9% to 6.1% over 3 years (-1.8 pts).

🔴 PAT (Net Profit) has shrunk at 55.4% a year over 3 years.

🔴 EPS has shrunk at 55.4% a year over 3 years.

🔴 ROE has fallen from 23.7% to 1.9% over 3 years (-21.8 pts).

🔴 ROCE has fallen from 25.5% to 16.3% over 3 years (-9.2 pts).

🔴 Total Debt has grown at 6.5% a year over 3 years.

🟢 Free Cash Flow has turned positive, from -₹9 Cr to ₹68 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹304 Cr

Total Liabilities

₹220 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹79 Cr

Capex

-₹11 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

78.2%

Corporate Actions

Dividend Rate

₹0.6

Ex-Dividend Date

16 Sept 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

6 general

Volume Gainers | July 23, 2026

HDFC Sky, 23 Jul

Salona Cotspin Share Price Forecast to 2030

Univest, 27 Jul

Orchasp Ltd leads losers in 'B' group

Business Standard, 17 Sept

Volume Gainers | July 23, 2026, 4:00 PM IST

HDFC Sky, 23 Jul

Salona Cotspin Share: Bull Case vs Bear Case for 2026

Univest, 18 Sept

Salona Cotspin Share Price

Upstox, 24 Oct

Watch Items

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

DalalBaazaar Thesis

MiddlingFinancial Health

WeakBusiness Quality · Growth · Profitability · Valuation · Risk

Points for each in the Score ↑

Weak on the fundamentals

Poor scores on business quality without a price low enough to compensate. There is no obvious argument for owning this over a stronger company at a similar valuation. 2 high-severity red flags sit 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 ↑