Sarla Performance Fibers Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹95.25−₹0.93 (−0.97%)

DalalBaazaar Score

42 / 100

🟡 Moderate

Verdict

CAUTION

Risk

Moderate

Driven by 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. Valuation is currently 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 Sarla Performance Fibers Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Sarla Performance Fibers Limited, together with its subsidiaries, manufactures and sells polyester and nylon yarns in India and internationally. It operates through two segments, Manufacturing of Yarn and Generation of Wind Power.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees433

Annual revenue₹391 Cr

How does it make money?

Turns over ₹391 Cr a year. Of every ₹100 of sales, about ₹-3 reaches shareholders as profit, with ₹14 left at the operating level before interest, tax and depreciation. Each of its 433 employees supports ₹90.3 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹90.3 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 -1.4% 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 +2% while net margin moved -160% 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+2%

Margin effect-160%

DalalBaazaar Score

42/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Return on equity is negative
✗ ROE has fallen by 8.0 points over the period

Quality vs. Valuation

Company Quality

40/ 100

Weak

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

Valuation

33/ 100

Expensive

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

207.1x

3Y Median

18.8x

40 monthly readings · mean 20.2x · range 9.3x–44.4x

Sector Median

69.2x

median of 4 sector peers

⚠️Current valuation is approximately 999% above its 3y median of 18.8x. 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 199% above the peer median of 69.2x.

vs. its own history

Expensive

18.8x median over 40 months · +999%

vs. sector peers

Expensive

69.2x median of 4 peers · +199%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

17.3x

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 5.4% to -2.6% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 8.6% to -1.4% — often a sign of competition or overexpansion.

Red Flags

6 items require attention · 4 high · 2 watch

🔴Debt has risen sharplyFinancial
Total debt is up 82% over 3 years, from ₹109 Cr to ₹198 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only -1.1x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹13 Cr in the latest reported year.
🔴Receivables growing faster than salesFinancial
Receivables up 89% against revenue up 2% — sales are being booked faster than they are collected.
🟡Interest coverage is deterioratingFinancial
Cover has fallen from 8.7x to -1.1x.
🟡Margins are compressingFinancial
EBITDA margin is down 2.8 points over 3 years.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Self-funding with balance-sheet headroom
Positive free cash flow of ₹56 Cr alongside low debt means growth, buybacks or dividends need no outside money — and a downturn can be absorbed rather than refinanced.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 16.8% to 14.0%. 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 3.6x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
Sales are being booked faster than collected
Receivables are up 89% against revenue up 2%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
The price already assumes success
The stock trades 999% 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.
Growth barely outpaces inflation
Revenue compounding at 0.7% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.

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

1EBITDA margin holds above 12%✓ 14.0%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 3.6x
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✗ -1.1x
How much operating profit can fall before interest stops being comfortably covered.
4Revenue growth stays above 4% a year✗ 0.7% CAGR
Latest reported year was 10.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5Free cash flow remains positive✓ ₹56 Cr
Profit that never becomes cash eventually stops being profit.

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

6 good · 2 neutral · 3 weak

Market Cap

₹757 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

207.1x

Expensive

Expensive — verify against sector peers

P/B Ratio

1.82x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹0.46

Profitable

Profitable on a per-share basis

ROE

-2.6%

Weak

Weak capital efficiency

ROCE

-1.4%

Weak

Low return on total capital employed

Debt/Equity

0.40x

Low

Conservative leverage

Revenue Growth (YoY)

10.6%

Healthy

Healthy top-line growth

Profit Growth (YoY)

76.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

2.10%

Healthy

Meaningful cash return while you hold the stock

Free Cash Flow

₹56 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

Operating Margin

18.7%

Good

Healthy core-business profitability

Net Margin

0.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.22

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.52

Defensive

Steadier than the market

52W Range Position

63%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

96.9 / 99.0

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

43.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹383 Cr	₹374 Cr	₹414 Cr	₹391 Cr	+0.7%
EBITDA	₹64 Cr	₹63 Cr	₹96 Cr	₹55 Cr	-5.2%
EBITDA Margin	16.8%	16.9%	23.2%	14.0%	—
PAT (Net Profit)	₹21 Cr	₹33 Cr	₹62 Cr	-₹13 Cr	—
EPS	₹2.56	₹3.94	₹7.47	₹-1.57	—
ROE	5.4%	7.7%	12.7%	-2.6%	—
ROCE	8.6%	10.6%	16.7%	-1.4%	—
Total Debt	₹109 Cr	₹137 Cr	₹181 Cr	₹198 Cr	+22.2%
Free Cash Flow	₹55 Cr	₹22 Cr	₹42 Cr	₹56 Cr	+0.5%

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

🔴 EBITDA has shrunk at 5.2% a year over 3 years.

🔴 EBITDA Margin has fallen from 16.8% to 14.0% over 3 years (-2.8 pts).

🔴 PAT (Net Profit) has turned negative, from ₹21 Cr to -₹13 Cr.

🔴 EPS has turned negative, from ₹2.56 to ₹-1.57.

🔴 ROE has fallen from 5.4% to -2.6% over 3 years (-8.0 pts).

🔴 ROCE has fallen from 8.6% to -1.4% over 3 years (-10.0 pts).

🔴 Total Debt has grown at 22.2% a year over 3 years.

🟡 Free Cash Flow has been broadly flat over 3 years (0.5% a year).

Balance Sheet & Cash Flow — FY2026

Total Assets

₹831 Cr

Total Liabilities

₹316 Cr

Cash & Equivalents

₹3 Cr

Operating Cash Flow

₹74 Cr

Capex

-₹18 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

126.4%

Corporate Actions

Dividend Rate

₹2

Ex-Dividend Date

22 Jul 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 positive2 mixed2 general

Sarla Performance Fibers (SARLAPOLY.NS) Edges Higher as Stock Tests Upper Range - ETF Premium Discount

siam.in, 06 Oct

Pashupati Cotspin vs Alok Industries vs Sarla Performance Fibers

Univest, 14 Oct

Sarla Performance Fibers Buyback Opens May 21

scanx.trade, 21 MayCapital return

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

Sarla Performance Fibers To Buyback 4 Million Shares At ₹110 Via Tender Offer Route

Sahi, 11 MayCapital return

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

Sarla Performance Fibers Share Price Gains 3.17% After Q1 FY27 Results

Univest, 06 AugPrice 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.

Sarla Performance Fibers Q1 Results: Auditors issue qualified opinion

scanx.trade, 06 AugResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

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. 4 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; Revenue growth stays above 4% a year · see Key things to watch ↑