Shahlon Silk Industries Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹23.30−₹0.05 (−0.21%)

DalalBaazaar Score

40 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by moderate debt load, negative free cash flow, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, but sales are shrinking. 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 Shahlon Silk Industries Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Shahlon Silk Industries Limited manufactures, sells, and trades in fabrics on water jet looms, air jet looms, and rapier looms in India and internationally.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees484

Annual revenue₹246 Cr

How does it make money?

Turns over ₹246 Cr a year. Of every ₹100 of sales, about ₹2 reaches shareholders as profit, with ₹10 left at the operating level before interest, tax and depreciation. Each of its 484 employees supports ₹50.8 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹50.8 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 10.3% 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 -18% while net margin moved +44% 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-18%

Margin effect+44%

DalalBaazaar Score

40/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 6.6% a year
✗ Profit CAGR of only 5.6%
✗ Latest-year revenue growth of -23.4% is below the longer-term trend — momentum is fading
✗ Profit fell 25.0% in the latest year

Quality vs. Valuation

Company Quality

37/ 100

Weak

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

Valuation

55/ 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

48.5x

3Y Median

49.2x

40 monthly readings · mean 48.8x · range 30.9x–69.2x

Sector Median

69.2x

median of 4 sector peers

🟡Currently trading close to its 3y median of 49.2x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 30% below the peer median of 69.2x.

vs. its own history

Fair

49.2x median over 40 months · -1%

vs. sector peers

Cheap

69.2x median of 4 peers · -30%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

13.6x

PEG

8.70

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from 7.2% to 9.9% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention1

Return on capital is falling
ROCE has declined from 13.2% to 10.3% — often a sign of competition or overexpansion.

Red Flags

4 items require attention · 3 high · 1 watch

🔴Thin interest coverageFinancial
Operating profit covers interest only 1.4x — 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.
🔴Inventory building faster than salesFinancial
Inventory up 94% against revenue up -18% — stock may not be moving.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹0 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 7.2% to 9.9%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Cheaper than its peers
It trades 30% 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?

The debt load needs earnings to hold up
Debt is 5.1x EBITDA. At that level a downturn in earnings turns a manageable balance sheet into a refinancing problem, and lenders get paid before shareholders.
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
3 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

1EBITDA margin holds above 8%✓ 9.9%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 5.1x
Already stretched, so this is a reduction target rather than a level to hold. Around 3x is where lenders typically start attaching conditions.
3Free cash flow remains positive✗ -₹0 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.4x
How much operating profit can fall before interest stops being comfortably covered.
5ROCE stays above 8%✓ 10.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

2 / 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

1 good · 5 neutral · 5 weak

Market Cap

₹208 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

48.5x

Expensive

Expensive — verify against sector peers

P/B Ratio

1.85x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹0.48

Profitable

Profitable on a per-share basis

ROE

4.0%

Weak

Weak capital efficiency

ROCE

10.3%

Moderate

Moderate return on the capital in the business

Debt/Equity

1.12x

Moderate

Moderate leverage

Revenue Growth (YoY)

-23.4%

Shrinking

Sales are contracting

Profit Growth (YoY)

-25.0%

Falling

Profits are shrinking

Dividend Yield

0.30%

Modest

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

Free Cash Flow

-₹0 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

10.2%

Average

Average margins

Net Margin

1.7%

Weak

Very little revenue reaches the bottom line

Current Ratio

3.00

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.68

Defensive

Steadier than the market

52W Range Position

41%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

23.3 / 23.4

Bearish alignment (short < long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

51.4

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹301 Cr	₹306 Cr	₹235 Cr	₹246 Cr	-6.6%
EBITDA	₹22 Cr	₹27 Cr	₹30 Cr	₹24 Cr	+3.8%
EBITDA Margin	7.2%	8.9%	12.8%	9.9%	—
PAT (Net Profit)	₹4 Cr	₹4 Cr	₹3 Cr	₹4 Cr	+5.6%
EPS	₹0.42	₹0.45	₹0.39	₹0.5	+6.0%
ROE	3.8%	3.9%	3.3%	4.0%	—
ROCE	13.2%	12.5%	12.1%	10.3%	—
Total Debt	₹131 Cr	₹133 Cr	₹134 Cr	₹123 Cr	-2.0%
Free Cash Flow	₹10 Cr	₹10 Cr	₹1 Cr	-₹0 Cr	—

🔴 Revenue has shrunk at 6.6% a year over 3 years.

🟢 EBITDA has grown at 3.8% a year over 3 years.

🟢 EBITDA Margin has risen from 7.2% to 9.9% over 3 years (+2.7 pts).

🟢 PAT (Net Profit) has grown at 5.6% a year over 3 years.

🟢 EPS has grown at 6.0% a year over 3 years.

🟡 ROE has held roughly flat at 4.0% over 3 years.

🔴 ROCE has fallen from 13.2% to 10.3% over 3 years (-3.0 pts).

🟢 Total Debt has shrunk at 2.0% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹10 Cr to -₹0 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹278 Cr

Total Liabilities

₹169 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹0 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

81.3%

Corporate Actions

Dividend Rate

₹0.07

Ex-Dividend Date

18 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

1 positive1 mixed4 general

Shahlon Silk Industries Share Price gain and sector view

Univest, 30 SeptPrice 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.

Shahlon Silk AGM passes all four resolutions including FY26 dividend

scanx.trade, 01 OctCapital return

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

T.T (NSEI:TTL) - Stock Analysis

Simply Wall Street, 14 Oct

Shahlon Silk Industries Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 31 Aug

Shahlon Silk Industries Ltd. Upper Circuit: Price and Key Data

Univest, 22 Sept

BTTL Stock Price and Chart — NSE:BTTL

TradingView, 20 Apr

Watch Items

Revenue growth is negative (-23.4%) 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

MiddlingBusiness Quality · Valuation · Risk

WeakFinancial Health · Growth · Profitability

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

3 of 5 tripwires tripped — Debt / EBITDA falls below 3x; Free cash flow remains positive; Interest cover stays above 3x · see Key things to watch ↑