Sky Industries Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹101.50−₹0.73 (−0.71%)

DalalBaazaar Score

60 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Moderate

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

In simple words: Reasonable but unspectacular business quality, 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, 7:01 pm

Understanding the Business

Company site ↗

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

What does this company do?

Sky Industries Limited manufactures, markets, and sells narrow woven fabrics in India.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees85

Annual revenue₹86 Cr

How does it make money?

Turns over ₹86 Cr a year. Of every ₹100 of sales, about ₹7 reaches shareholders as profit, with ₹14 left at the operating level before interest, tax and depreciation. Each of its 85 employees supports ₹1.01 Cr of revenue a year, the signature of a capital- or asset-led business.

Revenue / employee₹1.01 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 13.4% 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 +15% while net margin moved +198% 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+15%

Margin effect+198%

DalalBaazaar Score

60/ 100

Good

Weighted across six categories. Every point is explained below.

✓ Beta of 0.41 — 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
✗ Negative free cash flow means dependence on external funding

Quality vs. Valuation

Company Quality

59/ 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

12.4x

3Y Median

18.0x

40 monthly readings · mean 21.8x · range 8.9x–50.3x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 31% below its 3y median of 18.0x. 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 82% below the peer median of 69.2x.

vs. its own history

Cheap

18.0x median over 40 months · -31%

vs. sector peers

Cheap

69.2x median of 4 peers · -82%

vs. generic bands

Cheap

Below 15x

EV/EBITDA

9.6x

PEG

0.24

What's Good / What's Bad

🟢 What's Going Well4

Margins are improving
EBITDA margin is up from 7.3% to 13.7% over 3 years.
Return on equity is rising
ROE has improved from 4.9% to 12.0%.
Return on capital is rising
ROCE has improved from 10.3% to 13.4%.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention0

Nothing stands out as clearly deteriorating on the years of data available.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 134% over 3 years, from ₹14 Cr to ₹32 Cr.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹18 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from 7.3% to 13.7%. 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 31% 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 82% 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?

Growth barely outpaces inflation
Revenue compounding at 4.8% 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.
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

1EBITDA margin holds above 12%✓ 13.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA stays below 2x✗ 2.8x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
3Free cash flow remains positive✗ -₹18 Cr
Profit that never becomes cash eventually stops being profit.
4Revenue growth stays above 4% a year✓ 4.8% CAGR
Latest reported year was -0.4%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
5ROCE stays above 10%✓ 13.4%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

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

3 good · 6 neutral · 2 weak

Market Cap

₹81 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

12.4x

Cheap

Cheap against the generic band

P/B Ratio

1.59x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹8.18

Profitable

Profitable on a per-share basis

ROE

12.0%

Moderate

Moderate capital efficiency

ROCE

13.4%

Moderate

Moderate return on the capital in the business

Debt/Equity

0.64x

Moderate

Moderate leverage

Revenue Growth (YoY)

-0.4%

Shrinking

Sales are contracting

Profit Growth (YoY)

37.0%

Healthy

Profits growing at a healthy clip

Dividend Yield

0.99%

Modest

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

Free Cash Flow

-₹18 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

7.9%

Average

Average margins

Net Margin

7.5%

Average

Average bottom-line conversion

Current Ratio

1.81

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.41

Defensive

Steadier than the market

52W Range Position

53%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

96.9 / 95.0

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

58.6

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹74 Cr	₹81 Cr	₹83 Cr	₹86 Cr	+4.8%
EBITDA	₹5 Cr	₹8 Cr	₹10 Cr	₹12 Cr	+29.4%
EBITDA Margin	7.3%	10.2%	12.0%	13.7%	—
PAT (Net Profit)	₹2 Cr	₹5 Cr	₹6 Cr	₹6 Cr	+50.8%
EPS	₹2.26	₹5.77	₹7.42	₹7.69	+50.4%
ROE	4.9%	11.3%	13.0%	12.0%	—
ROCE	10.3%	17.6%	19.0%	13.4%	—
Total Debt	₹14 Cr	₹13 Cr	₹12 Cr	₹32 Cr	+32.7%
Free Cash Flow	₹1 Cr	₹8 Cr	-₹4 Cr	-₹18 Cr	—

🟢 Revenue has grown at 4.8% a year over 3 years.

🟢 EBITDA has grown at 29.4% a year over 3 years.

🟢 EBITDA Margin has risen from 7.3% to 13.7% over 3 years (+6.4 pts).

🟢 PAT (Net Profit) has grown at 50.8% a year over 3 years.

🟢 EPS has grown at 50.4% a year over 3 years.

🟢 ROE has risen from 4.9% to 12.0% over 3 years (+7.2 pts).

🟢 ROCE has risen from 10.3% to 13.4% over 3 years (+3.2 pts).

🔴 Total Debt has grown at 32.7% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹1 Cr to -₹18 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹91 Cr

Total Liabilities

₹41 Cr

Cash & Equivalents

₹1 Cr

Operating Cash Flow

₹6 Cr

Capex

-₹24 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

71.0%

Corporate Actions

Dividend Rate

₹1

Ex-Dividend Date

17 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

1 positive5 general

Sky Industries fixes record date for 10% dividend

scanx.trade, 29 SeptCapital return

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

Compare SKY INDUSTRIES with

Equitymaster, 08 Oct

PVR Inox, Sky Gold, Neogen, West Coast Paper, PTC Ind, KMEW hit 52-wk highs

Business Standard, 12 Oct

Sky Industries approves sale of Navi Mumbai factory premises

scanx.trade, 08 Oct

Big Sky Industrial Inc. (BSIN) stock price, news, quote and history

Yahoo Finance Singapore, 08 Jun

Compare SKY INDUSTRIES with

Equitymaster, 28 Sept

Watch Items

Revenue growth is negative (-0.4%) 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

StrongValuation

MiddlingBusiness Quality · Financial Health · Growth · Profitability

WeakRisk

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. 1 high-severity red flag sits above this conclusion and should be read first.

2 of 5 tripwires tripped — Debt / EBITDA stays below 2x; Free cash flow remains positive · see Key things to watch ↑