Southern Latex Limited

Basic Materials — Chemicals · BSE

₹27.65+₹0.78 (+2.90%)

DalalBaazaar Score

43 / 100

🟡 Moderate

Verdict

CAUTION

Risk

High

Driven by negative free cash flow, 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. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:56 pm

Understanding the Business

Company site ↗

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

What does this company do?

Southern Latex Limited manufactures, processes, and sells rubberized coir and related products. The company was incorporated in 1989 and is based in Chennai, India.

IndustryChemicals

SectorBasic Materials

Employees4

Who are its competitors?

The closest listed comparisons in its industry are PIDILITE INDUSTRIES LTD, SRF LTD, UPL 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 4.6% 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 ROE15.4%

DalalBaazaar Score

43/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ ROE of 3.9% is weak

Quality vs. Valuation

Company Quality

40/ 100

Weak

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

Valuation

34/ 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

70.9x

3Y Median

88.5x

40 monthly readings · mean 94.6x · range 46.6x–247.6x

Sector Median

33.8x

median of 3 sector peers

🟢Current valuation is approximately 20% below its 3y median of 88.5x. 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 110% above the peer median of 33.8x.

vs. its own history

Fair

88.5x median over 40 months · -20%

vs. sector peers

Expensive

33.8x median of 3 peers · +110%

vs. generic bands

Expensive

Above 35x

EV/EBITDA

62.4x

PEG

13.22

What's Good / What's Bad

🟢 What's Going Well2

Return on capital is rising
ROCE has improved from -3.9% to 4.6%.
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 · 2 high

🔴Free cash flow negative for 4 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴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.

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?

A premium to the sector to defend
It trades 110% above the peer median. That premium needs a reason that persists, or it closes.
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

1Free cash flow remains positive✗ -₹0 Cr
Profit that never becomes cash eventually stops being profit.
2ROCE stays above 8%✗ 4.6%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.
3Valuation vs its own median of 88.5x✓ 70.9x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

3 / 9 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ 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 · 6 neutral · 4 weak

Market Cap

₹20 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

70.9x

Expensive

Expensive — verify against sector peers

P/B Ratio

2.89x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹0.39

Profitable

Profitable on a per-share basis

ROE

3.9%

Weak

Weak capital efficiency

ROCE

4.6%

Weak

Low return on total capital employed

Debt/Equity

Not available

No data

Source didn't return this field

Revenue Growth (YoY)

Not available

No data

Source didn't return this field

Profit Growth (YoY)

5.9%

Modest

Slow profit growth

Dividend Yield

None

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

Free Cash Flow

-₹0 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

0.0%

Weak

Thin margins leave little room for error

Net Margin

0.0%

Weak

Very little revenue reaches the bottom line

Current Ratio

223.39

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.18

Defensive

Steadier than the market

52W Range Position

11%

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

30.3 / 31.0

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

33.0

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
EBITDA	-₹0 Cr	-₹0 Cr	₹0 Cr	₹0 Cr	—
PAT (Net Profit)	₹0 Cr	₹0 Cr	₹0 Cr	₹0 Cr	+5.4%
EPS	₹0.32	₹0.32	₹0.31	₹0.37	+5.0%
ROE	3.7%	3.6%	3.4%	3.9%	—
ROCE	-3.9%	-4.2%	4.1%	4.6%	—
Total Debt	₹0 Cr	₹0 Cr	—	—	—
Free Cash Flow	-₹0 Cr	-₹0 Cr	-₹0 Cr	-₹0 Cr	—

🟢 EBITDA has turned positive, from -₹0 Cr to ₹0 Cr.

🟢 PAT (Net Profit) has grown at 5.4% a year over 3 years.

🟢 EPS has grown at 5.0% a year over 3 years.

🟡 ROE has held roughly flat at 3.9% over 3 years.

🟢 ROCE has risen from -3.9% to 4.6% over 3 years (+8.5 pts).

Balance Sheet & Cash Flow — FY2026

Total Assets

₹7 Cr

Total Liabilities

₹0 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹0 Cr

Capex

—

Shareholding (proxy)

Institutional Holding

1.6%

Insider Holding

67.8%

Peer Comparison

Company	P/E	ROE
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

4 general

Southern Latex shareholders approve name change to Shirdi Engineering

scanx.trade, 03 Sept

Mattress Market Size, Share & Industry Report [2026-2034]

Fortune Business Insights, 28 Sept

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TradingView, 02 Oct

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TradingView, 04 Feb

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.
2 metrics couldn't be retrieved for this stock — this is more common for smaller or thinly-covered listings.

DalalBaazaar Thesis

MiddlingFinancial Health · Valuation · Risk

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

2 of 3 tripwires tripped — Free cash flow remains positive; ROCE stays above 8% · see Key things to watch ↑