Sri Nachammai Cotton Mills Limited

Consumer Cyclical — Textile Manufacturing · BSE

₹24.00−₹1.06 (−4.23%)

DalalBaazaar Score

33 / 100

🔴 Weak

Verdict

CAUTION

Risk

Very High

Driven by high debt relative to equity, the company is currently loss-making, micro-cap size, which brings thin liquidity.

In simple words: The company is currently losing money, but sales are shrinking. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:08 pm

Caution warranted. Multiple fundamental metrics — flagged in red below — point to either valuation stretch, leverage risk, or weakening profitability. This doesn't mean avoid the stock outright, but it does mean the burden of proof is on the growth story to justify the current price.

Understanding the Business

Company site ↗

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

What does this company do?

Sri Nachammai Cotton Mills Limited engages in the textile business. It manufactures and sells combed, carded, and compact cotton hosiery, and hank yarns. The company's products are used in manufacturing fabrics and dyeing garments. It also exports its products.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Annual revenue₹65 Cr

How does it make money?

Turns over ₹65 Cr a year. Of every ₹100 of sales, about ₹-6 reaches shareholders as profit, with ₹-2 left at the operating level before interest, tax and depreciation.

EBITDA margin-1.7%

Net margin-5.9%

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.

MARUTI SUZUKI INDIA LTD.P/E 25.2x · ROE 13.4%

TITAN COMPANY LIMITEDP/E 68.5x · ROE 36.7%

TRENT LTDP/E 87.2x · ROE 25.9%

AVENUE SUPERMARTS LIMITEDP/E 69.9x · ROE 12.7%

What is its competitive advantage?Little sign of one

Returns on capital of 4.8% 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.

ROCE4.8%

ROE-30.9%

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 -45% while net margin moved +107% 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-45%

Margin effect+107%

DalalBaazaar Score

33/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 18.0% a year
✗ Profit fell 18.5% in the latest year

Quality vs. Valuation

Company Quality

28/ 100

Weak

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

Valuation

36/ 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.

vs. its own history

Not enough price and earnings history

vs. sector peers

Not enough peers with a usable P/E

vs. generic bands

N/A

No P/E — the company is lossmaking

P/E (Trailing)

Not meaningful

P/B

0.84x

EV/EBITDA

—

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well1

Return on capital is rising
ROCE has improved from -1.6% to 4.8%.

🔴 What Needs Attention2

Margins are compressing
EBITDA margin has slipped from 0.1% to -1.7% over 3 years.
Return on equity is falling
ROE has dropped from -13.8% to -30.9% — each rupee of shareholder capital earns less than it did.

Red Flags

3 items require attention · 3 high

🔴High leverageFinancial
Debt/Equity of 3.98x — earnings must service borrowings before shareholders see anything.
🔴Thin interest coverageFinancial
Operating profit covers interest only 0.9x — little room if earnings dip.
🔴The company is lossmakingFinancial
Net profit of -₹4 Cr in the latest reported year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

No clear supporting case emerges from the available numbers.

🔴 Bear CaseWhat could go wrong?

Margins are being competed away
EBITDA margin has fallen from 0.1% to -1.7%. If the trend continues, profit falls even on flat sales — and margin decline rarely reverses quickly.
Leverage amplifies any setback
Debt/Equity of 3.98x. Interest is payable whether or not the business has a good year.
Returns on shareholder capital are falling
ROE has dropped from -13.8% to -30.9%. 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.
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 -4%✓ -1.7%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Interest cover stays above 3x✗ 0.9x
How much operating profit can fall before interest stops being comfortably covered.
3Free cash flow remains positive✓ ₹0 Cr
Profit that never becomes cash eventually stops being profit.
4ROCE stays above 8%✗ 4.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

4 / 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

2 good · 2 neutral · 7 weak

Market Cap

₹10 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

Not meaningful

Loss-making

Earnings are negative, so a P/E multiple can't be read here

P/B Ratio

0.84x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹-21.76

Loss-making

Negative earnings per share — the business is losing money

ROE

-30.9%

Weak

Weak capital efficiency

ROCE

4.8%

Weak

Low return on total capital employed

Debt/Equity

3.98x

High

High leverage

Revenue Growth (YoY)

-7.2%

Shrinking

Sales are contracting

Profit Growth (YoY)

-18.5%

Falling

Profits are shrinking

Dividend Yield

None

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

Free Cash Flow

₹0 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹24

Operating Margin

6.4%

Average

Average margins

Net Margin

-14.7%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.45

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

-0.04

Defensive

Steadier than the market

52W Range Position

Near low

Near its 52-week low

Technical Snapshot

SMA 20 / SMA 50

26.5 / 26.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

35.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹117 Cr	₹66 Cr	₹69 Cr	₹65 Cr	-18.0%
EBITDA	₹0 Cr	-₹1 Cr	₹2 Cr	-₹1 Cr	—
EBITDA Margin	0.1%	-2.1%	2.3%	-1.7%	—
PAT (Net Profit)	-₹3 Cr	-₹5 Cr	-₹3 Cr	-₹4 Cr	—
EPS	₹-7.76	₹-11.17	₹-7.48	₹-8.86	—
ROE	-13.8%	-24.8%	-19.9%	-30.9%	—
ROCE	-1.6%	-3.7%	-0.4%	4.8%	—
Total Debt	₹35 Cr	₹26 Cr	₹31 Cr	₹40 Cr	+4.1%
Free Cash Flow	₹21 Cr	₹10 Cr	-₹4 Cr	₹0 Cr	-73.7%

🔴 Revenue has shrunk at 18.0% a year over 3 years.

🔴 EBITDA has turned negative, from ₹0 Cr to -₹1 Cr.

🔴 EBITDA Margin has fallen from 0.1% to -1.7% over 3 years (-1.8 pts).

🔴 ROE has fallen from -13.8% to -30.9% over 3 years (-17.1 pts).

🟢 ROCE has risen from -1.6% to 4.8% over 3 years (+6.5 pts).

🔴 Total Debt has grown at 4.1% a year over 3 years.

🔴 Free Cash Flow has shrunk at 73.7% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹94 Cr

Total Liabilities

₹81 Cr

Total Debt

₹40 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹13 Cr

Capex

-₹13 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

68.6%

Corporate Actions

Ex-Dividend Date

29 Nov 2006

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 mixed5 general

Sri Nachammai Cotton Mills reports ₹14.75 lakh net loss in Q1FY27

scanx.trade, 11 Aug

Sri Nachammai Cotton Mills shareholders approve FY26 financials, director reappointment

scanx.trade, 25 Sept

Sri Nachammai Cotton Mills schedules 46th AGM for September 25

scanx.trade, 25 Aug

Sri Nachammai Cotton Mills Ltd. Financials – Balance Sheet, Profit & Loss, Cash Flow

Value Research, 03 Sept

Sri Nachammai Cotton Mills FY26 Results: Net loss widens to ₹382 lakh

scanx.trade, 25 AugResults

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

Astral Ltd leads losers in 'A' group

Business Standard, 19 May

Watch Items

Revenue growth is negative (-7.2%) on the latest reported period — check if this is one-off or a trend.
Trading very close to its 52-week low — worth checking whether this reflects a temporary setback or a structural problem.
Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🔴Business QualityWeak7.5/20

🟡Financial HealthAdequate9/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak2.5/15

🟡ValuationFair7.1/15

🔴RiskHigh4.3/10

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.

This thesis breaks if

✓EBITDA margin holds above -4%-1.7%
✗Interest cover stays above 3x0.9x
✓Free cash flow remains positive₹0 Cr
✗ROCE stays above 8%4.8%