Suryalakshmi Cotton Mills Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹54.50−₹0.14 (−0.26%)

DalalBaazaar Score

37 / 100

🔴 Weak

Verdict

CAUTION

Risk

Moderate

Driven by moderate debt load, micro-cap size, which brings thin liquidity.

In simple words: The business is earning a fairly low return on the money invested in it, with modest growth. Thin profit margins are the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Suryalakshmi 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?

Suryalakshmi Cotton Mills Limited manufactures and sells cotton and blended yarns, denim fabrics, and garments in India, Bangladesh, Ethiopia, Guatemala, Kenya, Mauritius, Madagascar, South Korea, and internationally.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees2,188

Annual revenue₹776 Cr

How does it make money?

Turns over ₹776 Cr a year. Of every ₹100 of sales, about ₹0 reaches shareholders as profit, with ₹6 left at the operating level before interest, tax and depreciation. Each of its 2,188 employees supports ₹35.5 lakh of revenue a year, the signature of a people-led business.

EBITDA margin5.6%

Net margin0.4%

Revenue / employee₹35.5 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.

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 6.0% 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.

ROCE6.0%

ROE1.1%

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 -7% while net margin moved -68% 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-7%

Margin effect-68%

DalalBaazaar Score

37/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Revenue has contracted at 2.3% a year
✗ Profit has declined at 33.1% a year

Quality vs. Valuation

Company Quality

30/ 100

Weak

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

Valuation

70/ 100

Cheap

What you are being asked to pay, ignoring how good the business is.

Optically cheap, but the underlying business scores poorly. Cheap-and-weak is what a value trap looks like from the outside — the low price may be deserved.

Historical Valuation

Current P/E

25.6x

3Y Median

31.5x

40 monthly readings · mean 28.3x · range 10.9x–48.7x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 19% below its 3y median of 31.5x. 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 63% below the peer median of 69.2x.

vs. its own history

Fair

31.5x median over 40 months · -19%

vs. sector peers

Cheap

69.2x median of 4 peers · -63%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

25.6x

P/B

0.38x

EV/EBITDA

9.3x

PEG

—

Dividend Yield

None

What's Good / What's Bad

🟢 What's Going Well1

Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention5

Margins are compressing
EBITDA margin has slipped from 7.3% to 5.6% over 3 years.
Debt is rising
Total debt is up 56% over 3 years — worth checking what it funded.
Return on capital is falling
ROCE has declined from 9.6% to 6.0% — often a sign of competition or overexpansion.
Receivables growing faster than sales
Receivables are up 26% against revenue growth of -7% — customers are taking longer to pay.
Inventory building faster than sales
Inventory is up 33% against revenue growth of -7% — stock may not be moving.

Red Flags

5 items require attention · 2 high · 3 watch

🔴Debt has risen sharplyFinancial
Total debt is up 56% over 3 years, from ₹191 Cr to ₹298 Cr.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.3x — little room if earnings dip.
🟡Profit is decliningFinancial
Net profit is down 70% over 3 years.
🟡Receivables growing faster than salesFinancial
Receivables up 26% against revenue up -7% — sales are being booked faster than they are collected.
🟡Inventory building faster than salesFinancial
Inventory up 33% against revenue up -7% — stock may not be moving.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 63% 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?

Margins are being competed away
EBITDA margin has fallen from 7.3% to 5.6%. 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 6.9x 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 26% against revenue up -7%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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

1EBITDA margin holds above 4%✓ 5.6%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 6.9x
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✗ 1.3x
How much operating profit can fall before interest stops being comfortably covered.
4Free cash flow remains positive✓ ₹33 Cr
Profit that never becomes cash eventually stops being profit.
5ROCE stays above 8%✗ 6.0%
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

4 good · 5 neutral · 2 weak

Market Cap

₹102 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

25.6x

Fair

Fairly valued against the generic band

P/B Ratio

0.38x

Reasonable

Reasonable against the company's book value

EPS (TTM)

₹2.13

Profitable

Profitable on a per-share basis

ROE

1.1%

Weak

Weak capital efficiency

ROCE

6.0%

Weak

Low return on total capital employed

Debt/Equity

1.11x

Moderate

Moderate leverage

Revenue Growth (YoY)

2.2%

Modest

Modest growth

Profit Growth (YoY)

61.1%

Healthy

Profits growing at a healthy clip

Dividend Yield

None

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

Free Cash Flow

₹33 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹54.5

Operating Margin

6.3%

Average

Average margins

Net Margin

0.5%

Weak

Very little revenue reaches the bottom line

Current Ratio

1.31

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.78

Defensive

Steadier than the market

52W Range Position

47%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

56.8 / 57.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

41.5

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹831 Cr	₹762 Cr	₹769 Cr	₹776 Cr	-2.3%
EBITDA	₹61 Cr	₹48 Cr	₹45 Cr	₹43 Cr	-10.9%
EBITDA Margin	7.3%	6.3%	5.8%	5.6%	—
PAT (Net Profit)	₹10 Cr	₹4 Cr	₹4 Cr	₹3 Cr	-33.1%
EPS	₹5.53	₹1.92	₹1.93	₹1.66	-33.0%
ROE	4.0%	1.4%	1.3%	1.1%	—
ROCE	9.6%	6.8%	7.1%	6.0%	—
Total Debt	₹191 Cr	₹219 Cr	₹332 Cr	₹298 Cr	+15.9%
Free Cash Flow	₹75 Cr	-₹14 Cr	-₹14 Cr	₹33 Cr	-24.1%

🔴 Revenue has shrunk at 2.3% a year over 3 years.

🔴 EBITDA has shrunk at 10.9% a year over 3 years.

🔴 EBITDA Margin has fallen from 7.3% to 5.6% over 3 years (-1.8 pts).

🔴 PAT (Net Profit) has shrunk at 33.1% a year over 3 years.

🔴 EPS has shrunk at 33.0% a year over 3 years.

🔴 ROE has fallen from 4.0% to 1.1% over 3 years (-2.8 pts).

🔴 ROCE has fallen from 9.6% to 6.0% over 3 years (-3.6 pts).

🔴 Total Debt has grown at 15.9% a year over 3 years.

🔴 Free Cash Flow has shrunk at 24.1% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹725 Cr

Total Liabilities

₹453 Cr

Total Debt

₹298 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

₹62 Cr

Capex

-₹29 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

72.0%

Corporate Actions

Ex-Dividend Date

18 Aug 2017

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 mixed1 negative3 general

Suryalakshmi Cotton Mills 63rd AGM: all five resolutions passed

scanx.trade, 30 Sept

Suryalakshmi Cotton Mills Ltd Downgraded to Sell Amid Technical and Fundamental Concerns

MarketsMojo, 08 OctAnalyst view

🔴Potentially negativeAn analyst opinion changing, which moves the price without changing the business.

Suryalakshmi Cotton Mills Share Price rises 8.83% today

Univest, 17 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.

Suryalakshmi Cotton Mills Q1 Results: Net Profit Jumps 61% YoY To ₹2.35 Cr

scanx.trade, 08 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Suryalakshmi Cotton Mills Ltd. Shareholding Pattern – Promoters, FIIs & DIIs

Value Research, 28 Aug

Suryalakshmi Cotton Mills Share Price

Upstox, 22 Oct

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🔴Business QualityWeak5.9/20

🟡Financial HealthAdequate9.6/20

🔴GrowthWeak2.4/20

🔴ProfitabilityWeak4.5/15

🟡ValuationFair9.5/15

🟡RiskModerate5.2/10

Cheap, but for a reason

The low price is the whole case here, and the business underneath scores poorly. Cheap-and-weak is what a value trap looks like from the outside — it needs a specific reason the numbers are about to improve, not just the observation that they are low. 2 high-severity red flags sit above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 4%5.6%
✗Debt / EBITDA falls below 3x6.9x
✗Interest cover stays above 3x1.3x
✓Free cash flow remains positive₹33 Cr
✗ROCE stays above 8%6.0%