Vardhman Polytex Limited

Consumer Cyclical — Textile Manufacturing · NSE

₹5.45+₹0.13 (+2.44%)

DalalBaazaar Score

24 / 100

🔴 Weak

Verdict

HIGH RISK

Risk

Very High

Driven by negative shareholders' equity — the company owes more than it owns, short-term liabilities exceed short-term assets, negative free cash flow.

In simple words: The company owes more than it owns — years of losses have wiped out its net worth, with modest growth. Solvency — whether it can keep funding itself at all — is 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 Vardhman Polytex Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Vardhman Polytex Limited manufactures and sells yarns and garments in India. It operates through Textiles and Real Estate segments. The company offers carded, combed, organic, and BCI cotton yarns; cotton polyester yarns; and grey and dyed value-added yarns.

IndustryTextile Manufacturing

SectorConsumer Cyclical

Employees473

Annual revenue₹236 Cr

How does it make money?

Turns over ₹236 Cr a year. Of every ₹100 of sales, about ₹3 reaches shareholders as profit, with ₹7 left at the operating level before interest, tax and depreciation. Each of its 473 employees supports ₹49.9 lakh of revenue a year, the signature of a people-led business.

Revenue / employee₹49.9 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 14.0% 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.

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 -62% while net margin moved +1243% 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-62%

Margin effect+1243%

DalalBaazaar Score

24/ 100

Weak

Weighted across six categories. Every point is explained below.

✗ Shareholders' equity is negative — accumulated losses exceed the capital in the business

Quality vs. Valuation

Company Quality

25/ 100

Weak

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

Valuation

30/ 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

0.8x

3Y Median

104.7x

40 monthly readings · mean 102.7x · range 13.3x–226.7x

Sector Median

69.2x

median of 4 sector peers

🟢Current valuation is approximately 99% below its 3y median of 104.7x. 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 99% below the peer median of 69.2x.

vs. its own history

Cheap

104.7x median over 40 months · -99%

vs. sector peers

Cheap

69.2x median of 4 peers · -99%

vs. generic bands

N/A

Multiples unreliable — equity base is negative

EV/EBITDA

37.7x

PEG

0.01

What's Good / What's Bad

🟢 What's Going Well2

Margins are improving
EBITDA margin is up from -5.2% to 7.3% over 3 years.
Debt is being paid down
Total debt is down 17% over 3 years.

🔴 What Needs Attention0

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

Red Flags

7 items require attention · 5 high · 2 watch

🔴Negative shareholders' equityFinancial
Liabilities exceed assets — accumulated losses have wiped out the company's net worth.
🔴Thin interest coverageFinancial
Operating profit covers interest only 1.9x — little room if earnings dip.
🔴Free cash flow negative for 3 yearsFinancial
The business has not covered its capital spending from operations for several years running, which has to be funded externally.
🔴Receivables growing faster than salesFinancial
Receivables up 1719% against revenue up -62% — sales are being booked faster than they are collected.
🔴Inventory building faster than salesFinancial
Inventory up 393% against revenue up -62% — stock may not be moving.
🟡Shareholders have been dilutedOwnership
Shares outstanding are up 91% over 3 years — each existing share owns a smaller slice of the company.
🟡Short-term liquidity is tightFinancial
Current ratio of 0.80 — near-term obligations exceed near-term assets.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Margin expansion has further to run
EBITDA margin has risen from -5.2% to 7.3%. If that holds, profit compounds faster than sales and today's multiple looks cheaper in hindsight than it does now.
Deleveraging frees up earnings
Debt is down 17% over 3 years. Every rupee of interest not paid drops to the bottom line, so profit can grow even if revenue does not.
Priced below its own history
The stock trades 99% 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 99% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.

🔴 Bear CaseWhat could go wrong?

Solvency comes before everything else
Liabilities exceed assets. Until net worth is rebuilt, the equity is a claim on a business that owes more than it owns, and further losses or a funding squeeze can leave shareholders with nothing.
The debt load needs earnings to hold up
Debt is 21.5x 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 1719% against revenue up -62%. If customers keep taking longer to pay, reported profit will not turn into cash — and write-offs follow if some never do.
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 5%✓ 7.3%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Debt / EBITDA falls below 3x✗ 21.5x
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✗ -₹43 Cr
Profit that never becomes cash eventually stops being profit.
4Interest cover stays above 3x✗ 1.9x
How much operating profit can fall before interest stops being comfortably covered.
5Valuation vs its own median of 104.7x✓ 0.8x today
A re-rating above its own history needs a reason; without one it is just a higher price.

Investment Checklist

5 / 10 checks passed

✗ Shareholders' equity is positive (assets exceed liabilities)
✗ Strong return on capital employed (ROCE ≥ 15%)
✓ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✗ 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 · 5 neutral · 3 weak

Market Cap

₹277 Cr

Micro Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

0.8x

Cheap

Cheap against the generic band

P/B Ratio

Not available

No data

Source didn't return this field

EPS (TTM)

₹6.6

Profitable

Profitable on a per-share basis

ROE

Not meaningful

Negative equity

Return on equity can't be read when equity itself is negative

ROCE

14.0%

Distorted

Distorted by the negative net worth — read this alongside the solvency flag, not on its own

Debt/Equity

Not meaningful

Negative equity

Shareholders' equity is negative, so this ratio can't be read

Revenue Growth (YoY)

2.0%

Modest

Modest growth

Profit Growth (YoY)

160975.0%

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

-₹43 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

Operating Margin

-5.0%

Weak

Thin margins leave little room for error

Net Margin

133.9%

Good

Strong bottom-line conversion

Current Ratio

0.80

Tight

Tight short-term liquidity

Beta (vs Nifty)

0.52

Defensive

Steadier than the market

52W Range Position

17%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

5.6 / 5.9

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

30.8

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹616 Cr	₹371 Cr	₹285 Cr	₹236 Cr	-27.3%
EBITDA	-₹32 Cr	-₹30 Cr	₹23 Cr	₹17 Cr	—
EBITDA Margin	-5.2%	-8.0%	8.1%	7.3%	—
PAT (Net Profit)	₹1 Cr	-₹27 Cr	₹15 Cr	₹8 Cr	+72.7%
EPS	₹0.06	₹-1.06	₹0.45	₹0.17	+42.2%
ROCE	—	-112.9%	25.3%	14.0%	—
Total Debt	₹447 Cr	₹391 Cr	₹374 Cr	₹370 Cr	-6.1%
Free Cash Flow	₹39 Cr	-₹14 Cr	-₹103 Cr	-₹43 Cr	—

🔴 Revenue has shrunk at 27.3% a year over 3 years.

🟢 EBITDA has turned positive, from -₹32 Cr to ₹17 Cr.

🟢 EBITDA Margin has risen from -5.2% to 7.3% over 3 years (+12.5 pts).

🟢 PAT (Net Profit) has grown at 72.7% a year over 3 years.

🟢 EPS has grown at 42.2% a year over 3 years.

🟢 ROCE has risen from -112.9% to 14.0% over 3 years (+126.8 pts).

🟢 Total Debt has shrunk at 6.1% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹39 Cr to -₹43 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹283 Cr

Total Liabilities

₹480 Cr

Cash & Equivalents

₹0 Cr

Operating Cash Flow

-₹30 Cr

Capex

-₹13 Cr

Shareholding (proxy)

Institutional Holding

0.0%

Insider Holding

73.0%

Corporate Actions

Ex-Dividend Date

18 Sept 2008

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 mixed1 negative4 general

Vardhman Polytex (VARDMNPOLY) Share Price near 52-week low as stock trades at Rs 5.10

Univest, 12 Oct

Vardhman Polytex Ltd is Rated Strong Sell

MarketsMojo, 15 Oct

Vardhman Polytex Default Update; Shares Show Mild Gain

HDFC Sky, 07 AprPrice 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.

Vardhman Polytex Ltd. 52 Week Low Streak and Price View

Univest, 13 Oct

Vardhman Polytex FY26 net profit falls 48.5% to ₹768.13 lakh

scanx.trade, 26 MayResults

🔴Potentially negativeReported deterioration, which feeds the growth and margin inputs on this page directly.

Vardhman Polytex (VARDMNPOLY.NS) Slips 1.85% to ₹5.83 as Textile Counter Tests Lower Support - Bear Pennant

siam.in, 15 Sept

Watch Items

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

DalalBaazaar Thesis

MiddlingGrowth

WeakBusiness Quality · Financial Health · Profitability · Valuation · Risk

Points for each in the Score ↑

Avoid until solvency is resolved

Vardhman Polytex Limited owes more than it owns. Whatever the operating numbers show, the equity is a residual claim on a business with negative net worth, and that question has to be settled before any of the rest is worth weighing. 5 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 ↑