💡 At a Glance
Revenue: ₹1,655 Cr
PBT: ₹4.97 Cr
Finance Cost: ₹42.9 Cr
CMP: ₹31.98
EduFair Value: ₹120–₹180 (with margin improvement assumptions)
👉 Verdict: Deep value if debt is reduced. Otherwise… textile trap.
🏢 About the Company
Bannari Amman Spinning Mills Ltd is one of India’s leading textile players and part of the legendary Bannari Amman Group. They manufacture:
- 🧶 Cotton yarn
- 🧥 Woven & knitted garments
- 🧵 Fabrics for Indian & export markets
They’ve got size, scale, and South India dominance. But is it enough to survive the brutal economics of textiles?
👨💼 Key Management
- Chairman: Mr. S.V. Balasubramaniam
- MD: Mr. S.V. Ramaswamy
Two veterans, family-run, old-school operators. The kind who still sign balance sheets with fountain pens.
📊 Financials Snapshot (Q4 FY25)
| Metric | ₹ Cr |
|---|---|
| Revenue from Operations | 1,655.5 |
| Other Income | -0.12 |
| Finance Costs | 42.9 |
| Profit Before Tax | 4.97 |
| PBT Margin | 0.3% (!?) |
This company is doing ₹1,655 Cr in sales to earn ₹5 Cr in PBT. That’s a 0.3% margin. That’s not a business, it’s a cotton-themed hobby.
📉 The Debt Trap
- ₹42.9 Cr in finance costs.
- That’s 8.6x higher than the quarterly PBT.
- Unless this gets fixed, shareholders are just charity donors.
🔮 Forward Fair Value (FV) – Edu Estimate
Let’s assume:
- FY26 revenue: ₹6,600 Cr (flat to slightly rising)
- Net margin improves to 2% (still optimistic)
- EPS estimate: ₹10–12
- Sector P/E: 12–15x
➡ Fair Value = ₹120–₹180
At CMP ₹31.98, it’s trading at:
- 🟢 ~75% discount to FV (if turnaround plays out)
- 🔴 But with no improvement, you’re stuck in a mill that spins dreams, not profits.
🧵 The Cotton Sector Reality
- China+1 gave hope, but Vietnam & Bangladesh are cheaper still
- PLI schemes helping large players, not mid-cap debt-ridden ones
- Cotton price volatility = massive margin swings
So unless you control raw material + have killer exports, your margins get dyed red.
🧠 EduInvesting Take
“A company that makes ₹1,600 Cr in revenue and gets left with ₹5 Cr is not a multibagger — it’s a motivational speaker.”
Bannari has:
✅ Scale
✅ Group strength
❌ Margin
❌ Debt control
❌ RoE
It’s not hopeless, but it’s not investible until debt comes down or demand shoots up.
⚠️ Risks & Red Flags
- 📉 Operating margin compressed due to input costs
- 💳 Interest eats profit like termites on a wooden loom
- 🧾 No EPS or PAT data disclosed = transparency issue
- 🧺 Heavy reliance on the cyclical textile export market
📈 CMP vs FV Recap
| Parameter | Value |
|---|---|
| CMP | ₹31.98 |
| Fair Value Range | ₹120 – ₹180 |
| Upside Potential | 275% – 460% |
| Risk Level | ⚠️ High |
If you’re buying this, you’re buying hope + a debt repayment plan.
🏁 EduFinal Word
Bannari Amman is not a multibagger — yet.
But if they:
- Reduce debt
- Improve margin
- Ride a textile export wave
…it could 3x–5x from here. That’s a lot of “ifs,” though.
Until then, don’t invest your money — invest your sympathy.
