🟢 At a Glance
VTM Ltd, a Thiagarajar Group textile company, quietly went from “nobody knows” to “every smallcap investor’s flex” — up 323% in a year. It manufactures structured fabrics like satin, twill, dobby, and jacquard for export and domestic use. Post a juicy 3:2 bonus issue and record profits in FY25, the market’s attention has finally caught up with the loom.
1. 🎬 Introduction with Hook
Let’s be real — nobody was discussing VTM Ltd in 2023.
While you were debating Nykaa’s margins or IREDA’s solar dreams, this low-key textile company was weaving quiet alpha. The stock was at ₹26. It’s now ₹117. That’s not a rally — that’s a textile-fueled short squeeze in disguise.
So, what the silk is happening here? How did a company with ₹345 Cr revenue and zero DII/FII interest manage to thread the needle between obscurity and multibagger territory?
Let’s unravel.
2. 🧵 WTF Do They Even Do?
- 🎯 Core biz: Weaving grey fabric and specialty greige & processed fabrics
- 🧶 Product range:
- Dobby, Twill, Satin, Jacquard, Structured
- Widths: 38″ to 144″
- 🌍 Markets served: India + exports (including private label orders)
- 🏢 Plants & Capex:
- Single unit at Virudhunagar
- Asset-light, zero-sprawl model
- 👨👩👧👦 Promoter group: Thiagarajar Group — known for spinning, weaving, and staying lowkey
3. 📊 Financials – From Thanda to Taaza
| Metric | FY20 | FY23 | FY25 | CAGR (5Y) |
|---|---|---|---|---|
| 🧾 Revenue | ₹161 Cr | ₹209 Cr | ₹345 Cr | 17% |
| 💰 EBITDA | ₹16 Cr | ₹17 Cr | ₹67 Cr | 35% |
| 📈 Net Profit | ₹12 Cr | ₹9 Cr | ₹45 Cr | 34% |
| 🧂 OPM | 10% | 8% | 19% | ↑ peak |
| 🤑 EPS | ₹1.20 | ₹0.91 | ₹4.51 | 37% |
| 📉 ROCE | 7% | 4% | 19% | 🚀 |
| 🧵 Inventory Days | 102 | 76 | 185 | ❌ |
🧠 Observations:
- Margins have DOUBLED in 2 years
- Highest-ever net profit in FY25
- ROCE shot up to 19% from low single digits
- But inventory bloat is real — 185 days of stock? Who’s hoarding?
4. 💸 Valuation – Is It Cheap, Meh, or Crack?
| Metric | Value |
|---|---|
| CMP | ₹117 |
| Market Cap | ₹1,175 Cr |
| P/E (TTM) | ~26.9x |
| Book Value | ₹30.5 |
| P/B | 3.8x |
| ROE | 15.3% |
| EV/EBITDA | ~15.2x |
| Dividend Yield | 0.73% |
👀 Narrative:
- This isn’t bargain-basement anymore. It’s priced like a “performance textile” company now.
- Fair Value Range? At 15–18x FY26E EPS of ₹4.5–5.5 → ₹68 to ₹99
- CMP ₹117 = running a bit ahead of itself. But hey, in this market, overshoot is a feature, not a bug.
5. 🍿 What’s Cooking – Bonus, Boardroom & Bounce
- 🎁 Bonus Issue: 3:2 announced in April 2025 → helped expand retail base
- 🧓 Leadership Change: Mr. K. Thiagarajan became CMD; CFO appointed → professionalisation angle
- 😢 Tragedy: Former CMD Mr. T. Kannan passed away in 2023
- 📈 Q4 FY25 Profit: ₹12 Cr PAT, 17% OPM — highest ever
- 🧵 Buzz: Social media “smallcap textile multibagger” crowd is sniffing around
6. 🧾 Balance Sheet – How Much Debt, How Many Dreams?
| Metric | FY25 |
|---|---|
| Equity | ₹4 Cr |
| Reserves | ₹302 Cr |
| Debt | ₹41 Cr |
| Investments | ₹67 Cr |
| Cash | ~₹20 Cr (est) |
| Net Worth | ₹306 Cr |
| D/E Ratio | ~0.13x |
✅ Solid. Minimal debt. Ample reserves. Legacy asset-backed structure.
🧵 But working capital stress (inventory) is a watchpoint.
7. 💵 Cash Flow – Sab Number Game Hai
| Metric | FY25 |
|---|---|
| CFO | -₹38 Cr |
| CFI | +₹8 Cr |
| CFF | +₹31 Cr |
| Net Change | ₹2 Cr |
🤯 Negative CFO in a record profit year? Blame the inventory surge + receivables stretch.
This is not sustainable unless operations normalize soon.
8. 📐 Ratios – Sexy or Stressy?
| Ratio | Value | Verdict |
|---|---|---|
| ROE | 15.3% | 👍 |
| ROCE | 19.5% | 🔥 |
| Debtor Days | 78 | 🚩 |
| Inventory Days | 185 | 🚨 |
| CCC | 236 days | 😬 |
| Dividend Payout | 9% | 👎 |
Verdict? Profitability is sexy. Working capital cycle is stressy.
9. 💰 P&L Breakdown – Show Me the Money
- 🧾 FY25 Revenue = ₹345 Cr
- 🧂 EBITDA = ₹67 Cr (19.4%)
- 🤑 PAT = ₹45 Cr (13%)
- 🎯 Target OPM = 15–20% (can it sustain?)
Key levers:
- Export pricing
- Premium fabric mix
- Power cost control
⚠️ Risks:
- RM inflation (cotton, yarn)
- Low pricing power with large buyers
- Competition from synthetic players (esp. in China, Bangladesh)
10. 🤼 Peer Comparison – Who Else is in the Game?
| Company | MCap | P/E | ROCE | OPM | PAT (₹Cr) |
|---|---|---|---|---|---|
| KPR Mill | ₹40,607 Cr | 51x | 19.8% | 19.5% | ₹797 Cr |
| Trident | ₹15,925 Cr | 43x | 9.5% | 13% | ₹369 Cr |
| Vardhman | ₹14,477 Cr | 16x | 11.2% | 13% | ₹883 Cr |
| Welspun | ₹14,025 Cr | 22x | 14.4% | 12.3% | ₹639 Cr |
| VTM | ₹1,175 Cr | 27x | 19.5% | 19.4% | ₹45 Cr |
🎯 VTM punches way above its weight in margins and ROCE, but trades closer to KPR Mill in valuation multiples — risky if growth falters.
11. 📦 Miscellaneous – Promoters, Shareholding, and Love Letters
- 🧑💼 Promoters: 75% holding, rock solid. No pledging.
- 📉 DII: Entered only in March 2025 (0.45%)
- 📈 Public holding: Broad base, over 5,500 shareholders
- 📜 Bonus Issue: 3:2 approved in June 2025 (already credited)
- 🔄 No capex announcements or expansion plans yet — focused on profitability
12. 🧑⚖️ EduInvesting Verdict™
Textile toh theek hai… but VTM is no longer the boring loom uncle.
It’s clean, profitable, and gave you 300% returns for doing nothing but holding. But CFO negative, inventory bloated, and valuation stretched make this less of a “load up” and more of a “logically hold”.
Fair Value Range (EduInvesting Model):
- 15x FY26E EPS (₹4.5–5.5) = ₹68 – ₹99
🔔 CMP ₹117 = baking in perfection + bonus hype
If margin sustainability + working capital don’t improve by FY26, expect market to cool off.
For now? Enjoy the afterglow — just don’t confuse a good bonus with a great business pivot. 😎
✍️ Written by Prashant | 📅 July 5, 2025
Tags: VTM Ltd, Textile Stocks, Bonus Shares, Smallcap Rally, Working Capital, EduInvesting, Multibagger, ROCE, Virudhunagar Textiles, Thiagarajar Group
