At a glance
Reliance Chemotex reported a FY25 net profit of ₹404.52 lakh, up from ₹320.99 lakh in FY24 — a clean 26% growth. Revenue rose to ₹36,719 lakh, and the board even declared a ₹0.50/share dividend after years of dry spell. But the real twist? EPS is still just ₹5.36, while the stock trades at ₹202. That’s a P/E of 37+. For a yarn stock.
So the real question is: Are we investing in fundamentals… or feelings?
🧵 About the Company
Reliance Chemotex Industries Ltd, based in the scenic textile cluster of Udaipur, Rajasthan, is engaged in manufacturing synthetic blended yarn — used by domestic and international textile manufacturers.
No, this is not related to Reliance Industries. So if you’re here hoping this will become the next Ambani empire, you’re in the wrong kurta.
🧑💼 Key Management
- Managing Director: Sanjiv Shroff
- CFO & Compliance Officer: Chandrasekaran Rajagopalan
- Statutory Auditor: M/s P K B & Co. — gave a clean, unmodified audit opinion for FY25
So yes — financials are honest. But are they exciting?
📊 Q4 & FY25 Financial Highlights
| Particulars | Q4 FY25 (₹ Lakh) | Q4 FY24 (₹ Lakh) | FY25 (₹ Lakh) | FY24 (₹ Lakh) |
|---|---|---|---|---|
| Revenue from Operations | 8,220.26 | 10,227.46 | 36,718.80 | 34,718.80 |
| Other Income | 172.27 | 142.65 | 426.65 | 370.47 |
| Total Income | 8,392.53 | 10,370.27 | 37,145.45 | 35,089.27 |
| EBITDA (est.) | ~1,668.73 | ~1,563.24 | ~6,672.57 | ~5,871.79 |
| Net Profit | 189.42 | 193.10 | 404.52 | 320.99 |
| EPS (Basic/Diluted) | ₹2.44 | ₹2.61 | ₹5.36 | ₹4.26 |
| Dividend | ₹0.50/share | NIL | ₹0.50/share | NIL |
📌 Margin View: PAT margin = 1.09% — not exactly gold spun from polyester.
📦 Balance Sheet Snapshot (₹ in Lakh)
| Particulars | FY25 | FY24 |
|---|---|---|
| Total Assets | 47,451.49 | 44,012.62 |
| Total Equity | 13,726.70 | 14,363.31 |
| Non-Current Borrowings | 11,360.16 | 15,040.15 |
| Current Borrowings | 11,518.03 | 12,853.58 |
| Inventory | 6,911.54 | 5,885.07 |
| Trade Receivables | 1,758.06 | 1,648.64 |
| Cash & Cash Equivalents | 2,238.52 | 1,998.96 |
🧮 Takeaways:
- Inventory grew 17% — likely unsold stock.
- Equity declined despite profit — because reserves dipped.
- Debt reduced by ₹5,000+ lakh — good deleveraging story.
💸 Cash Flow Highlights
| Type | FY25 (₹ Lakh) | FY24 (₹ Lakh) |
|---|---|---|
| Operating Cash Flow | +3,330.58 | +2,717.59 |
| Investing Cash Flow | -1,037.93 | -1,141.88 |
| Financing Cash Flow | -2,270.00 | -1,258.00 |
| Net Change in Cash | +22.65 | +317.71 |
They repaid debt. Respect.
But growth capex? Not really. This feels more like survival spinning.
📐 Forward-Looking Fair Value (FV) Calculation
We stitch this up with logic.
- EPS (FY25) = ₹5.36
- Expected Growth = 12% CAGR for next 3 years (optimistic for yarn)
- Fair P/E = 20 (textile average, not software dreams)
FY28E EPS = ₹5.36 × (1.12)^3 = ₹7.53
Estimated FV in FY28 = ₹7.53 × 20 = ₹150.60
Discounting to Present (12%) = ₹150.60 ÷ (1.12)^3 ≈ ₹107.25
📉 Fair Value Today: ₹107/share
📈 CMP: ₹202.78
⚠️ Overvalued by ~47%
🧠 EduInvesting Take
Let’s be brutally honest: this stock is trading like it sells Gucci yarn, but delivers like it’s supplying school sweaters.
- Yes, EPS grew 25%.
- Yes, the company is reducing debt.
- Yes, dividend is a positive signal.
But…
- P/E is 37, not backed by growth.
- Inventory pile-up hints at slowing demand.
- Margins are threadbare — PAT is just 1% of revenue.
Unless there’s a massive demand spike or capacity expansion, this is closer to being fully priced-in than a hidden gem.
🚨 Risks & Red Flags
- Overdependence on one segment: Yarn
- High working capital cycle (inventory days rising)
- Weak dividend yield (~0.25%)
- No forward guidance or innovation investments
- EPS not supporting the sky-high valuation
🔍 What to Watch
- Export Orders: Will FY26 bring more global demand?
- Raw Material Prices: Polyester fluctuations could crush margins.
- Capacity Expansion: Any CAPEX for automation or higher throughput?
- ESG & Compliance: Textile sector faces tightening norms — any investment there?
🎯 Final Verdict
Reliance Chemotex is not a bad company. It’s just not a ₹200 stock.
It’s a clean business, clean books, clean audit — but low-margin, undifferentiated, and overvalued for now.
It’s like buying a FabIndia kurta at Louis Vuitton prices.
Comfortable, yes. Couture? Not quite.
🏷️ Tags:
Reliance Chemotex FY25 Results, RELCHEMQ Q4 Results, Textile Stocks India, Yarn Manufacturing India, Debt Reduction Companies, Smallcap Valuation Bubble, EduInvesting
🖋️ Prashant Marathe | 🗓️ 30 May 2025
EduInvesting — where financials are spun with sarcasm, not spreadsheets.
