Anand Rayons Ltd Q2 FY26 – 144x P/E, 2% Margins, and Still Glowing Like a Disco Yarn Factory
1. At a Glance
What happens when a yarn trader decides to moonwalk into petrochemicals, foil packaging, and possibly world domination? You get Anand Rayons Ltd (ARL) — a company that weaves polyester, sells oils, and shines on BSE with a market cap of ₹826 crore and a P/E ratio fatter than an auditor’s bonus season lunch — a staggering 144x.
The stock trades at ₹388, delivering a 394% return over one year. The business runs at wafer-thin margins (OPM 2.03%), but apparently, the market believes this yarn story will spin into gold. Quarterly revenue in Q2 FY26 clocked ₹112 crore with PAT ₹1.50 crore, up 35.3% YoY and 40.2% QoQ.
It’s a delightful paradox — a 2% operating margin company priced at 9.3x book value. But hey, who said the stock market needed logic when it has enthusiasm?
2. Introduction
Anand Rayons Ltd is one of those delightful smallcaps that make you wonder if the market is trolling fundamental analysts. The company sells yarns, dabbles in chemicals, and even imports aluminum foil — essentially covering every industry from apparel to adhesive.
Founded in 2018, it’s part of the Anand Group, a name that’s slowly weaving itself into the “how did this become ₹800 crore market cap?” club.
In the last few years, ARL has pulled off a fascinating act: sales have grown modestly (3% CAGR TTM), but profits have managed to climb 35% year-on-year. Investors seem convinced this Surat-based textile trader is not just selling threads — it’s threading ambition.
However, dig into the numbers and the comedy writes itself. A P/E of 144 on a net profit of ₹5.74 crore. No dividends. A return on equity of 6.1%. And yet, the stock quadrupled in a year. Maybe it’s not “yarn”, maybe it’s “yearn” — for multibagger dreams.
3. Business Model – WTF Do They Even Do?
At its core, ARL manufactures and trades yarn and fabrics, especially embroidery and dyed yarns used in garments and T-shirts. But like every ambitious Gujarati business story, diversification is the second nature here.
Now, it also trades in petrochemical products — yellow oil, white oil, base oil, and palm oil — all key raw materials for adhesive industries. Recently, it started exploring exports and packaging products like aluminum foil, because why not?
Let’s simplify:
Textiles division – still the bread and butter, but with 2% operating margin, it’s mostly toast.
Petrochemical division – the wild card; helps improve volume and margin mix, but needs scale.
Packaging – imported foil, resold locally; think of it as the company’s cashback scheme for diversification.
So, Anand Rayons today is part textile trader, part chemical dealer, part packaging supplier — basically, a “Threadflix” of industrial products. The only thing missing is an NFT division for yarn art.
4. Financials Overview
Quarterly Results Locked: Q2 FY26
Source table
Metric
Latest Qtr (Sep ’25)
Same Qtr Last Year (Sep ’24)
Prev Qtr (Jun ’25)
YoY %
QoQ %
Revenue (₹ Cr)
112.25
82.95
75.95
35.3%
47.8%
EBITDA (₹ Cr)
1.35
2.02
1.13
-33.2%
19.5%
PAT (₹ Cr)
1.50
1.07
1.18
40.2%
27.1%
EPS (₹)
0.70
0.71
0.56
-1.4%
25.0%
Annualised EPS = ₹0.70 × 4 = ₹2.80, giving a self-imposed P/E of roughly 138x. Even the stock seems to laugh at this math.
Commentary: Margins are like wafer biscuits — crisp, thin, and easily crushed. Despite strong sales growth, EBITDA has been erratic, which means the real growth story lies in volume, not profitability. But hey, in bull markets, every crore of PAT deserves a standing ovation.
5. Valuation Discussion – Fair Value Range Only
Let’s see how overcooked (or undercooked) this yarn is:
a) P/E Method:
EPS (Annualised): ₹2.8
Industry P/E: 37x
Fair Value = 2.8 × 37 = ₹104
b) EV/EBITDA Method:
EV = ₹819 Cr, EBITDA (TTM) = ₹8 Cr → EV/EBITDA = 102x If we normalise to industry multiple of ~12x: Fair EV = 8 × 12 = ₹96
