At a Glance
Ludlow Jute & Specialities Ltd, a 100-year-old jute bag maker, has surged 500% in the last year. But beneath the rally lies a tangled mess: -6% ROE, negative profits, open offer drama, mill fires, and a takeover by Panchjanya Distributors. The hype is real, but is the business?
1. Introduction with Hook
“Aayega toh Modi hi,” but Ludlow Jute investors came out saying, “aaya toh 5x return hi!”
From being a sleepy jute manufacturer in Howrah to turning into a 10-bagger smallcap story (almost), Ludlow’s stock went from Rs 80 to Rs 506 in a year.
But here’s the question:
Are you buying a jute revival story… or just a recycled pipe dream stuffed in a gunny bag?
2. WTF Do They Even Do? (Business Model)
Ludlow Jute is part of the Kanoria Group. But that changed recently (more in drama section).
- Manufactures: Jute bags, fabrics, scrims, yarns, soil savers
- Sells to: Packaging, agriculture, geotextile industries
- Location: Main mill in Chengail, Howrah
- Bonus: Solely jute-focused. Zero diversification. No polyester distractions like Gloster.
Basically, they grow, weave, stitch, and pray the monsoon is good.
3. Financials Overview — Profit, Margins, ROE, Growth
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Sales (Rs Cr) | 547 | 476 | 301 |
| Net Profit (Rs Cr) | 1 | -13 | -11 |
| ROE | 0.7% | -7.5% | -6.3% |
| OPM | 3% | 0% | 3% |
| EPS | 1.24 | -11.64 | -9.81 |
- FY25 has seen a partial recovery in operating profit.
- But negative net profit for two straight years.
- Working capital days shot up to 145.
The business is barely profitable when it is. And that too… seasonally.
4. Valuation — Cheap, Meh, or Crack?
- Current Market Cap: ₹546 Cr
- Book Value: ₹156 → P/B = 3.25x (nosebleed for a jute company)
- PE: Not applicable due to losses
Fair Value Estimate
Let’s assume Ludlow returns to FY22 profit levels (Rs 12 Cr):
- At 10x earnings: Rs 120 Cr mcap → FV = Rs 110/share
- At 15x: Rs 180 Cr mcap → FV = Rs 165/share
EduFair Value Range: Rs 110 – Rs 165
So yes, at Rs 506… you’re paying Kanoria premium + Panchjanya prayers + jute joyride.
5. What’s Cooking — News, Triggers, Drama
The real spice:
- 🔥 Fire incident at Ludlow Mill (twice)
- ✊ Illegal strike by workers in Sep 2024
- 🏰 Mill operations suspended, then resumed in Nov 2024
- 📈 Promoter Kanoria group sold 67.2% stake to Panchjanya Distributors
- ✉️ Panchjanya launched open offer for 26% more shares
The open offer price? ~Rs 125.
Market price now? Rs 506.
So yes, the rally is operator-driven. Fundamentals were not invited to the party.
6. Balance Sheet — How Much Debt, How Many Dreams?
| Metric | FY23 | FY24 | FY25 |
|---|---|---|---|
| Borrowings (Rs Cr) | 121 | 120 | 147 |
| Reserves | 166 | 154 | 157 |
| Total Liabilities | 367 | 366 | 355 |
| Net Block (FA) | 180 | 190 | 192 |
- Leverage creeping up
- No major capex
- Reserves declining due to continued losses
7. Cash Flow — Sab Number Game Hai
- FY25 CFO: -5 Cr
- FCF has been negative in 2 of last 3 years
- Investing in what? Not much. No expansion.
- Financing cash flows include debt juggling and some inflows
Basically, cash is leaking like water through a jute sack.
8. Ratios — Sexy or Stressy?
| Ratio | FY23 | FY24 | FY25 |
|---|---|---|---|
| ROCE | 3% | -3% | -1% |
| Debtor Days | 16 | 26 | 29 |
| Inventory Days | 149 | 164 | 244 |
| CCC | 114 | 110 | 218 |
Yes. You read that right. 218 days of cash conversion cycle.
Jute ka time lagta hai bhai, but this is ridiculous.
9. P&L Breakdown — Show Me the Money
- Sales halved in 2 years (from Rs 582 Cr to Rs 301 Cr)
- OPM hit 10.66% in Mar 2025 quarter – but it was one-off
- Interest burden rising
Quarterly Net Profit:
- Q3FY25: -Rs 3.5 Cr
- Q4FY25: -Rs 2.6 Cr
- Q1FY26: +Rs 2.5 Cr
Recovery? Or fluke? You decide.
10. Peer Comparison — Who Else in the Game?
| Company | ROE (%) | OPM (%) | PE | P/B |
|---|---|---|---|---|
| Ludlow | -6.35 | 3.00 | NA | 3.25 |
| Gloster Ltd | -1.22 | 6.33 | NA | 0.74 |
| Cheviot Company | 9.04 | 12.08 | 12.32 | 1.09 |
Cheviot is profitable, cheaper, and better.
So why is Ludlow the meme king?
Because… new promoter + jute hype + low float = 🚀
11. Miscellaneous — Shareholding, Promoters
- Promoter (Kanoria) exited
- Panchjanya Distributors now controls 67.21%
- Government stake: Zero now
- Public holding: 32.79%
- Total shareholders: ~8,800 (shrinking every quarter)
Small float = easy to manipulate = big moves.
12. EduInvesting Verdict™
Ludlow Jute is not a turnaround.
It is not a jute megatrend story.
It is 🌾 a speculative operator cocktail with a jute straw.
At Rs 506, it is:
- ❌ 4x above fair value
- ❌ Making net losses
- ❌ Running on takeover fumes and operator fuel
Fair Value: Rs 110 – Rs 165.
Everything else is excitement tax.
✍️ Written by Prashant | 🗓️ July 9, 2025
tags: Ludlow Jute, Panchjanya Distributors, jute stocks, smallcap rally, operator stocks, open offer, Kanoria Group, EduInvesting
