By Prashant Marathe | 23 May 2025 | EduInvesting

📌 At a Glance

Precot Limited, the Coimbatore-based textile player, has posted a net profit of ₹3,288.74 lakh (₹32.88 Cr) for FY25 — nearly 2x last year’s ₹16.78 Cr, despite taking a ₹18.88 Cr loss hit from shutting down its Hindupur unit.

Also announced:

• 🪙 ₹3/share dividend
• 🔁 Multiple director reappointments
• ✅ Unmodified audit opinion (clean report)
• 🏭 Discontinued unit accounting cleanup done

So is Precot spinning value or just weaving headlines?

📊 Financial Snapshot (FY25 Consolidated)

L = Lakh

🚫 Discontinued Operations: The ₹18.88 Cr Drag

Precot decided to shut its Hindupur spinning unit (Andhra Pradesh) in Feb 2025. Why?

• Chronic losses
• No visible revival in profitability
• ₹11.19 Cr went into employee settlements alone

Impact:

• FY25 loss from discontinued ops: ₹18.88 Cr
• But thanks to strong continuing business, they still posted record profits.

💰 Balance Sheet Highlights

💡 Debt down, receivables collected, inventories cut — working capital improvement visible.

💸 Cash Flow FY25

Operating cash flow strong 💪
Net cash used mostly for capex + debt repayment
Ending cash: ₹83L

🧑‍💼 Boardroom Shuffle

All key leaders were reappointed for 3 years (from FY27):

• Ashwin Chandran: CMD (since 2003)
• Prashanth Chandran: Vice CMD (since 2010)
• T. Kumar: Executive Director
• Ravi Kumar Abburu: Director (Technical Textiles)

Also:
📝 New secretarial auditor = KSR & Co. LLP (5-year term)

✅ All reappointments clean, SEBI-compliant, and approved for AGM ratification.

🧠 EduInvesting Take

Precot’s FY25 is a classic “clean-up and move-on” year:

• Shut the loss-making unit ✅
• Streamline working capital ✅
• Pay a dividend ✅
• Double the profit ✅

And yet — stock remains under radar. CMP ₹317. EPS ₹27.41 means the P/E is ~11.6x — dirt cheap if sustainability holds.

🧨 Risks

• Raw material volatility (cotton prices spiked late FY25)
• Exports could face headwinds if EU recession deepens
• Spinning capacity reduced — topline growth may flatten
• Still not debt-free — ₹32.5 Cr borrowing remains

🧮 Forward Valuation

Assuming stable EPS ₹27.5 and assigning a P/E of 15x:

• Forward FV = ₹412.5
• CMP ₹317 = ~23% upside potential

🧵 Final Verdict

Precot is no flashy multibagger. But it’s:

• Profitable ✅
• Cleanly audited ✅
• Dividends flowing ✅
• Debt reducing ✅
• Now leaner after spinning off losses ✅

If you’re a textile bull with patience, this is a tidy play.

🏷️ Tags

Precot FY25 Results, Spinning Mill Shutdown, Dividend Textile Stocks, Coimbatore Companies, EduInvesting, Clean Audit, Textile Sector 2025, Precot Hindupur, Net Profit Jump, Earnings Explainer India