And then comes the twist — Q3 FY26 profit down 48% YoY.
Welcome to Precot Ltd, the company that makes cotton pads, cotton balls, yarn, spunlace fabric and probably the cotton your doctor used after your last injection.
Latest quarter (Dec 2025):
Sales: ₹207.98 crore
PAT: ₹5.78 crore
EPS: ₹4.82
OPM: 10.8%
Return over last 3 months? 7.97%. Return over 1 year? 4.48%.
Stock P/E is lower than industry median (19.8), but profits are wobbling.
So what’s happening here?
Is this a boring cotton spinner quietly compounding? Or is this a textile veteran struggling in a brutal margin cycle?
Let’s open the cotton bale and see what’s inside.
2. Introduction – From 1962 to Cotton Pads for Walmart
Founded in 1962, Precot Ltd has been spinning yarn since before your dad discovered equity markets.
It manufactures:
Compact cotton yarn (20s to 60s count)
Technical textiles like cotton pads, balls, wool rolls
Spunlace fabric for hygiene products
Clients include Walmart, CVS, Walgreens, Dollar General, Dove, Kroger, Aldi. Not exactly kirana store distribution.
Exports contribute 41% of revenue (FY23). Domestic is 59%.
So this is not some small-town yarn mill. This is a hygiene-focused textile exporter riding global personal care demand.
But here’s the drama:
Q3 PAT down 48% YoY.
Sales slightly down 1.89% YoY.
Interest coverage just 2.7.
Debt ₹376 crore.
And they just shut down a spinning unit at Hindupur in Feb 2025 due to unsustainable losses.
Cotton business is cyclical. But margin swings here look like a cricket match in Chennai — unpredictable.
So is this a cyclical hiccup or structural weakness?
3. Business Model – WTF Do They Even Do?
Let me simplify.
Precot does two big things:
1️ Yarn (71% of FY23 revenue)
They spin cotton into yarn used by textile mills.
Think of them as the ingredient supplier for fabric manufacturers.
