1. At a Glance – The Yarn Spinner With a Cement Portfolio
Rajapalayam Mills Ltd is currently sitting at ₹816, with a market cap of ₹752 crore, and trading at a spicy 0.32x book value (Book Value ₹2,540). The stock is down ~2% in 3 months, basically doing yoga — not going anywhere.
But wait.
Latest Q3 FY26 (Dec 2025) consolidated results show:
- Sales: ₹243 crore
- PAT: ₹60 crore
- EPS: ₹64.56
- QoQ profit jump: 73%
And here’s the masala:
The market value of investments is ₹3,176 crore, which is more than the entire market cap of ₹752 crore.
Read that again.
Textile company? Yes.
Investment holding company? Also yes.
Debt-heavy? Definitely yes.
ROCE? 0.43%.
Interest coverage? 0.55x.
Drama level? High.
Is this a deep value relic from 1936… or a cotton-spinning puzzle wrapped inside a cement portfolio?
Let’s investigate like a slightly suspicious auditor with a calculator and chai.
2. Introduction – 1936 Se Textile Bana Rahe Hain
Founded in 1936, Rajapalayam Mills is the first venture of the Ramco group. This is not some startup promising AI-powered organic cotton NFTs. This is a proper old-school Tamil Nadu textile house.
They manufacture:
- Cotton yarn (counts from 4s to 300s)
- Mercerized yarn
- Mélange
- Slub
- Gassed yarn
- Fabrics
Basically, if cotton had a personality disorder, they manufacture all its moods.
But here’s the twist.
While they spin yarn, they also:
- Own strategic investments worth ₹3,000+ crore
- Pledge shares to take loans
- Provide corporate guarantees
- Acquire group company shares
- Sell cement shares to fund fabric units
At this point, you’re not sure whether you’re reading a textile balance sheet or a Ramco group family WhatsApp ledger.
And just when you think you understand it, CRISIL:
- Reaffirmed ratings with negative outlook
- Then downgraded ratings in April 2025
Classic.
So the real question:
Are we looking at a cyclical textile recovery story —
or a leveraged group holding structure wearing a cotton disguise?
Let’s unpack.
3. Business Model – WTF Do They Even Do?
Rajapalayam Mills manufactures cotton yarn and fabrics from 4 facilities in Tamil Nadu.
Capacity:
- 1,51,808 spindles
- 328 looms
- 2,960 rotors
- Wind power: 35.15 MW
- Solar: 17 MW
- Additional group captive solar procurement in FY26
They aim to meet 85%+ power requirement from renewables. Respect.
FY24 Production:
- Yarn: 128.67 lakh kg produced
- Fabric: 119 lakh meters produced
Revenue breakup FY24:
- Yarn: 76%
- Fabric: 22%
- Waste cotton & others: 2%
Now here’s where it gets interesting.
They invested:
- ₹334 crore in loom expansion & processing unit
- ₹37 crore in modernization
- Total FY24 capex: ₹374 crore
And how
