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INVESTMENT INSIGHTS

Check Before You Invest : Modern Threads (India) Ltd

BSE: 500282 NSE: MODTHREAD ISIN: INE794W01014
  |   Sector:  Textiles & Apparels   |   Industry:  Textile - Spinning

Snapshot

Q.1 Which industry/sub-sector does Modern Threads (India) Ltd belong to?
Modern Threads (India) Ltd belongs to the Textiles & Apparels sector, operating specifically within the Textile - Spinning segment.
Q.2 Is Modern Threads (India) Ltd a good quality company?
Modern Threads (India) Ltd is a good quality company, based on a consistently good multi-year financial track record.

This assessment is based on company’s performance on Revenue growth, ROCE, Equity and Assets, key margin ratios, cash conversion cycle, and debt to cash flow from operations and how it compares with its long term averages.

Q.3 Is Modern Threads (India) Ltd undervalued or overvalued?
Modern Threads (India) Ltd appears Overvalued, as its key valuation ratios are higher than their past averages.

Based on the industry it operates in, the relevant valuation ratios include one of the following, P/E, P/BV, P/Sales, EV/EBITDA or a combination of two or more.

Valuation Ratios Current 5-year
Historic Median
Price to Earnings 14.63 0.45
Price to Book 1.2 -0.40
Price to Sales 0.59 0.02
EV to EBITDA 8.77 9.12
Q.4 Is Modern Threads (India) Ltd a good buy now?
Modern Threads (India) Ltd is a neutral opportunity now, based on stable price trend analysis suggesting prices may move sideways. However, you need to check its quality and valuation before making a decision

Performance Analysis

We have analysed the performance of the company on the following:

  • How has it performed on generating Profits?

    By checking its Revenue growth, Gross, Operating and Net Margins compared to its last 5-year median.

  • How efficiently has it utilized Capital?

    By checking its ROCE, ROA, ROE and its Cash Conversion Cycle.

  • How is it managing its Debt?

    By checking its Debt to Equity and Cash Flow from Operations.

A: What are the trends in revenue and profit margins?

Q.1 Revenue growth of Modern Threads (India) Ltd?
Modern Threads (India) Ltd revenue growth is -13.5% for FY-2025, which is below its 5-year CAGR of 5.33%, indicating slower growth.

Q.2 Gross Profit margin of Modern Threads (India) Ltd?
Modern Threads (India) Ltd Gross profit margin which is the profit after deduction of direct costs, is 3.6% for FY-2025, which is below its 5-year median of 4.6%, indicating decreasing margins.

Q.3 Operating Profit Margin of Modern Threads (India) Ltd?
Modern Threads (India) Ltd Operating Profit Margin which is the profit after deduction of all operating costs, is 0.38% for FY-2025, which is below its 5-year median of 5.13% indicating decreasing margins.

Q.4 Net Profit Margin of Modern Threads (India) Ltd?
Modern Threads (India) Ltd Net Profit Margin is 1.3% for FY-2025, is below its 5-year median of 3.57%, indicating decreasing margins.
Current Level 5-year
Historic Median
Gross Profit Margin (%) 3.6 4.6
Operating Profit Margin (%) 0.38 5.13
Net Profit Margin (%) 1.3 3.57

B: Does the business utilize capital efficiently?

Q.5 Return on Asset of Modern Threads (India) Ltd?
Modern Threads (India) Ltd Return on Asset is 1.57%, which is below its 5-year historical median of 6.09%, indicating deteriorated asset utilization efficiency.

Q.6 Return on capital employed (ROCE) of Modern Threads (India) Ltd?
Modern Threads (India) Ltd Return on capital employed is 4.47% for FY-2025, which is below its 5-year historical median of 14.97%. The current ROCE is below its estimated weighted average cost of capital (WACC) of 14%, indicating value preservation.

Q.7 Cash conversion cycle of Modern Threads (India) Ltd?
Modern Threads (India) Ltd Cash conversion cycle is 116 days, above its 5-year historical median of 87 days, indicating deteriorated working capital management. However, you need to compare this with its peers in the industry.

C: How much debt does the business have and is it at a sustainable level?

Q.8 Debt to Equity ratio of Modern Threads (India) Ltd?
Modern Threads (India) Ltd Debt-to-Equity ratio is 0.16, which is lower the industry average of 0.36, indicating lower debt levels in the industry.

Q.9 Debt to cash flow from operations of Modern Threads (India) Ltd?
Modern Threads (India) Ltd Debt to cash flow from operations is -2.79, which is at a unhealthy level.

Ownership & governance

D: Promoter shareholding and pledge status of Modern Threads (India) Ltd?

Q.1 Promoter shareholding and pledge status of Modern Threads (India) Ltd?
Promoters hold 65.16% of the Modern Threads (India) Ltd, with 0.00% of their stake pledged, indicating no pledge risk.

Peer comparison (industry-wise, mcap)

E: How does Modern Threads (India) Ltd performance compare with that of its Peers?

Q.1 Revenue growth of Modern Threads (India) Ltd vs industry peers?
Modern Threads (India) Ltd revenue CAGR is 5.33%, compared to the industry median CAGR of 1.47%, indicating faster growth and gaining its market share.
Profit Metrics
Current Level 5-year
Industry Median
Revenue Growth (%) -13.5 1.5
Gross Profit Growth (%) -70 1.8
Operating Profit Growth (%) -96.7 -1.5
Net Profit Growth (%) -88 2.1
Operating Efficiency
Current Level 5-year
Industry Median
Asset Turnover (x) 1.21 0.94
ROE (%) - -
ROCE (%) 4.47 6.13
Cash Conversion Cycle (days) 116.03 61

Valuation & price assessment

Q.1 Stock return of Modern Threads (India) Ltd over the last decade?
Over the last 1 year(s), the stock has delivered a CAGR of 20.27% based on the current price.
9Y 5Y 3Y 1Y
Share Price
CAGR		 - - - 20.3%
Q.2 Valuation ratios of Modern Threads (India) Ltd vs historical?
The current P/E ratio of 14.63 is higher than its historical median of 0.45, indicating that the stock is trading above its historical average valuation.
Q.3 How do the current valuation ratios compare with 5-year historical median and industry numbers?
Valuation Ratios Current 5-year
Historic Median		 5-year
Industry Median
Price to Earnings 14.63 0.45 9.43
Price to Book 1.2 -0.40 0.72
Price to Sales 0.59 0.02 0.40
EV to EBITDA 8.77 9.12 7.20

Check more companies

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4. Nitin Spinners
5. Sumeet Industries
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7. GHCL Textiles
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9. Precot
10. Ambika Cotton Mills

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