Modern Threads (MODTHREAD)

Score breakdown: P/E: 2/3 · ROCE: 0/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• P/E of 12.50 is modest relative to reported trailing earnings
• Promoter holding of 65.16% aligns owner interests with minority shareholders
• Piotroski F-score of 7/9 suggests improving financial health
• Latest quarter shows ₹6 Cr net profit on ₹75 Cr sales, indicating margin recovery

Concerns

• ROCE of only 2.90% reflects poor return on capital employed
• Sales growth of just 3.55% means the topline is nearly flat
• 1,000% profit growth is likely a low-base effect, not durable compounding
• No dividend means shareholders depend entirely on price appreciation

AI Analysis

At ₹46.90, Modern Threads sells for ₹146 Cr, about 12.5 times trailing earnings. That sounds cheap, but I have learned that a low multiple is only attractive if the underlying economics are sound. The ROE is 8.97%, and ROCE is just 2.90%. That tells me this business earns a thin return on actual capital employed. For a textile company, that is not a wonderful franchise. There is no moat; it is a commodity-like operation where margins are at the mercy of input costs and global demand. The 1,000% profit growth looks exciting, but I must remember that a percentage explosion from a low base is not the same as durable compounding. Sales growth is only 3.55%, so the topline is nearly stagnant. The latest quarter shows ₹75 Cr sales and ₹6 Cr net profit, a nice margin of 8%, but I need to see several quarters like that before believing it is a new normal. F-score of 7/9 is a positive signal and suggests the balance sheet is healing. Promoter holding at 65.16% is good; owners have skin in the game. There is no dividend, so minority shareholders rely entirely on capital appreciation. PEG of 0.02 is a statistical illusion—it uses a one-year profit spike. Graham would demand a margin of safety. With book value ₹29.72 and price ₹46.90, I am paying 1.58 times book for a business earning sub-9% equity returns. This is not a classic bargain. It may be an early turnaround, but the market is already pricing some recovery. I would wait for stronger sales growth or a value closer to book.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer