ABCOTS - AB Cotspin

📊 NSE: ABCOTS 🏢 Textiles - Cotton/Blended 📅 Last Updated: 12/13/2025 17:45

💰 Financial Performance

Revenue Growth by Segment

The company operates in a single business segment, 'Cotton Ginning', which generated revenue of INR 298.06 Cr in FY 2024-25, representing a growth of 16.54% compared to INR 255.77 Cr in FY 2023-24.

Geographic Revenue Split

While specific percentage splits are not disclosed, the company is headquartered in Jaitu, Punjab, and is actively expanding its procurement and operational footprint into the states of Madhya Pradesh and Maharashtra to leverage regional cotton availability.

Profitability Margins

Net Profit Margin improved to 3.35% in FY 2024-25 from 2.62% in FY 2023-24, a 27.86% YoY improvement. Operating Profit Margin increased from 2.99% to 3.60% (+61 bps) due to better scale and cost management.

EBITDA Margin

EBITDA stood at INR 32.64 Cr in FY 2024-25, a growth of 18.10% YoY from INR 27.64 Cr. The calculated EBITDA margin is approximately 10.95%, reflecting improved operational efficiency despite sluggish demand in the broader textile industry.

Capital Expenditure

The company is planning expansion into Madhya Pradesh and Maharashtra funded through bank finance, internal accruals, and government incentives; however, the exact INR Cr value for planned capex is not disclosed in the available documents.

Credit Rating & Borrowing

The company maintains a 'Stable' outlook from IVR (Infomerics). Borrowing costs are reflected in a finance cost of INR 10.40 Cr for FY 2024-25, which increased 11.28% YoY to support a total debt-to-equity ratio of 1.5x.

⚙️ Operational Drivers

Raw Materials

The primary raw material is Raw Cotton, which is processed through ginning. While the exact percentage of total cost is not specified, 'Cost of Material Consumed' is the largest expense component in the textile ginning process.

Import Sources

Raw materials are sourced domestically from major cotton-producing states including Punjab, Madhya Pradesh, and Maharashtra to ensure easy availability and reduced logistics costs.

Key Suppliers

Specific supplier names are not disclosed, but the company relies on a fragmented network of local farmers and traders within the textile hubs of North and Central India.

Capacity Expansion

The company is expanding operations into Madhya Pradesh and Maharashtra. Current capacity is not specified in MT, but rating sensitivities indicate a target to scale Total Operating Income (TOI) beyond INR 400 Cr.

Raw Material Costs

Profitability is highly susceptible to volatile raw cotton prices. The company manages this through a procurement strategy focused on 'location advantage' in textile hubs to minimize transit costs and ensure steady supply.

Manufacturing Efficiency

The company achieved a Profit Before Tax (PBT) of INR 13.45 Cr in FY 2024-25, a 59.26% increase YoY, indicating significant improvements in manufacturing throughput and cost absorption.

Logistics & Distribution

Distribution costs are managed by maintaining a diversified clientele across various regions, though specific logistics costs as a percentage of revenue are not provided.

📈 Strategic Growth

Expected Growth Rate

34%

Growth Strategy

The company aims to achieve a Total Operating Income exceeding INR 400 Cr by expanding its footprint into Madhya Pradesh and Maharashtra, diversifying its product profile within the cotton ginning and netting business, and leveraging government incentives for textile expansion.

Products & Services

The company provides Cotton Ginning services and produces ginned cotton and netting products for the textile industry.

Brand Portfolio

ABCOTS (AB Cotspin India Limited).

New Products/Services

The company is focusing on the 'Cotton Ginning and Netting' business as its primary reportable segment with ongoing efforts in product diversification.

Market Expansion

Targeting geographic expansion into Central India (MP and Maharashtra) to secure raw material supply and reach new textile manufacturing clusters.

Market Share & Ranking

Not disclosed, but the industry is described as 'highly fragmented and competitive'.

🌍 External Factors

Industry Trends

The textile industry is currently facing sluggish demand for yarn. However, the industry is evolving toward higher sustainability practices and environmental regulation compliance, which the company is proactively adopting.

Competitive Landscape

The industry is characterized by high fragmentation and cyclicality, with competition from both organized and unorganized players in the cotton ginning sector.

Competitive Moat

The company's moat is built on 'experienced promoters' (led by Sh. Deepak Garg), a 'long track record of operations', and 'location advantage' in textile hubs. These are sustainable but partially offset by the fragmented industry structure.

Macro Economic Sensitivity

The business is highly sensitive to climatic conditions affecting cotton crop yields and global demand for yarn, which influences the scale of ginning operations.

Consumer Behavior

Demand is driven by the global textile value chain; shifts toward sustainable and traceable cotton are emerging as key consumer trends.

Geopolitical Risks

Geopolitical uncertainties are noted as a complexity that could add to industry risks, particularly affecting the export of textile products.

⚖️ Regulatory & Governance

Industry Regulations

Operations are subject to the Companies Act 2013, Ind AS accounting standards, and specific textile industry regulations. The company maintains cost records as prescribed under Section 148(1) of the Act.

Environmental Compliance

The company acknowledges evolving environmental regulations as an industry complexity and is prioritizing sustainability practices, though specific ESG costs are not disclosed.

Taxation Policy Impact

Total Tax Expenses for FY 2024-25 were INR 3.46 Cr (calculated as PBT of 13.45 Cr minus PAT of 9.99 Cr), representing an effective tax rate of approximately 25.7%.

Legal Contingencies

The company has disclosed pending litigations in Note 49 of its financial statements that would impact its financial position; however, the specific case values in INR are not provided in the summary.

⚠️ Risk Analysis

Key Uncertainties

Key risks include raw material price volatility (impacts margins by ~50-100 bps) and climatic risks affecting cotton supply.

Geographic Concentration Risk

Operations are currently concentrated in the Punjab textile hub, with a strategic move to reduce this by expanding into MP and Maharashtra.

Third Party Dependencies

High dependency on the agricultural sector for raw cotton supply and bank finance for expansion projects.

Technology Obsolescence Risk

The auditor noted that the 'audit trail (edit log) facility' in the accounting software was not operated throughout the year, indicating a need for digital governance upgrades.