Gujarat Cotex revenue up 31%; profit and EPS get squeezed
Net profit dropped to ₹16.34 lakh from ₹40.59 lakh, diluted by a rights issue that pushed equity to ₹47.47 cr. Fabric trading remains the only revenue generator; hotel construction not yet contributing.
— 2 earlier stories on Gujarat Cotex Ltd. →What's new
- Revenue rose to ₹6.39 cr but net profit halved to ₹16.34 lakh.
- Rights issue inflates equity to ₹47.47 cr; EPS at 2 paise.
- Independent director Monil Navinchandra Vora resigned effective June 30.
Why this matters
The rights issue has massively diluted earnings. At ₹47.47 cr equity capital, even a small profit produces negligible per-share returns. Fabric trading alone is insufficient to justify the current valuation (P/E 330x). Hotel construction adds uncertainty but no revenue yet.
What we're watching
- When hotel construction completes and starts contributing.
- Future revenue diversification from agriculture/industrial plots.
- Ability to improve margins given cost pressures.
The full read
Gujarat Cotex posted a mixed Q1. Revenue from operations rose 31% to ₹6.39 crore, but net profit collapsed 60% to ₹16.34 lakh, squeezed by lower other income and higher costs. The bigger story is the rights issue: paid-up equity surged to ₹47.47 crore, diluting earnings per share to just 2 paise. Fabric trading was the only revenue source; agriculture, industrial plots, and hotel services contributed zero. The company is still in a transitional phase. Hotel construction began in mid-2026 but hasn't yet generated revenue. An independent director resigned, adding to the governance shuffle. For a stock trading at a P/E of 330, the path to future earnings remains unclear.
Questions answered
- How does the rights issue affect current shareholders?
- The rights issue increased paid-up equity capital to ₹47.47 crore, reducing basic EPS to 2 paise. Existing shareholders' stakes are diluted unless they participated.
- Why is fabric trading the only revenue segment?
- Revenue from agriculture trading, industrial plots, and hotel services was nil in Q1. Fabric trading accounted for the entire ₹6.39 crore turnover.
- What happened to the hotel project mentioned in prior coverage?
- Hotel construction started in mid-2026 but generated no revenue in Q1 FY27. The project is still in a transitional phase.
- Who resigned from the board and why?
- Independent director Monil Navinchandra Vora resigned effective June 30. The board formally accepted the resignation; no reason was disclosed.
- Is the stock expensive given these results?
- Trailing P/E is 330.8, with ROE of just 3.2%. The current earnings do not support the valuation; future growth depends on the hotel project and diversification.
Gujarat Cotex Ltd.
Latest quarter · Jun 2026
Strength & growth
Story so far
All notes on GUJCOTEX →- 21 Jul 2026 · 5:49 PM IST Gujarat Cotex revenue up 31%; profit and EPS get squeezed
- 43d ago Gujarat Cotex starts hotel construction, diversifying from textile trade
- 60d ago Gujarat Cotex's revenue grew 41%. A ₹79.64 lakh write-off did the profit in.