­Extensive industry experience of the promoters: 
The promoters have an experience of over 3 decades in textile- spinning industry which gives them an understanding of the dynamics of the market and enables them to establish relationships with suppliers and customers. Additionally, the promoter K. Subramani, has previous experience in operating a company - Mothi Spinners Private Limited - which operates in same line of business. CMYTPL is a demerged unit of Mothi Spinner Private Limited (rated Acuite A-/Stable/A2+), the demerger was a strategic initiative which occurred in FY2021. Acuite believes that the Company is expected to benefit over the medium term from the experience of the promoters. 

Stable scale of operations with improving profitability
CMYTPL has maintained a stable scale of operations, with operating income moderating to Rs. 213.25 crore in FY2025 from Rs. 291.56 crore in FY2024. The moderation in revenues was primarily due to lower volume sales in FY2025 despite better realisations, driven by the absence of cotton trading and the company’s strategic shift towards premium finer-count blended yarns. In FY2026, revenues recovered modestly to Rs. 239.47 crore, supported by improved pricing and volumes.  Despite the topline moderation in FY2025, profitability improved sharply, with EBITDA margins expanding to 20.93% from 14.51%, aided by significant reduction in power costs through higher captive renewable energy usage. Consequently, EBITDA increased to Rs. 44.63 crore in FY2025 from Rs. 42.30 crore in FY2024, while PAT rose sharply to Rs. 10.24 crore from Rs. 0.85 crore, supported by stronger operating performance and deferred tax recognition. Acuité expects revenues to remain stable over the medium term, with profitability remaining sensitive to industry cyclicality, partly mitigated by captive power benefits and focus on higher-margin yarns.

Moderate financial risk profile
The company’s financial risk profile remains moderate, supported by an improving net worth base, moderate leverage and coverage indicators. The tangible net worth increased to Rs. 75.87 crore as on March 31, 2025, from Rs. 65.74 crore as on March 31, 2024, driven primarily by profit accretion during the year and quasi-equity support. Total debt declined to Rs. 151.72 crore in FY2025 (comprising long-term debt of Rs. 62.20 crore, short-term borrowings of Rs. 59.71 crore, unsecured loans of Rs. 5.06 crore, and current maturities of long-term debt of Rs. 24.75 crore), compared to Rs. 165.97 crore in FY2024, reflecting moderation in borrowings. Consequently, the gearing ratio improved to 2.00x in FY2025 from 2.52x in FY2024, while the TOL/TNW ratio improved to 2.16x from 2.79x, aided by reduced liabilities and improved net worth. Debt protection metrics remained moderate, with the interest coverage ratio (ICR) improving to 2.82x in FY2025 from 2.73x in FY2024, while the debt service coverage ratio (DSCR) remained stable at 1.22x in FY2025 from 1.24x in FY2024. Acuité expects the company’s financial risk profile to remain moderate over the near to medium term, though it remains sensitive to industry cyclicality and working capital intensity.

­Intensive working capital operations
The company’s operations remained working-capital intensive, with Gross Current Assets (GCA) increasing to 162 days in FY2025 from 105 days in FY2024, primarily driven by a sharp rise in inventory levels. Inventory days elongated significantly to 135 days in FY2025 from 71 days in FY2024, largely due to accumulation of finished goods pending dispatch toward the year-end. Debtor days remained stable at around 28 days, reflecting disciplined collection practices supported by a largely repeat and established customer base, while creditor days increased marginally to 26 days from 22 days, providing limited offset. Consequently, the working-capital cycle lengthened to 136 days in FY2025 from 77 days in FY2024, indicating elevated funding requirements. Fund-based bank limit utilisation remained high at ~94.6% over the twelve months ended March 2026, underscoring continued reliance on bank borrowings. Acuité believes working-capital intensity will remain elevated over the medium term, with operting efficiency largely dependent on disciplined inventory management and timely realisation of receivables.

Susceptibility to volatility in raw material prices
The Company depends on domestic VSF producers like Grasim and imports for their raw material requirements. The profitability is susceptible to changes in the prices of these raw material i.e. viscose staple fibre (VSF), any adverse price movement are likely to impact the operating margins of viscose fibre yarn(VFY) manufacturers. In the past, the industry had faced competition from imports of VFY from countries like China which had impacted the margins of players.