Redtape Ltd

Price story Before the numbers, the tape. A stock price moves through four repeating seasons: a flat base (stage 1), an advance (2), a top (3), a decline (4). Where the price sits in that cycle frames everything below.

Redtape Ltd trades at ₹121, in a downtrend and 4 weeks into that stage. That is −5.9% against its own 200-day average. It sits at 33% of a 52-week range of ₹112 to ₹140. On relative strength it is currently behind the NIFTY 500 on a trailing-13-week view (12 weeks and counting).

Today the stock is in a downtrend — week 4 of stage 4, confirmed. At ₹121 it trades −5.9% versus its 200-day average and sits at 33% of its 52-week range (₹112–₹140).

Against the market, two honest reads. Cumulative: over the last 3.1 years the stock moved −2% while the NIFTY 500 moved +34% — behind the index over the full window. Recent form: on a trailing-13-week view the stock is currently behind (12 weeks and counting; last ahead the week of 2026-07-03) — the ribbon below is that same metric, week by week.

What would end the trend, mechanically: two Friday closes in a row below the 200-day line. That is the exit rule — no debates.

Story check

Redtape Ltd's story is not scored yet against the markers our research file set on 22 August 2026. Where it sits in its own cycle: TROUGH. Our fortnightly research layers last read it on 22 August 2026.

Our read, 22 August 2026. Redtape combines a deeply compressed valuation with an earnings recovery, but the investable outcome depends on cash conversion, delivery against the reduced store plan, and margin discipline during seasonal inventory builds.

What is proven. Redtape combines a deeply compressed valuation with an earnings recovery, but the investable outcome depends on cash conversion, delivery against the reduced store plan, and margin discipline during seasonal inventory builds.

What is not proven yet. Reported inventory days fail to move toward the stated target after the seasonal selling period and operating cash flow again remains below half of reported profit, showing that the cash gap is structural rather than a temporary inventory cycle.

🚨 What would change our mind. Reported inventory days fail to move toward the stated target after the seasonal selling period and operating cash flow again remains below half of reported profit, showing that the cash gap is structural rather than a temporary inventory cycle.

🚨 CIO read, 22 August 2026 — EXIT. EXIT (system_dma) · forward-asymmetry 61/100 · CONTESTED. The rating is deeply depressed at the 0th percentile and the price is still 49% below peak. But June operating profit grew only from Rs 77 crore to Rs 84 crore while other income rose from Rs 9 crore to Rs 15 crore, leaving judged growth 5.9 points short of the model requirement.

The test written in advance. Reported inventory days fail to move toward the stated target after the seasonal selling period and operating cash flow again remains below half of reported profit, showing that the cash gap is structural rather than a temporary inventory cycle. — the thesis as written as stated by the next result.

What the company does. The trailing valuation is near the bottom of the available history and remains similarly low after normalizing earnings, so the discount is not merely a trough-margin illusion. Q1 revenue and reported profit increased year on year while management protected e-commerce pricing and set a margin aspiration around its recent operating range. The counterweight is cash: the three-year operating-cash-flow-to-profit ratio remains below one-half, while management has cut its store-opening aspiration and withdrawn numerical export guidance.

🚨 What the surface reading misses. The surface reading is: Cash conversion below one-half suggests reported profit is not turning into cash. The research reads it further: The cash gap coincided with working-capital absorption and capex during retail expansion, but the deterministic full-window cash story remains debt-funded deterioration rather than a completed investment harvest.

🚨 What the surface reading misses. The surface reading is: Reported profit in the base quarter can make subsequent growth appear more meaningful than operating progress. The research reads it further: The flagged item is non-operating other income, so reported profit must be separated from operating profit when judging the recovery.

Sources: our stock research file (22 August 2026) · quarterly results through Jun 26 · the company’s own earnings calls. The story check is re-scored every results season; the record below never changes.

Revenue Revenue is the top line: everything the company billed its customers in the period.

Redtape Ltd reported ₹481 Cr of revenue in the Jun 26 quarter, +3.7% year on year. That is the 5th straight quarter of year-on-year growth. Over 3 years it has compounded at 18.1% a year. The last full year, FY26, came in at ₹2,419 Cr. The last four reported quarters add to ₹2,436 Cr.

FY26 revenue came in at ₹2,419 Cr (+19.7% on the year), capping 3 years at 18.1% compound. The latest quarter (Jun 26) printed ₹481 Cr, +3.7% year on year — the 5th consecutive quarter of year-over-year growth.

Pace check: the last four quarters averaged +18.7% growth against the decade's 18.1% — the current year is running in line with its own long-run rate.

Acceleration check: trailing-twelve-month revenue grew +19.0% over the last 4 quarters against +13.5%/yr over the last 8 — accelerating; TTM profit +38.8% vs +23.9%/yr — accelerating.

FY26-Q4. revenue ₹676 Cr and profit ₹70 Cr as reported.

FY27-Q1. revenue ₹481 Cr and profit ₹44 Cr as reported.

Why-sources: our stock research file (22 August 2026) and the company’s own results for those quarters.

Operating margin Operating margin is what is left of every ₹100 of sales after running the business, before interest and tax. It is the cleanest read on pricing power and cost control.

Redtape Ltd's operating margin is 17.0% in the Jun 26 quarter, +0.0 percentage points against the same quarter a year ago. Across 4 fiscal years the operating margin has ranged 11.0% to 17.0%. The current quarter sits inside that band.

Why this happened. Management states that its focus is to keep margins intact and increase them, while Q1 operating margin remained at the reported level. The claimed mechanism is mix, supply-chain efficiency and fixed-cost absorption rather than broad price increases.

The latest quarter's operating margin is 17.0%, +0.0 pp against the same quarter a year ago. Across 4 fiscal years the operating margin has ranged 11.0%–17.0%.

Why the margin moved: operating margin went +0.8 pp year on year while gross margin went +0.6 pp — the gain came mostly from the gross line: input costs and pricing.

FY26-Q4. revenue ₹676 Cr and profit ₹70 Cr as reported.

FY27-Q1. revenue ₹481 Cr and profit ₹44 Cr as reported.

Why-sources: our stock research file (22 August 2026) and the company’s own results for those quarters.

Net profit Net profit is what survives every cost, interest and tax — the number EPS, dividends and book value all grow from.

Redtape Ltd earned ₹44.0 Cr of net profit in the Jun 26 quarter, +12.8% year on year. It is the 5th consecutive quarter of growth. Full-year FY26 profit was ₹241 Cr. The 3-year compound rate is 19.3%. That is 9.1% of the quarter's revenue. The same quarter a year earlier earned ₹39.0 Cr.

Jun 26 profit was ₹44.0 Cr, +12.8% year on year — the 5th consecutive quarter of growth. On the full year, FY26 printed ₹241 Cr (+41.8%), and the 3-year compound rate is 19.3%.

Why profit moved: revenue contributed +3.7% and the margin +0.0 pp — the quarter was revenue-led, with the margin roughly flat.

Pace comparison, last four quarters: profit +34.8% vs revenue +18.7%. Profit is growing faster than sales — fixed costs are being spread over a bigger base, and each extra rupee of revenue drops more to the bottom line.

FY26-Q4. revenue ₹676 Cr and profit ₹70 Cr as reported.

FY27-Q1. revenue ₹481 Cr and profit ₹44 Cr as reported.

Why-sources: our stock research file (22 August 2026) and the company’s own results for those quarters.

Cash flow — the router The P&L says what was earned; the cash-flow statement says what actually arrived. Operating cash flow (CFO) against profit is the cleanest lie detector in the accounts.

Over the last 3 fiscal years 45% of Redtape Ltd's reported profit arrived as operating cash — a gap worth watching. In FY26 that was ₹174 Cr of operating cash against ₹241 Cr of profit. After ₹100 Cr of capital spending, ₹74.0 Cr was left as free cash. Cash resolution here is annual, because quarterly cash statements are not published.

Why this happened. Management reported inventory days at 173 and expects a seasonal build before a later drawdown toward its target. The latest fiscal year’s cash conversion improved, but the three-year record remains weak; a delivered reduction would change the quality of the earnings case.

FY26: operating cash of ₹174 Cr against reported profit of ₹241 Cr, leaving free cash of ₹74.0 Cr after ₹100 Cr of capital spending. Across the last 3 fiscal years the conversion rate is 45% of profit.

Cash-flow readings here are annual — that is the resolution our series carries, so this section moves once a year.

🚨 Why conversion sits at 45%: the cash cycle stretched 76 days between FY23 and FY26 — more of each rupee of profit waits inside the cycle before arriving. Less than 70% of profit arriving as cash is the thing to watch on this page.

Router verdict: conversion is below par and the cash cycle has stretched 76 days — the next section's job is to find where the cash is stuck.

Where the cash goes Working capital is the cash tied up between paying suppliers and getting paid: debtor days (customers owe), inventory days (stock waits), and the cash conversion cycle (the whole loop, in days of sales).

Redtape Ltd's cash conversion cycle runs 240 days in FY26, up from 164 days in FY23. Capital spending ran ₹566 Cr over the last 3 years. At FY26 sales of ₹2,419 Cr each day of that cycle holds about ₹6.6 Cr, so roughly ₹1,591 Cr sits inside the business at any moment.

Why this happened. Q1 added 33 stores, and management now aspires to reach 150 openings by financial year-end. Smaller stores can ramp faster, while the franchise model can limit direct capital intensity. The Operating Leverage Catapult applies only if new outlets add sales without rebuilding the working-capital burden.

FY26: debtors at 32 days, inventory at 306 days — roughly 10.1 months of stock waiting to sell; that is where the cash sits while it waits — for a full cycle of 240 days, looser than FY23's 164.

The full loop: cash goes out to suppliers and production on day 0; stock waits 306 days to sell; customers pay about 32 days after that; and suppliers themselves are paid at 97 days — netting out to the 240-day cycle.

In money terms: at FY26 sales of ₹2,419 Cr, each day of the cycle holds about ₹6.6 Cr — so the 240-day loop keeps roughly ₹1,591 Cr sitting inside the business at any moment.

On the investment side: capital spending of ₹566 Cr over the last 3 fiscal years against ₹230 Cr of depreciation — the company is building well ahead of wear-and-tear. Capital work-in-progress stands at ₹25.0 Cr (FY26) — capacity paid for but not yet earning.

The synthesis: the working-capital loop is the cash sink the router flagged — watch the cycle, not the P&L.

Return on capital Return on capital employed (ROCE) is the profit the whole business earns on all the money in it — equity and debt together. It is the single best test of whether growth creates value or just size.

Redtape Ltd earns a ROCE of 24% in FY26. That is up from a trough of 22% in FY25. Return on invested capital clears the cost of that capital by +4.0 percentage points, so growth here adds value rather than only size. The wiring behind it is 10.0% net margin on 1.05× asset turns.

FY26 ROCE is 24%, recovered from a FY25 trough of 22% — the full ladder below shows the fall and the climb, undoctored.

Why the return is what it is — the wiring (FY26): 10.0% net margin × 1.05× asset turns × 2.26× balance-sheet leverage ≈ 23.7% on equity. Margin does its share; leverage is a meaningful part of the equation.

The capstone test — ROIC − WACC: 16.0% − 12.0% = a +4.0 pp spread. The 12.0% is a standing assumption for the cost of capital in India, not a per-stock estimate — read the sign and the size of the spread, not the decimals. Positive but thin — value creation with little room for error.

Debt Debt-to-equity says how much of the business is funded by borrowings. Low is the safe corner; the trend matters as much as the level.

Redtape Ltd carries total debt of ₹720 Cr against shareholder equity of ₹1,021 Cr as of Mar 26, a debt-to-equity of 0.71. On the annual view that ratio went from 0.55 in FY23 to 0.71 in FY26. Read the returns elsewhere on this page with that leverage in mind.

Mar 26: total debt of ₹720 Cr against shareholder equity of ₹1,021 Cr — a debt-to-equity of 0.71. On the annual view, debt-to-equity went from 0.55 (FY23) to 0.71 (FY26). Read the returns on this page with that leverage in mind.

Ownership Who owns the stock, quarter by quarter: promoters (the controlling owners), foreign and domestic institutions, and the public. Steady accumulation by people close to the numbers is a signal; a quiet register is also an answer.

Domestic institutions added 2.8 points of Redtape Ltd over 8 quarters, the biggest move on the register. That takes domestic institutions to 11.7% of the company. Promoters moved +0.0 points over the same window, to 71.8%. The register is read on the four disclosed classes only; nothing is inferred between filings.

The register over the last two years — Domestic institutions: +2.8 points over 8 quarters to 11.7%; Promoters: +0.0 points over 8 quarters to 71.8%; Foreign institutions: +0.0 points over 8 quarters to 3.2%.

Why the register moved: domestic institutions drove it (+2.8 points) — steady accumulation by institutions reading the same numbers this page reads.

Safety line The Z-score estimates how far a company sits from balance-sheet distress — above roughly 3 is safe, below roughly 1.8 is the danger zone. It was built for manufacturers, so it is not applied to banks and lenders.

Redtape Ltd: the Z-score is not available for this stock, so we say so rather than invent one. It is a distance-to-distress estimate from the balance sheet, not a forecast of failure. The debt, cash-flow and return sections above carry the balance-sheet evidence this page does hold, and each of them states its own reporting date.

The safety line in one sentence: the Z-score is not available for this stock, so we say so rather than invent one.

Valuation P/E is the price of ₹1 of annual profit: how many rupees the market pays for each rupee the company earns in a year.

Redtape Ltd trades at 27.2× P/E, near the bottom of its own range — cheaper only 3% of the time. Its long-run median P/E is 44.9×, measured across 3.1 years of weekly readings. This places the multiple against the stock’s own record, and says nothing about what the business is worth.

Today's P/E of 27.2× is near the bottom of its own range — cheaper only 3% of the time, against a long-run median of 44.9× measured over 3.1 years of weekly readings. This is a comparison against the stock's own history — not a claim about what it is worth.

Why the multiple sits where it does: over the past year annual EPS moved +41.2% against a −17.4% price move — earnings outran the price, pushing the multiple DOWN its own range.

The price move, decomposed: over 3y, of the +2.7%/yr price move, ~+20.3%/yr came from earnings growth and ~−17.6 pp from the multiple (compressing). The split is the honest approximate (price return minus earnings growth); it makes the rally itself visible instead of hiding it behind the percentile.

Put together: the multiple is low against its own past, so the story rests on the earnings line underneath it, not the multiple.

What the price assumes This reading works the multiple backwards. It asks one question: what yearly rate of profit growth is a buyer at the market price already paying for? The number is the growth rate that makes eleven years of profit — six years growing, then five fading — add up to that day's market price, once each year is discounted at 11% a year.

Solved at its 26 August 2026 price, Redtape Ltd was paying for profit growth of about 15.9% a year. Profit itself has compounded 19.3% a year over the past 3 years. Today the market pays 27.2× P/E, the 3rd percentile of its own 3-year range.

What the two numbers say together. The multiple is low against its own past, and the growth the price is paying for is close to what this company has actually delivered.

How to hold this number: it is a reading of one day's price, taken on 26 August 2026, not a running figure — every other number on this page, the multiple included, is read off the live quote as of 25 September 2026. A higher price is paying for more growth and a lower price for less, so it moves whenever the price does, and this page does not restate it between measurements.

Stage: Mixed Every business sits somewhere on a fundamental arc, and this page names the spot before anything else. The last twelve quarters of revenue, profit and EPS growth — plus the return the business earns on its capital — are read as curves: Deteriorating (the curves are falling), Turning around (a trough has just formed and the last few quarters lift off it), Improving (the climb off the trough is sustained), Consistent (steadily positive with healthy returns), Topping out (still high but decelerating from the peak). When the curves genuinely disagree the read is Mixed; too little history is No read. CAGR (compound annual growth rate) is the smooth yearly pace that turns the starting value into the latest one — the fairest way to compare growth across different time spans. Read the columns together: if the 1-year number towers over the 10-year, recent growth is running hotter than the long-run trend. A dash means that window is not held, or the base year was a loss (where a growth rate is not meaningful).

Redtape Ltd reads as mixed on its fundamental arc. Mixed — no clean majority across the growth curves, ROCE lifting at 31.8% — the per-curve reads carry the story. The read is built from 11 quarters across 3 curves, on partial evidence.

Why it matters: when the curves disagree, the per-curve reads above matter more than any single verdict.

A partial read: at least one curve is short, or the returns curve is not the computed quarterly series — hold the stage word a little more loosely.

4-Factor Sector Score

72.9/100 — rank 1 of 7 in Footwear · 100% evidence confidence

Redtape Ltd scores 72.9 out of 100 against the 7 companies it is compared with in Footwear, ranking 1. Balanced evidence: keep at normal research priority and require another comparable period before raising conviction.

The four contributions add to the total exactly: 27.9 + 18 + 18.9 + 8.1 = 72.9. This is the SAME number shown on the sector comparison — it is computed once, for the whole peer set, and read here.

What would change it: The read weakens if profit growth turns negative or margin improvement reverses while sector-relative strength deteriorates.

Said versus delivered

What Redtape Ltd's management promised, set against what actually arrived — 4 tracked promises on the record. Read straight from the company’s own earnings calls. A promise that slipped stays on this page after it is met.

FY27 Store Opening Plan Cut · 11 August 2026. In May 2026, management said FY27 store additions would be 200 to 250. In August 2026, after opening 33 stores in Q1 FY27, management described only 150 stores by year-end as its aspiration, a reduction of at least 25% with no explanation for the change.

Unexplained Shift to External Brand Acquisition · 11 August 2026. In November 2025, management explicitly said Redtape was not in the business of acquiring brands, taking over brands, or having outside brands in its portfolio. By August 2026, the company had acquired rights to the Sprandi sports footwear brand, representing a clear and unexplained shift in portfolio strategy.

Export Revenue Target Withdrawn · 11 August 2026. In November 2025, management provided a specific medium-term target of exports reaching 10% of the business within two to five years. In August 2026, management declined to provide any numerical guidance, stating that it was too early to commit, without explaining why the earlier target had been withdrawn.

Aggressive Acceleration in Store Expansion · 26 May 2026. In the Nov 2025 call, management emphasized a consistent, multi-year strategy to maintain their historical run rate of opening 80 to 100 stores annually. However, in the May 2026 call, management abruptly more than doubled this expansion guidance, stating they plan to add 200 to 250 stores this year without explaining the strategic pivot or addressing the material capital expenditure and working capital implications.

Every quote above is taken word for word from the company’s own earnings calls.

Frequently asked questions