RIL’s Company Analysis on Square Textiles PLC.
RIL’s Company Analysis on Square Textiles PLC.
Square Textile PLC (SQUARETEXT), a leading subsidiary of the Square Group, remains a strong performer within Bangladesh’s textile and Ready-Made Garments (RMG) industry. The company has evolved into a vertically integrated manufacturer producing a wide range of yarns.
The company delivered robust financial results in FY24, achieving consolidated revenue of BDT 20.9 billion, a 26.6% rise from the previous year, driven by a combination of higher export orders and expanded production capacity. Gross profit increased to BDT 2.5 billion, while operating profit rose to BDT 2.2 billion, reflecting improved operational efficiency despite rising input costs for cotton, fuel, and packing materials. Net profit followed an upward trend, reaching BDT 1.5 billion. Over the last five years, SQUARETEXT posted a strong revenue CAGR of 19.2% and an exceptional net profit CAGR of 116%, supported by consistent capital investment and modernization.
SQUARETEXT’s decision to merge its subsidiary, Square Texcom Ltd, which contributes 9.5% to consolidated revenue, is expected to streamline operations and improve efficiency. The company maintains healthy financial ratios, with ROE at 11.4%, ROA at 4.6%, and a manageable debt-to-equity ratio of 0.30 in FY24. Additionally, quarterly performance indicates steady business momentum, with revenue increasing from BDT 15.4 billion in Mar’24 to BDT 18.3 billion in Mar’25, alongside consistent growth in EPS from 4.24 to 5.10 over the same period. The company has also announced to invest BDT40 crore to boost its production capacity under a Balancing, Modernisation, Rehabilitation, and Expansion (BMRE) programme.
The broader RMG industry, accounting for over 81% of Bangladesh’s export earnings, continues to present both opportunities and challenges. As Bangladesh prepares for LDC graduation in 2026 and potential changes in EU market access, SQUARETEXT needs to focus on sustainable, high-value products and strong backward linkage provides a key competitive advantage.
The company’s valuation analysis indicates that SQUARETEXT remains undervalued, with an intrinsic value of BDT 71.7 against a market price of BDT 49.1, offering a potential upside of 46%. Supported by strategic investment, expanding export demand, and resilient financial performance, SQUARETEXT is well-positioned for sustained long-term growth.