Corporate Update | Market Reports

Weekly Analysis of Textile Stocks

Published: August 31, 2020

Author: G.Thulessiraman

The textile industry is a group of related industries which uses a variety of natural (cotton, wool, etc.) and/or synthetic fibers to produce fabric. It is a significant contributor to many national economies, encompassing both small and large-scale operations worldwide. The textile industry is primarily concerned with the design, production and distribution of yarn, cloth and clothing. The raw material may be natural, or synthetic using products of the chemical industry.

TEXTILE STOCKS- NAME, PRICE & UPDATES:

(Current prices are as per the closing prices as on 28/08/’20.)

GRASIM INDUSTRIES LIMITED:
Current Price: Rs. 701.15

Grasim Industries Limited is a holding company. The Company’s segments include Viscose Staple Fiber and Wood Pulp. The Company conducts its cement business through its subsidiary, UltraTech Cement Limited. Viscose Staple Fiber is used in apparels, home textiles, dress material, knitted wear and non-woven applications, and its plants are located at Madhya Pradesh, Gujarat and Karnataka. The average capacity of these plants is 500 kilo-tons per annum. It also offers fabrics and synthetic yarns through its subsidiary, Grasim Bhiwani Textiles Limited. It caters to international fashion houses in the United States and the United Kingdom supplying fabric to them for manufacturing of garments.

Technical rating indicates a very bullish trend.
Community sentiments give an indication of 100% BUY.
June ’20 Net sales was recorded at Rs. 13,621.10 crores, down 27.78% YoY.
Net profit earned was 598 crores.
Stock price is trading at its 0.81 times.
Company has delivered good profit growth of 28.66% CAGR over last 5 years.

STRENGTHS –

Company has zero promoter pledge.
The stock price is being traded above the short, medium- and long-term moving averages and thus has a strong momentum.

WEAKNESS –

Mutual fund holders have decreased their stake in this company.
Company with weak financials.
Decline in quarterly net profit (YoY).

27/09/’19- Rs. 727

INDIAN CARD CLOTHING COMPANY LIMITED:
Current Price: Rs. 103.15

The Indian Card Clothing Company Limited is engaged in manufacture of card clothing and realty. The Company’s segments include Card Clothing and Realty. The Company’s geographic segments include Domestic and Overseas. The Company offers products, including Cotton, Woolen and Acura. The Company’s card clothing has been categorized into sections, such as short staple, long staple, non-woven and other.

March ’20 Net sales was recorded at Rs. 16.16 crores, up 0.01% YoY.
On 21st August ’20, the stock price was trending over its 200-day moving average.
Only buyers in this stock, and thus community sentiments suggest to stay on the BUY side.
Net loss for March ’20 results was recorded at 2%
Stock price is trading at 0.80 times of its book value.
The company has delivered a poor growth of -5.44% over past five years.
Company has a low return on equity of -13.79% for last 3 years.

STRENGTHS –

Company with low debt.
Improving net cash flow from the last 2 years.

WEAKNESS –

Book value per share deteriorating since the last 2 years.
Return on asset declining since the last 2 years.

27/08/’19- Rs. 113.25

INDIAN TERRAIN FASHIONS LIMITED:
Current Price: 35.80

Indian Terrain Fashions Limited is an India-based company, which is engaged in the business of manufacture and sale of apparel. The Company’s geographical segments are Domestic, which includes sales to customers located in India, and International, which includes sales to customers located outside India. The Company offers work wear and casual clothing for men. The Company offers products for men under the brand name, Indian Terrain. The Company offers casual clothing for boys under the brand, Indian Terrain BOY. The Company retails across the country through over 800 multi brand outlets, approximately 150 doors of large format stores and over 100 brand outlets, as well as through e-commerce platforms.

Technical rating indicates a bullish trend.
Community sentiments give an indicator of 100% BUY.
March ’20 sales was recorded at Rs, crores.
Net loss was recorded at 18%
Company has a low return on equity of 6.05% for the past 3 years.
Stock price is trading at 0.63 times of its book value.
Promoters have pledged 66.98% of its holdings.

STRENGTHS –

Stock price gained 20% of its value in 1 month.
Company with low debt.

WEAKNESS –

High interest payments as compared to earnings.
Company with high promoter pledge.

27/08/’19- Rs. 81.95

LAKSHMI MACHINE WORKS LIMITED:
Current Price: Rs. 3304.85

Lakshmi Machine Works Limited is an India-based holding company. The Company is engaged in the manufacturing and selling of textile spinning machinery, computer numerical control machine tools, heavy castings, and parts and components for aerospace industry. It offers machine tool products, such as turning, milling and turn mills. Its foundry products include ductile iron castings and grey iron castings. The Advanced Technology Center specializes in the manufacture and supply of parts and components required for the aerospace industry. Its products and services include aero structure components, aero engine components and sheet metal fabrications.

Technical rating indicates a very bullish trend.
June ’20 Net sales was recorded at Rs. 168.78 crores, down 63.21% YoY.
Net loss was recorded at 21%
Company is virtually debt free.
Company has been maintaining a healthy dividend pay-out of 26.35%
The company has a poor growth of -8.75% for the past 5 years.

STRENGTHS –

Company with zero promoter pledge.
Price is trending above the short, medium- and long-term moving averages, and thus has a strong momentum.

WEAKNESS –

Major fall in TTM Net profit.
Annual net profit decreasing for the past 2 years.

27/08/’19- Rs. 3695.45

LAMBODHARA TEXTILES LIMITED:
Current Price: Rs. 33.30

Lambodhara Textiles Limited is an India-based textile company. The Company is engaged in the manufacturing of synthetic yarn. The Company’s segments include Yarn Manufacturing, Wind Mills and Real Estate. The Company produces yarns in a count range from 10s to 60s. It specializes in manufacturing slub yarns, multi count and multi twist yarns, siro yarns and neppy yarns. The Company’s windmills are located at Koodankulam Village, Tirunelveli District and Kundadam Village, Tirupur District.

Technical rating indicates a very bullish trend.
June ’20 Net sales was recorded at Rs. 4.13 crores, down 90.78% YoY.
Stock price is trading at 0.51 times of its book value.
Debtor days has improved from 30.86 days to 24.47 days.
Promoters have pledged 44.26% of its holding.
The company has delivered a poor growth of 5.55% over past five years.

STRENGTHS –

Stock price has gained about 20% of its value in one month.
The stock price is trading above its short, medium- and long-term moving average and thus have a strong momentum.

WEAKNESS –

Fall in quarterly revenue and net profit.
Declining profits every quarter for the past 2 quarters.

27/08/’19- Rs. 31.15

MITTAL LIFE STYLE LIMITED:
Current Price: Rs. 32.40

Mittal Life Style Limited is an India-based company engaged in the business of trading in denim fabrics. The Company is engaged in the business of fabrics and garments manufacturing, designing, trading and export and import of fabrics and garments. It offers a variety of products, such as polyester dobby, cotton knits, satin silky, polyester shirting, satin silky and polyester knits, cotton satin silky, white ecru and cotton dyed fabrics. It takes small orders of five yards and up.

Technical rating indicates a bearish trend.
Moving averages and moving average crossovers indicate a neutral trend.
Community sentiments indicate a 100% BUY and sets a target or Rs.40 or Rs.44
Promoter holding has decreased by 8.6% over the last quarter.
Company has given out low returns on equity of 13.50% over the past 3 years.

STRENGTHS –

Return on asset improving since the last 2 years.
Annual net profits improving for the last 2 years.

WEAKNESS –

Company is not able to generate net cash effectively.
The stock price lost more than 20% of its value in 1 month.

27/08/’19- Rs. 86.10

ORBIT EXPORTS:
Current Price: Rs. 70.25

Orbit Exports Limited is a holding and weaving company. The Company operates through two segments: Windmill Power Generation and Manufacturing of Textile. It operates across multiple verticals, from women’s apparel to Christmas crafts and home decor, and occasion specific fabrics and finished products. Its fabric is used for the purposes, including evening and fashion garments, Christmas/carnival/Halloween/Easter festivals and church draping’s. It has operations in the United States, Latin America, Africa, Europe and the Far East.

Technical rating indicates a neutral trend.
Moving average and moving average crossovers indicate a bullish trend.
June ’20 Net sales was recorded at Rs. 8.93 crores, down 79.88% YoY.
Net loss was recorded at 1%
Stock price is trading at 1.10 times of its book value.
Stock is providing a good dividend yield of 4.27%

STRENGTHS –

Company with zero promoter pledge.
The stock price is being traded above its short, medium- and long-term moving averages and thus have a strong momentum.

WEAKNESS –

Degrowth in revenue and profit.
Decline in quarterly net profits since the last 4 quarters.

27/08/’19- Rs. 105.25

PIONEER EMBROIDERIES LIMITED:
Current Price: Rs. 23.15

Pioneer Embroideries Limited is an India-based textiles company. The Company is engaged in the manufacture and export of embroideries, torchon/bobbin laces, raschel laces and other garment accessories It is engaged in product development for embroideries. The Company owns manufacturing facilities at approximately seven locations across India. Its subsidiaries include Hakoba Lifestyle Limited, Mas Embroideries Private Limited, Pioneer Realty Limited and S.R Investments Limited.

Technical ratings indicate a neutral trend.
Moving averages indicate a bearish trend.
The stock price closed below its 30-day moving average on 28^th August ’20.
June ’20 Net sales was recorded at Rs. 24.59 crores, down 63.55% YoY.
The company is reporting repeated profits, but it is not giving out dividend.
Promoters have pledged 82% of their holding

STRENGTHS –

Annual net profits increasing since the last 2 years.
Company with low debt.

WEAKNESS –

Company with high promoter pledge.
Fall in quarterly net profit and revenue (YoY).

27/08/’19- Rs. 24.05

SALONA COTSPIN LIMITED:
Current Price: Rs. 60.80

It is engaged in product development for embroideries. The Company owns manufacturing facilities at approximately seven locations across India. Its subsidiaries include Hakoba Lifestyle Limited, Mas Embroideries Private Limited, Pioneer Realty Limited and S.R Investments Limited. The Company’s finished products, such as combed hosiery yarn and knitted fabrics have demand in domestic and export markets. It is sold in the Tirupur hosiery market. The Company serves exporters of apparels. It makes direct and merchant sales for export of yarn and fabrics to Sri Lanka, Bangladesh, Hong Kong, South Korea, Germany, Mexico, South America and Russia, among others.

The stock price closes above its 30-day moving average on 28^th
June ’20 Net sales was recorded at Rs. 30.23 crores, down 22.68% YoY.
Net loss was recorded at 0.4%
Debtor’s days have improved from 51.99 days to 40.47 days.
Company has a low return on equity of 5.35% for last 3 years.

STRENGTHS –

Company has zero promoter pledge.
The stock price is traded above it short, medium- and long-term moving averages and thus have a strong momentum.

WEAKNESS –

Degrowth in revenue and profit.
Decline in net profit with falling profit margin.

27/08/’19- Rs. 70.15

SRF LIMITED:
Current Price: Rs. 4226

SRF Limited is an India-based holding company. The Company is engaged in manufacturing of chemicals and polymers, technical textiles and packaging films. Its segments include Technical Textiles Business (TTB), which includes nylon tire cord fabric, belting fabric, coated fabric, polyester tire cord fabric and industrial yarns and its research and development. Its technical textiles plants are located at Chennai, Tamil Nadu, Madhya Pradesh, Uttarakhand. Its packaging films plants are located at Udham Singh Nagar, Uttarakhand and Indore, Madhya Pradesh.

June ’20 Net sales was recorded at Rs. 1545.15 crores, down 15.49% YoY.
The stock price has a potential to increase and thus various financial institutions have set targets such as Rs. 4550, Rs. 4306, etc.
Company has delivered good profit growth of 29.41% CAGR over last 5 years.
The stock price is trading at 4.92 times of its book value.
Tax rate seems low.

STRENGTHS –

The company’s return on RoCE- Return on Capital employed has been increasing since the last 2 years.
Growth in operating profit with increase in operating margins.

WEAKNESS –