Corporate Update | Market Reports

Weekly Analysis of Textile Stocks

Published: August 17, 2020

Author: G.Thulessiraman

The textile and apparel industry are one of the earliest industries to have developed in India. Its inherent and unique strength is its incomparable employment potential owing to the presence of the entire value chain from fiber to apparel manufacturing within the country. It is the biggest employer after agriculture and provides direct employment to 4.5 crore people and another 6 crores in allied sectors. India needs to generate jobs that pay well, provide social protection to workers, support efficient production for export markets, and hold the potential for social transformation. The textile industry meets all these criteria.

India is the second-largest manufacturer of textiles and clothing in the world. India is also the second-largest exporter of textiles and apparel with a share of 5% of global trade. India has a very strong raw material base both in natural and man-made fibers (MMFs).

SOME OF THE TEXTILE STOCKS ANALYZED ARE:

(Current prices are the closing prices as on 14/08/’20).

SWAN ENERGY:
Current Price: Rs. 133.45

Swan Energy Limited is an India-based holding company. The Company is engaged in the manufacturing of textile products. The Company’s business segments include Textiles and Property Development/Others. The Company is engaged in the manufacturing and marketing of cotton and polyester textile products. The Company is also engaged in the real estate development and energy businesses.

Technical Rating indicates a Bearish trend.
Exponential moving average crossovers are bullish in nature.
March ’20 Sales recorded was Rs. 105 crores and a net loss of 5.62%.
The company has a growth rate of only 1.63% in the past 5 years.
Return on equity has deteriorated at -1.11% in the past 3 years.

STRENGTHS –

MACD crossover the signal line.
Book value per share increasing for the past 2 years.

WEAKNESS –

Declining profits since the last 3 quarters.
High interest rates compared to the earnings.

14/08/’19- Rs. 101.70

MAYUR UNIQUOTER:
Current Price: Rs. 251.60

Mayur Uniquoters Limited is a holding company. The Company is engaged in the manufacturing of artificial leather/foam leather, and other substitutes of leather. It manufactures coated textile fabric. It offers products for various parts of footwear, such as shoe uppers, shoe lining and insoles. Its manufacturing units are located at village Jaipura and Dhodsar, Jaipur. Knitted fabric manufactured at Dhodsar plant is consumed primarily as captive consumption.

Technical rating indicates a very bullish trend.
Community sentiments give a mixed signal of 50% BUY and 50% SELL.
June ’20 Net sales recorded was Rs. 38.05 crores, down 70.32 YoY.
Net profit recorded was 0.9%.
Company is virtually debt-free.
The company has delivered a poor growth rate of 0.54% in the past 5 years.

STRENGTHS –

The stock price is forming a Bullish reversal pattern.
Company has zero promoter pledge.

WEAKNESS –

Mutual fund holders have reduced their stake in the company since the last quarter.
Annual net profit declining since the last 2 years.

14/08/’19- Rs. 234.25

KEWAL KIRAN CLOTHING LIMITED:
Current Price: Rs. 757.15

Kewal Kiran Clothing Limited is engaged in manufacturing and marketing of wearing apparels. The Company’s segments include Apparel & Life style Accessories/Products, and Other/Reconciling Item. The Company is also engaged in generating power from Wind Turbine Generator. The Company offers a range of western wear for men and women. It offers a range of products under its four brands: Killer, Easies, LawmanPg3 and Integriti.

Technical rating indicates a bullish trend.
Exponential moving average crossovers indicate a neutral trend.
June ’20 Net sales recorded was Rs.7.01 crores, down 93.64% YoY.
The company has a good dividend pay-out track record, and has paid out dividend consistently for the past 5 years.
The company has delivered a poor growth rate of 5.89% for the past 5 years.

STRENGTHS –

Company with low debt.
Foreign institutional investors increasing their shareholding stake.

WEAKNESS –

Degrowth in Revenue and profit.
Major fall in Trailing twelve months (TTM) net profit.

14/08/’19- Rs. 1000.05

KITEX GARMENT LIMITED:
Current Price: Rs. 104.25

Kitex Garments Limited is an India-based company engaged in the manufacture of fabric and ready-made garments. The Company operates through two business segments: Garments and Fabric. The Company exports cotton garments principally infants wear. The Company exports its products to the United States and European markets. The Company’s products include body suits, rompers, bibs, sleepwear, burps and training pants.

Technical rating indicates a bearish trend.
Community sentiments gives a 100% BUY signal.
The stock price closes below 30 day- 300 moving average on 14^th August ,20.
March ’20 sales recorded was Rs. 146.32 crores and net profit was 17.62%.
Company is virtually debt free.
Company has a dividend pay-out of as low as 11.89% over the past 3 years.

STRENGTHS –

Company with low debt.
Company with zero promoter pledge.

WEAKNESS –

Declining profits every quarter for the past 2 quarters.
Decline in net profit with falling Profit Margin.

14/08/’19- Rs. 90.40

RAJAPALAYAM MILLS LIMITED:
Current Price: Rs. 565.60

Rajapalayam Mills Limited is an India-based company engaged in manufacture of yarn. The Company operates in two segments: Textiles and Power generation from Windmills. It has textile manufacturing plants located in Tamilnadu and Andhra Pradesh. Its wind mills are located in areas, such as Dhanakkarkulam, Irukkanthurai and Uthumalai in Tamilnadu.

Technical rating indicates a bearish trend.
March ’20 Net sales recorded was Rs. 88.50 crore, down 23.44% YoY.
Net loss of 17.57% was recorded.
Company has a low return on equity of only 6.31% from the last 3 years.
Dividend pay-out has been as low as 2.06% from the past 3 years.

STRENGTHS –

Company with zero promoter pledge.
Foreign institutional investors have been increasing their holding in this company.

WEAKNESS –

High interest payments as compared to profits earned.
Annual net profit declaring from the past 2 years.

14/08/’19- Rs. 734.50

MALLCOM INDIA LIMITED:
Current Price: Rs. 241.15

Mallcom (India) Ltd is an India-based security system supplier. The Company is engaged in the manufacturing, exporting and distributing of a wide range of personal protective equipment (PPE). The Company manufactures and supplies of lightweight to heavy duty industrial work wear, profile clothing, winter protection, uniforms, and corporate casual wear. The Company manufactures head protection, hand protection, body protection and feet protection.

June ’20 Net sales recorded was Rs.39.50 crores, down 43.67% YoY.
Net profit recorded was 5.17%.
Technical ratings indicated a bearish trend.
The company has reduced its debt.
The company has delivered a poor growth rate of 6.28% over the past 5 years.

STRENGTHS –

Annual profits increasing for the past 2 years.
The stock price is forming a bullish reversal pattern.

WEAKNESS –

Degrowth in quarterly revenue and profit in recent results.
Declining revenue every quarter for the past 3 quarters.

14/08/’19- Rs. 213.50

SUPER SALES INDIA LIMITED:
Current Price: Rs. 254.85

Super Sales India Limited is engaged in manufacturing of yarn, gears and gear boxes. The Company’s segments include Agency Division, Textile Division, Wind Energy Division and Engineering Division. The Company produces 100% Cotton Combed Yarn/100% Len-zing Micro Modal Yarn. It can offer Autoconed Siro Cleared Yarn from Indian Cotton, as well as imported cottons.

Technical rating indicates a bearish trend.
March ’20 Net sales recorded was Rs. 63.76 crores, down 15.1% YoY.
Net profit recorded was 0.17%.
Stock is trading at 0.42% times its book value.
The company has delivered a poor growth of 5.17% over the past 5 years.

STRENGTHS –

Growth in quarterly net profit with increasing Profit margin (YoY).
Company with zero promoter pledge.

WEAKNESS –

Declining revenue every quarter for the past 3 quarters.
Poor cash flow generated from operations since the last 2 years.

14/08/’19- Rs. 282.40

HINDOOSTAN MILLS LIMITED:
Current Price: Rs. 216.30

Hindoostan Mills Limited is engaged in textile business, which includes manufacturing of Geiger fabrics and fine fabrics. The Company’s segments include Textile, Engineering and Composite. The Company’s manufacturing plants are located in Karad, Satara district, Maharashtra. The Company has installed over five new ring frames, an open-end spinning machine, approximately four new generation winding machines, such as auto comer wide width.

Technical rating indicates a bullish trend.
June ’20 Net sales recorded was Rs.5.91 crore, down 84.05% YoY.
Net loss recorded was 2.03%.
The company has delivered a poor growth of -1.71% for the past 5 years.
Company has a low return on equity of -17.59% for the last 3 years.

STRENGTHS –

Company with low debt.
Company with zero promoter pledge.

WEAKNESS –

Decline in net profit with falling profit margin (QoQ).
Company with weak financials.

14/08/’19- Rs. 204.75

JAMSHRI REALTY LIMITED:
Current Price: Rs. 2824.95

Jamshri Realty Limited, formerly Jamshri Ranjitsinghji Spinning and Weaving Mills Company Limited, is a fabric manufacturer. The Company’s principal products include yarn and cloth. The Company manufactures both polyester-cotton and polyester-viscose blended yarns, and fabrics. The Company focuses on spinning yarn and has a total capacity of 25,200 spindles. It offers Carded Yarns and Blended Yarns.

Technical rating indicates a very bullish trend.
Company has a low interest coverage ratio.
The company has delivered a poor growth of -51.18% over the past 5 years.
Company has a low return on equity of -30.75% over the past 3 years.

STRENGTHS –

Stock gained more than 20% in one month.
Improving net cash flow since the past 2 years.

WEAKNESS –

Degrowth in Revenue and profit.
Decline in quarterly net profits (YoY).

14/08/’19- Rs. 1670

BLUE CHIP TEX:
Current Price: Rs. 81.10

Blue Chip Tex Industries Limited is a Public incorporated on 17 September 1985. It is classified as Non-govt company and is registered at Registrar of Companies, Ahmadabad. It is involved in Spinning, weaving and finishing of textiles. Company is also engaged in the business of Twisting of Polyester Texturized Yarn.

Technical rating indicates a bearish trend.
March ’20 Net sales recorded was Rs. 47.97 crores, down 22.65% YoY.
Net profit recorded was 0.46%
Company has a good profit growth rate of 29.96% Compound Annual Growth Rate (CAGR) over the last 5 years.
Promoters have pledged about 31.33% of their holdings.

STRENGTHS –