Recommendations from Textiles - Spinning - Cotton Blended & Miscellaneous Sectors
The scrips in this column have been recommended with a 15-day investment horizon in mind and carry high risk. Therefore, investors are advised to take into account their risk appetite before investing, as fundamentals may or may not back the recommendations.
AMBIKA COTTON MILLS LTD.
CMP - Rs 2,183.70
BSE CODE : 531978
Volume : 11,970
Face Value : Rs 10
Target : Rs 2,450
Stoploss : Rs 1,950 (CLS)
Ambika Cotton Mills based out of Coimbatore, India, is engaged in the manufacture of premium quality Compact and Elitwist cotton yarn for hosiery and weaving. They also are in the international and domestic yarn market with exports constituting roughly sixty per cent of its revenues. The quarterly performance of the company recorded net sales of Rs 220.50 crore, a 51 per cent jump from Q2FY21 of Rs 145.62 crore. The operating sales in Q2FY22 stood at Rs 69.13 crore as compared to Rs 25.72 crore in Q2FY21. The net profit jumped by a staggering 253 per cent in Q2FY22 to Rs 45.50 crore as compared to Rs 12.87 crore in Q2FY21. The demand for clothing has started to gain pace again. The company has invested Rs 2197.53 lakh, in new factory building and plant and machinery. The company’s history of product innovation, consistency in quality and timely delivery of committed orders has noticeably added to repeated orders and its overall financial results. Further, the demand scenario has substantially improved and has largely contributed to the overall strong financial performance. The company is not carrying any long-term debt. Hence, we recommend BUY.
CENTURY PLYBOARDS (I) LTD.
CMP - Rs 644.25
BSE CODE : 532548
Volume : 34,727
Face Value : Rs 1
Target : Rs 720
Stoploss : Rs 585 (CLS)
Century Plyboards is the largest seller of multi-use plywood and decorative veneers in the Indian organized plywood market. It offers a unique blend of form and functionality to specially treated, fire retardant plywoods that find use in a construction purposes. Analyzing the quarterly performance, the net sales for Q2FY22 stood at Rs 813.64 crore as opposed to Rs 522.23 crore in Q2FY21. The operating profit climbed to Rs 166.30 crore in Q2FY22 up by 89 per cent as compared to Rs 87.84 crore in Q2FY21. The net profit flew up 97.79 per cent in Q2FY22 to Rs 99.43 crore from Q2FY21 which was Rs 50.27 crore. The company is expected to reach revenue of Rs 5,000 crore by FY26 (implied 19 per cent Revenue CAGR over FY21-26). The residential segment has emerged stronger after the second wave of Covid. The company will invest deeper in brand building, sustain product innovation, extend the firewall feature into premium products .It will also widen the impact of its sales by automating factories. Hence, we recommend BUY.
(Closing price as of Jan 10, 2022)