CMP (BSE): 149.85
CMP (NSE): 149.75
Industry: Textiles
Shri Lakshmi Cotsyn Ltd (SLCL) is one of the fastest growing US% 250 million Indian conglomerate. Shri Lakshmi is well positioned as an integrated multi product and multi market player covering almost all the activities of textile value chain. It is a premiere manufacturer of home furnishing products and manufactures denim fabric, terry towels, bed linen,cotton fusible interlining, embroided fabric, technical textile products and ballistic products. Since its commencement in 1993, as a small textile unit, it has grown magnanimously, diversifying into various business.
It has 3 subsidiary companies under its arm. They are
(1) Shri Lakshmi Defence Solutions Ltd (SLDSL): It is a 100% subsidiary of SLCL and is one of the leading suppliers of defence equipments, prominently since 2003. Recently they have launched the complete 360 degree armoured vehicle for the Indian armed forces and the police. They have introduced an exclusive range of uniquely designed models of the 360 degree armoured vehicle such as DHRUV-ATC (Armoured Troop Career) , DRONA-MPV (Blast and Mine protection vehicle) and VIPER (fast moving attacking vehicle). The high end 360 degree protected armoured vehicle is first one of its kind in India with bullet, mine and blast proof capabilities. SLDSL plans to make around 300-400 vehicles a year and expects a turnover of Rs 150 cr in this year itself. SLDSL along with Indian paramilitary forces is also pursuing some high-value customers in India, Europe and the Middle-East who want their vehicles to be armored with Level-B7 protection with bullet, mine and bomb-proof accessories. The armoring could cost anywhere between Rs 50 lakh to over Rs 1 crore, depending upon the accessories embedded in the vehicle. This time in the union budget a total of $28 billion has been allocated, the highest ever. Apart from this they have facilities for manufacturing complex weapon systems. They have even developed an ultra light HAP against ORDINANCE KIRKEE BULLETS OF AK 47, weighing inly around 2.1kg each to reduce the weight of the bullet proof jacket. In addition to a range of ballistic products, they also have an established network and affiliates around the world, backed by long term strategic alliances with local as well as global manufacturers. All their facilities are as per the ISO standards. With proven capabilities and technical know how from a US based company and trained manpower in providing comprehensive defence solution equipment, they are the only Indian Company to have produced a composite structured bullet/ mine proof vehicle. Their wide ranging resources, expertise and flexibility ensures delivery of products that are researched, tested and customised to meet the specific needs of each branch of the armed forces.
(2) Weaves Retail: It is a 100% subsidiary of Shri Lakshmi Cotsyn Ltd (SLCL). It is India’s first eco-friendly textile brand for health conscious families. It was launched in mid 2008 with a single focus of having a wide range of bedspreads that bring revolution in Indian textile market. Their product range includes innovative products such as Vitamin E (skin care) bed sheets, water repellent bed sheets, mosquito-bacteria repellent and stain free bed sheets. Their range will also include other home furnishing products such as towels along with pillows, cushions and comforters. They have entered into the branded retail segment with terry towels, home furnishing, and high-end organic textile and plans to open 300 retail shops and shop outlets.
(3) Shri Lakshmi Nano Technologies Ltd (SLNTL): It is a 100% subsidiary of SLCL, working on nano technology fabrics and smart textiles with collaboration from international companies. They nurture new scientific findings in research laboratories and transform them into valuable products in the market. Their aim is to foster a network of technology experts in fields of nanotechnology to lay a roadmap for our forthcoming innovative products. They aim to optimize utilization of upcoming nanotechnologies to invent, design and manufacture advanced textiles fabric that provides safe, effective and antimicrobial protection in a variety of products. The current research is to produce eco-friendly conductive fabric with only one sensor which will allow the monitoring of body temperature, blood pressure, ECG, heart beat rate and other vital health signs.
At the current market price the stock is quoting at a discount (0.92 times the book value). It PE is a mere 2.90 as compared to an average industry PE of 6.46. The dividend yield is 1.34%. Its EPS is Rs.51.50 for the year 2009-2010. The earnings has been approximately growing at 60% CAGR since the past 5 years. Its market capitalization is 253 crores whereas its turnover is 1055 crores, which is almost 4 times its market cap. In addition to this it has a very small equity of just Rs. 15.58 crore (1.558 crore shares). This can prove beneficial because any good news can fetch very good returns to the shareholders. And with this company I feel the future prospects are very good because of its thrust on innovation and innovative product offerings.
Happy Value Investing.
Ms. Shah, Shri Lakshmi Cotsyn's board decides to convert FCCB into equity shares, CAN U DESRIBE IT, IS IT SIMPLY DILUTING EQUITY AND REDUCING LOAN?, its impact, is it a healthy sign? r they on expansion plans? other than heavy debts. rest all seems very Lucrative.
ReplyDeleteYes, the board has decided to convert its FCCB of USD 5,00,000 into equity. This would indeed result in dilution of equity. Well if you would ask me or anyone about equity dilution, no one would like it. But if you look at the extent to which they are planning to expand is tremendous. They are planning a huge capex. They are planning a huge capex and the necessary funds they plan to raise through internal accruals, FPO as well as debt. This would in turn lead to more equity dilution. However the post expansion growth would also be tremendous according to me. In addition to this it is into defense sector which can be considered recession proof. They are even expecting commission of the terry towel expansion project from 3000 TPA to 15000 TPA. They are even setting up a 50 MW power plant in the state of Rajasthan. It has even acquired spinning facilities of 25000 nos of spindles on job work at District Fatehpur from UP state co-operative federation. They are even raising 500 crores through QIP. So basically it is in a capex and expansion mode and are using both ways i.e equity route as well as debt. This time would indeed be challenging for them. However once the benefits of this expansion starts, value would be realized.
ReplyDeleteThis is indeed on the riskier side and I definitely put this particular stock in the risky category of my portfolio, but the verticals that it is into seems a lot more promising.The risk appetite varies from individual to individual.
Well this is my point of view. You might not agree to it.
But what I truly appreciate about you, it that you seem to be a person who does a thorough research and then invests, which is very rare.
Happy Investing.
thanx a lot ms. shah, for d details u provided, there is one more thing, ur intuition. and my intuition says, this is a safer bet. pankajmohta73@gmail.com
ReplyDeleteWOULD U LIKE TO HAVE A LOOK AT VARDHMAN ACRYLICS, THIS COMPANY HAS SHOWN :
ReplyDeleteYear 2010/03 2009/03 2008/03 2007/03 2006/03
PATax 43.44 4.23 5.44 12.03 -4.00
Var % 926.95 -22.24 -54.78 -400.75
RESEVES 80.15 CR LOAN 2.34 CR M CAP 157.37 CR SALE TTM 296.55 CR.
pe ttm 3.72
Looks good. Will have a look at the company over the weekend. The numbers look good as of now. Thanks.
ReplyDelete@kabeera: I am not able to get through the financials of this particular company. If possible please do send me a link of the financials. Thanks.
ReplyDeletehi purvi,
ReplyDeletegood morning, i have seen your stock ideas.They are really good.but i want to learn how to pick a multibagger stock.whats the point to be kept in mind to select a stock for long term.what are the sources where i can get maximum information about company. when i select a company. I look p/e, p/bv.am i doing the right thing. plz guide me in detail. i will be thank ful to you.tell me the website where i can get information about the company. thanks
Hi Ajit,
ReplyDeleteWell a multibagger is a stock that gives you good returns over a long period of time and usually outperforms the market. However people usually think of a multibagger as a stock that doubles or maybe even triples or even more than that over a very short period of time. This is wrong because usually something that gives you quick returns usually has something wrong attached to it. So I believe in good returns over long term theory.
Well as far as analyzing a company is concerned, I usually start by looking at its capital structure and the debt on its books. I like companies that are less leveraged and that have low equity base. The logic is simple any increase in its net profits will be distributed over its low equity base and this will lead to exponential increase in its stock price. Then I also look at the interest coverage ratio. If a company has debt it should be able to repay that debt and should be well within the margin of safety. Then you can look at the growth in the sales and the earnings. There should be consistent growth and most importantly the growth in the bottomline should be more than the growth in the topline because it just indicates that the company is working well towards achieveing its operational efficiencies.
Then you can look at the P/BV ratio, PE ratio compared to the industry average. I even look at its dividend policy and also the dividend yield of the company. On more thing you can do is comparing the market cap with the sales. This helps you determine that how much business does the company do for every rupee invested in the company.
To end the analysis you can look at the profit margin ratios and take your call. At the end you will be sure whether the investment in a particular company looks attractive or no.
As far as websites are concerned you have moneycontrol.com, bseindia.com, nseindia.com. In addition to this you have the company's own website and its annual reports which is loaded with loads of information.
And not to forget the newspapers, they are an investors best friends. It helps you get an idea about the economy and about the various sectors. Hope all this will help you.
Thank You
Purvi P. Shah
hi purvi,
ReplyDeleteFirst of all thanks. you replied to my message.plz tell me about profit margin ratio.Is it appear in company annual report.
thanks
Hi Ajit,
ReplyDeleteYou can get the profit margin ratios in moneycontrol.com, bseindia.com and nseindia.com
Purvi P. Shah
hi purvi,
ReplyDeleteis it right time to purchase shri lakshmi coysyan at cmp 93.0; Its quartly number is quite good. plz guide me.
thanks
Ms. SHAH, HAVE U REVISED UR VIEW ON THIS STOCK NOW AT CURRENT SCENARIO. ANY NEW ACTIVITY IN THIS COMPANY. SHOULD WE ADD OR HOLD.
ReplyDeleteHi Kabeera,
ReplyDeleteI still stick to my view on Shri Lakshmi Cotsyn. This time they are expanding and it would be a challenging time for them. If you look at the valuations, it looks more attractive now. The company is very ambitious and has ventured on to massive expansion plans. Once completed it will show the true value. It might be risky, but can give very good returns. Choice is yours. You take your own call.
Thank-you,
Purvi P. Shah