“The margins right now have gone up to 17% which is even better than the pre-Covid levels and their top line also should be now close to the pre-Covid levels,” says Neeraj Dewan, Director, Quantum Securities
What would be your Dhamaka (blockbuster ) pick?
The stock I am recommending today is the Siyaram Silk. It is a 41-year-old textile manufacturing company of the Siyaram Poddar Group and this company is into manufacturing of textiles. They even have a readymade garment division. So 76% of the business comes from fabric and 24% comes readymade garments.
What would be your Dhamaka (blockbuster ) pick?
The stock I am recommending today is the Siyaram Silk. It is a 41-year-old textile manufacturing company of the Siyaram Poddar Group and this company is into manufacturing of textiles. They even have a readymade garment division. So 76% of the business comes from fabric and 24% comes readymade garments.
So besides the flagship brand which is Siyaram they also launched other brands which have been pretty successful. Some of those are Oxemberg, J Hampstead, Cadini. They have even been able to get some success from these other brands and the company is also very well managed.
In the last two years, they have done some cost rationalisation. They have improved their working capital by improving the receivable and the inventory days and that has given a good improvement to their balance sheet. The result: they have been able to repay some of the debts and from Rs 400 crore, debts have fallen to less than Rs 200 crore. So they have a very light balance sheet with very less debt.
The working capital management has also resulted in improvement in the margins. The margins right now have gone up to 17% which is even better than the pre-Covid levels and their top line also should be now close to the pre-Covid levels.
The next year I am expecting them to do a turnover of Rs 2,100 crore with a profit of Rs 225 crore. This company is now a very high ROC company. They do a ROC close to 30%. Even if one gives it a value of 13-14 times one year forward, a decent amount of upside can be expected from the stock. I will recommend this as an investment for at least one year.
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