Friends,
I have been recomending Textile stocks since long.Some of them were:
1)Super Sales, which has already given over 50% return from my call.
2)Super Spinning
3)Suryalata Spinning
4)Suryavanshi Spinning
5)SuryaJyoti Spinning etc
last end Dec 2009.What were the prices then and what is now I haven't tracked that....but anyone can have a look at it....
But today I will be talking on another yesteryear Bluechip.......
Loyal Textile Ltd......
This one was a darling of investors and punters and operators in 90's.
I have seen this stock quoting at 700 and over.Then Bonus at 1:1 and again XB 700.....it was a darling for everyone.
Well, due to bad time for Textile sector Loyal Tex also took a beating .In Mar 2009, it made a LOW of Rs 44.00 and from there it has come to this level.
The reason I am recomending it here is Loyal Tex has come out with excellent results for Mar 2010 ending.The sales has gone up from 88 cr to 140 cr .NP has made a big turnaround.From a loss of 5.84 cr to 9.73 cr profit and hence the Mar qr EPS ends at 20.68.
The eq is still very low at 4.70 cr and if the trend continues like this in this June ending qr, there will be no looking back for this yesteryear bulechip.
The confidence of management declaring 30% Div says that June qr will also be excellent.From a loss making to profit making and that too from a LOSS of 6 cr to profit of 10 cr is huge huge turnaround.
Well, this is what I wants to show to you all.See what happens when a Co is having a LOW eq......if someone can recall , my first criteria for picking a multibagger is "low eq."See the magic of low eq.....Loyal Tex was making losses and with just one turnaround, it ends up with an eps of 20 for just 1 quarter.
And the most important part here is promoters hold 72% stake and they held it even in bad times.Because they were confident that they will make a turnaround otherwise they would have sold their shares when chips were down for textile sector.But they never did that.That is a sign of Top Class Management.
What I have written may happen and may not happen.The June qr may not be good and can be excellent as well.....Take your own call .....
Readers and followers keeps on asking me to show them some textile stocks......so here it is.....
Sir Rajeev,
ReplyDeleteThis stock is my Lakshmi..it gave more more than lakhs of rupees in the year 2005 when MFA regime ends...Promoters are too good and one can enter without any worry...i will also joining sir...the problem is when i want to pick this stock last year but forgot the name of the co..later happened to see the name in Dalal street mag..and found they were in bad shape..luckily they turn around and iam too happy to pick...thanks sir
Discl: My Mamu Kukkolu having big chunk of this co.
raju bhai
ReplyDeleteyour every scrip is gem but
i think you miss 1 good textile scrip to mention
sri laxmi cotspin, at cmp 130 it is good buy.
your view please
Hi Rajeev,
ReplyDeleteI found similarity between Century text ( EPS 42 Eq 5 cr ) and Loyal text ( March quarter eps 20 which can be near 60 for entire year and eq 4.7 cr )...the major difference is depreciation on factor which is taking down all profit of loyal to nil
I can’t understand the fact that they are showing huge amount of depreciation but still generating a huge sales. Amount under depreciation Colum are they using to buy new machinery?
By anyhow will that amount get reduce in future? Please give me your valuable inputs if u has time.
Thank you very much…I gained lot from your IFB ind call .
Bipin
Bipin,
ReplyDeleteI don't understand ur comparision of Century Tex and Loyal Tex.
Century Tex has an eq of 93 cr and Loyal Tex has eq of 4.7 cr.
Depreciation in Loyal Tex is as big as 3 times eq /qr and that is huge but that is due to the new machinary they brought in.
There is no connection between depreciation and Sales.How can depreciation figure affects sales?They are totally 2 different things.Depreciation is writtenoff amt for machinary/plants etc...how higher depreciation will affect Sales?
Well, it(depreciation) can affect the bottomline as the profit is trimmed down due to higher provision for depreciation but Sales has nothing to do with Depreciations....
Higher depreciation amt can get reduced in future and at that time the NP will go through the roof.....
ashok,
ReplyDeleteYou maybe right but I do not track Sri Laxmi Cots.
Remember in market, stock which have market fancy will only move otherwise Micro Tech should have been now at 500...Loyal Tex has better market interest/fancy then Sri Laxmi....that is what one should be able to read..
http://www.thehindubusinessline.com/2010/12/28/stories/2010122853310100.htm
ReplyDelete