Please refer to important disclosures at the end of this report
Vardhman Textile (VTL) Ltd. is a leading player with India’s largest yarn capacit
and fledgling fabric division. The cash crunch in the economy on account o
demonetization has led to temporary shortage of Cotton and price rise in the
domestic market which seems to have a temporary impact on Textile business o
VTL. VTL’s has plans for expansion in fabric division given the high growth
potential and superior margins versus its legacy yarn business. Growing share o
fabric business will improve overall margins and return ratios, while strong cash
flows from the yarn business will keep balance sheet light through the expansion.
Higher value addition in yarn and fabric, vertical integration in fabric business
and strong relationships with the end-customers, have been the key things o
VTL’s business built over decades. The company’s yarn division has operated at a
premium yarn-cotton spread relative to the industry benchmark, given a highe
proportion of value-added yarn and strong customer relationships. The
management is now committed to expanding its processed fabric division, to
cushion company-level margins from any adverse movements in cotton prices.
VTL part of the Vardhman group continues to reflect the Vardhman group's
strong and diversified business risk profile, especially in the textiles business, and
its healthy operating capability. It seems that Vardhman group's operating
profitability to remain healthy over the medium term, due to continuing focus on
value-added business and initiatives to improve productivity. The company has
reported a healthy RoE of 15% for the last 5years. Hence Buy.
CMP `1,121
Stock Info
Bloomberg Code
Shareholding Pattern (%)
Promoters 62.2
MF / Banks / Indian Fls 12.7
FII / NRIs / OCBs 11.8
Indian Public / Others 13.3
Abs. (%) 3m 1yr 3yr
Sensex (2.8) 12.7 28.2
Vardhman Textiles 2.6 59.0 431.4
Reuters Code VART.BO
BSE Sensex 27,258
Nifty 8,417
Face Value (
Market Cap (
cr) 7,136
52 Week High / Low 1160/652
Avg. Daily Volume 13,387
Vaibhav Agrawal
022 – 3935 7800 Ext: 6808
ardhman Textiles
Others | Textiles
January 19, 2017
Vardhman Textiles | Textiles
January 19, 2017
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website:
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Disclosure of Interest Statement Vardhman Textiles
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment
: Reduce
-5% to -15%
< -15