Please refer to important disclosures at the end of this report
1
Vardhman Textile (VTL) Ltd. is a leading player with India’s largest yarn capacit
y
and fledgling fabric division. The cash crunch in the economy on account o
f
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
f
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
f
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
f
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
r
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.
BUY
CMP `1,121
Stock Info
Sector
Beta
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
0.6
Reuters Code VART.BO
VTEX@IN
10
BSE Sensex 27,258
Nifty 8,417
Face Value (
`
)
Textiles
Market Cap (
`
cr) 7,136
52 Week High / Low 1160/652
Avg. Daily Volume 13,387
Vaibhav Agrawal
022 – 3935 7800 Ext: 6808
V
ardhman Textiles
Others | Textiles
January 19, 2017
Vardhman Textiles | Textiles
January 19, 2017
2
Research Team Tel: 022 - 39357800 E-mail: [email protected] Website: www.angelbroking.com
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL
and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information.
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
eriod
: Reduce
(
-5% to -15%
)
Sell
(
< -15
)