Zee Business Managing Editor Anil Singhvi today said that S P Apparels growth in the US and Europe has been handsome. Singhvi said that 75% Revenue of the company comes from exports. After Q3 FY21, in the Investors presentation, the company has clearly indicated that Global Growth and Global Demand will benefit the company going forward as it will receive many orders from Global Companies. The company has strong pricing power too.

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Singhvi said that S P Apparels has finished its expansion plan which will yield good returns in future. The Company has done around Rs 200 cr capex From FY18 till 30 Sep 2020 yet borrowings rose around Rs 48 cr, i.e. 76% was financed from internal accrual and current D/E ratio is 0.43. Also, the company has a rating of ICRA A+ and recently ICRA revised the Outlook to Stable from Negative.

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Singhvi said that more than 80% of its yarn needs have been met from internal accruals indicating that the company is insulated from rising yarn prices and as on 30 September 2020, the company had around Rs 243 cr of inventory in books, which will benefit the company. Since the company has pricing power, its margins won’t get impacted.

Singhvi said that the valuations of the company are attractive and it will do EPS of Rs 25 while the cash EPS could be around Rs 30. The stock is attractive and is trading below its book value and the market cap is below its sales.

Singhvi said that Promoter's have marginally increased stake from 61.64% as on 31March 2020 to 61.69% as on 31 March 2021. Also currently DIIs also hold as high a stake as 14.73% in the company. He said major local funds too are holding a stake in this company. 

Singhvi said that the Textile sector will remain in focus for next 2 quarters and companies related to this sector will derive huge benefit from here on. There will be huge improvement in their overall numbers.

Analyst Sacchitanand Uttekar said that the target price on the stock is Rs 225 – Rs 230 and stop-loss will be Rs 175.

Ashish Chaturvedi, Research Analyst at Zee Business said that S P Apparels started export operations as a partnership firm in 1989. The company has a history of over 30 years with a 3 star Export house recognition. He said that based on Fixed Asset turnover Ratio, the Company is estimated to achieve a turnover for 924 cr in coming 2 years. The Revenue growth in export can see significant improvement going forward.

Ashish said that Company tends to receive recurring orders from its top customers and also gives comfort on Revenue visibility.