Winsome Textile Industries Ltd : A Multi-Bagger Stock

WINSOME TEXTILE INDUSTRIES LTD : A Multi-Bagger Stock

CMP : 71-72

BSE CODE :514470

Market Cap : 140 Crores

       LISTED ON : BSE

TARGET : 150/180

TIME-FRAME : 12 Months

History of the Company :

Winsome Textile Industries Ltd (WTIL) established its 1st green field venture in textile in 1980 with a state-of-the-art spinning unit at Baddi, Himachal Pradesh. WTIL has grown from 16,000 spindles in the 1980s to 1,06,000 spindles ,dye house with capacity of 33 tons per day and yarn dyed knitted fabric capacity of 7 tons per day. 

In order to remain competitive and also its commitment towards environment WTIL has invested in  Hydro Power Generation. A 3.5 MW Hydro power plant at Dharamsala,Himachal pradesh has become operational since March 2017.

The Company today is lead by young and dynamic team of professionals and is a leading producer of Melange, Dyed and specialty yarns in the world. WTIL is associated with over 250 customers across 50 countries and also has 600 plus customers within India.

WTIL is ISO-14001 certified for Environment management, ISO-9001 certified for Quality Management System and ISO-18001 certified for Safety management.

Company has taken certain Green Initiatives which include : 

• Up to 30% water is recycled in the plant 
• Up to 90% recovery of steam condensation
• Up to 30% recovery of heat energy
• 33% of the required power is produced via Hydro power generation
• Company is one of the lowest consumers of water in the Dyeing industry

Major Customers/Brands associated with the Company include :

• Adidas
• Calvin Klein Jeans
• Decathlon
• GAP
• KOHL'S
• Jockey
• Nautica
• Reebok
• Matalan
• Nike
• Puma
• Tommy Hilfiger
• Tesco
• Walmart

Financials of the Company :

• Profit After Tax (PAT) for the year ended on 31st March,2017 has been reported at Rs 25.55 Crore and turnover at 708 Crore.
• As per the numbers as on 31st March,2017 the company has generated Return on Equity of approx. 15% , Return on Capital Employed of 17% and Return on Assets of 12%
• The Company has carried out a major capacity expansion in year 2013-14 due to which the turnover of the company has doubled from 350 crores in 2013 to 700+ crores in 2017.
• Debt to Equity ratio is below 2 and is reasonable in nature
• Substantial portion of debt taken for expansion has already been repaid due to healthy cash flow of the company from operations.

Investment Rationale : Why to Invest in this Stock ??

• Shareholding of the promoters in the company is 33.8% as on 30th September,2017. FPI's (Foreign Portfolio Investors) hold 27% stake and Institutions/Body corporate hold 29% stake in the Company. It indicates strong inclination of big investors which are invested in the Company.
• For year ended on 31st March 2017, the company has incurred expense of approx 76 crore for depreciation and finance cost. Going forward it is expected to go down and it will make a major contribution to PAT (Profit after Tax) enhancing the valuation of the company.
• Book value of the stock stands at 95 Rs per share. At current share price it is trading at almost 25% discount to the book value.
• Market Cap to Sales Ratio : 0.20 ( Considering March 2017 sales and current market cap) is very attractive
• At current price of 71 Rs per share and EPS of 10 Rs, the stock is presently trading at an attractive P/E ratio of 7.
• At a forward reasonable P/E of 10-12 and EPS of 15, we expect the stock price to soar higher at least to 150 and higher levels in coming time.

Disclaimer Note: The above is not a research report but information as available on public domain and it should not be treated as a research report. Registration status with SEBI: I am not registered with SEBI under the (Research Analyst) regulations 2014 and as per clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations.

Disclosure: It is safe to assume that I might have Winsome Textile Industries Ltd  in my portfolio and hence my point of view can be biased. Readers should perform own due diligence before investing. We do not assume any responsibility or liability resulting from the use of information , judgments and opinions for Trading or Investment purposes on the Blog.