Ambika Cotton Mills - Rs.162.50
Ambika Cotton Mills Ltd. (ACML) was established in 1988 to produce high quality cotton yarn, both carded and combed, for knitting and weaving. Since then it has become a leading yarn manufacture of South India with a capacity of 56,000 spindles. Today, apart from manufacturing high quality, contamination free cotton yarn, ACML has diversified into manufacturing Compact Spinning Yarn, a premium yarn made out of specialty cottons like PIMA (Cotton sourced from USA), GIZA (Cotton sourced from Egypt) and Australian Cotton, which go into the making of premium branded shirts and T-shirts. As one of its unit is an 100% EOU, exports account for nearly 50% of its turnover with exports to Taiwan, China, Hong Kong, Turkey, Korea, Singapore, Israel directly and to USA and European markets through merchant exports. Its main overseas clients are Quannitex Enterprise Corporation, Taiwan, Pacific Textiles, Hong Kong and Winnitex Investment Co., Hong Kong.
ACML has two manufacturing facilities located in Dindigul, Tamil Nadu, of which one is 100% EOU. Both its plants are equipped with state-of-the-art machines like combers from Rieter, draw frames from Cherry Hara, autoconers from Murata and other machines from LMW. Recently, the company completed its expansion scheme of 14,112 spindles for manufacture of compact yarn and is further expanding its capacity by another 10080 spindles which is expected to be completed by September’06. On completion of this expansion, its total installed capacity will be 66,000 spindles of which the compact spinning capacity will constitute 41,000 spindles. Besides, the company has also expanded its windmill capacity by 6.4 MW (8 Wind Machines of 800 KW) and the total wind energy capacity as on date is 13 MW generating 3.66 cr. units. Hence, its total power requirement will be met by the wind mills and thereby considerably reduce its cost of electricity. For future growth, ACML has planned to augment its spinning capacity by 43200 spindles, of which 33,600 spindles will be for the manufacture of compact yarn and 9600 spindles will be for manufacture of doubled yarn. This facility is expected to come into operation by September’07. To fund its expansion, ACML has allotted 8,75,000 equity shares at Rs.185 per share aggregating Rs.16.2 cr. on a preferential basis to Ascent India Fund, whose trustee is Unit Trust of India Investment Advisory Services.
For FY06, its sales grew by 25% to Rs.105 cr. but net profit jumped by 50% to Rs.19 cr. registering an EPS of Rs.32 on its small equity of Rs.5.90 cr. For FY07, it may clock a turnover of Rs.120 cr. and PAT of Rs.18 cr. (due to higher tax provisioning) i.e. EPS of Rs.30. Considering its 52W H/L of Rs.373/RS.145 and book value of Rs.160, the scrip seems to have bottomed out and has the potential to rise 40% i.e. Rs.240 in a year’s time.
ACML has two manufacturing facilities located in Dindigul, Tamil Nadu, of which one is 100% EOU. Both its plants are equipped with state-of-the-art machines like combers from Rieter, draw frames from Cherry Hara, autoconers from Murata and other machines from LMW. Recently, the company completed its expansion scheme of 14,112 spindles for manufacture of compact yarn and is further expanding its capacity by another 10080 spindles which is expected to be completed by September’06. On completion of this expansion, its total installed capacity will be 66,000 spindles of which the compact spinning capacity will constitute 41,000 spindles. Besides, the company has also expanded its windmill capacity by 6.4 MW (8 Wind Machines of 800 KW) and the total wind energy capacity as on date is 13 MW generating 3.66 cr. units. Hence, its total power requirement will be met by the wind mills and thereby considerably reduce its cost of electricity. For future growth, ACML has planned to augment its spinning capacity by 43200 spindles, of which 33,600 spindles will be for the manufacture of compact yarn and 9600 spindles will be for manufacture of doubled yarn. This facility is expected to come into operation by September’07. To fund its expansion, ACML has allotted 8,75,000 equity shares at Rs.185 per share aggregating Rs.16.2 cr. on a preferential basis to Ascent India Fund, whose trustee is Unit Trust of India Investment Advisory Services.
For FY06, its sales grew by 25% to Rs.105 cr. but net profit jumped by 50% to Rs.19 cr. registering an EPS of Rs.32 on its small equity of Rs.5.90 cr. For FY07, it may clock a turnover of Rs.120 cr. and PAT of Rs.18 cr. (due to higher tax provisioning) i.e. EPS of Rs.30. Considering its 52W H/L of Rs.373/RS.145 and book value of Rs.160, the scrip seems to have bottomed out and has the potential to rise 40% i.e. Rs.240 in a year’s time.
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