Gupta Synthetics - Rs.178.00

Synthetic Ltd (GSL) was promoted by the renowned Gupta Group of Companies which has wide and varied experience of over two decades in the manufacture of polyester yarn apart from Texturising, Twisting, Sizing, Dyeing of Yarns and processing of Fabrics. The group is known in textile circles for their business acumen and techno savvy attitude, which has helped them in charting consistent growth even under unfavourable conditions. Currently, GSL is one of the leading yarn manufacturer engaged in production of partially oriented yarn (POY), fully drawn yarn (FDY), drawn texturised and drawn twisted yarns.

Its world class manufacturing facilities are located at Silvassa and Surat. It has all hi-tech imported machineries like Barmag A G machinery for POY spinning imported from Germany and Teijin Seiki for FDY Spinning from Japan etc. Ironically, the company has installed complete IBM infrastructure and is running international class ERP package of SAP and has also connected its manufacturing plants and corporate office by leased lines to get real time information and updates. Due to continuous expansion and modernization, GSL’s current capacity stands at 46,500 TPA for POY, 2500 TPA for FDY, 2200 TPA for drawn texturised yarn and 550 TPA for drawn twisted yarn. To cater to the rising demand, GSL is increasing the production capacity of FDY by 15,000 TPA by installing additional imported FDY Lines at a capital outlay of Rs.25 cr. This expansion is estimated to be completed by April 2006. The company is also exploring possibilities to take up a backward integration project by installing a Continuous Polymerisation plant (CP) to reduce its dependency upon foreign suppliers. Besides, it also plans to increase its production capacity of POY and Polyester Texturised Yarn (PTY). Interestingly, the management is also keen to diversify its activities from polyester products to include nylon based products also.

Recently, the company announced its Dec.’05 qtr. numbers which are very encouraging. It registered a growth of 63% in sales at Rs.80 cr. whereas its NP jumped 260% to Rs.3.20 cr. It is planning to rise around Rs.25 cr. Through a preferential allotment to fund its future expansion plans. With its long experience in the Textile Industry and equipped with all infrastructural facilities, GSL is estimated to clock a turnover of Rs.285 cr. and NP of Rs.9 cr. after all tax provisions for FY06. This works out to an EPS of Rs.56 on its current equity of Rs.1.58 cr. with a diluted EPS of Rs.30. For FY07, it may post an EPS of Rs.40 as the full impact of the expansion will be felt in FY07 only. The 52 week high of the scrip is Rs.207 and the scrip has the potential to touch Rs.240 in the medium term and Rs.320 in 15-18 months.