Thursday, July 15, 2010

Stock Idea: Sutlej Textile

This Birla group is also engaged in production of Poly/viscose yarn. Company also has weaving division, engaged in export of textile fabrics. Sutlej has its own process house , also produces Furnishing fabrics and captive use power plant. Sutlej has nearly 3 lac spindles and 2nd biggest in India:
Sutlej Textile too had reported loss in 2008-09 due to lower yarn prices, less demand and its fabric division was also incurring heavy losses. However, Sutlej has staged massive turnaround in 2009-10 with PAT of 26.31 cr translating into EPS of 24.10 crs. Like RSWM, Sutlej too makes large provision for depreciation and CASH Eps stands at 85.36.

Sutlej commissioned its 10mw power plant in Q3 of 09-10. Sutlej will report best ever results in current year as its fabric divison has stopped making losses and yarn  division is reporting huge profits. Networth as on 31.03.2010 is Rs 145 cr and current market cap is also 175 Cr

Co is likely earn CASH PROFIT of 200 cr in 09-10 and 10-11 against market cap of just 175 cr Stock is trading at: 3.88xFy11E Eps  1.60xFy11E Cash Eps Market cap is just 13.50% of Fy11E sales At curent levels, Sutlej is gross underpriced. Birla group company available at such  tempting valuations. Scrip can go to 215/ in less than 2 months, can be 250/ in 6 months and Rs 350/ in 15-18 months.
Source: Internet (Valuenotes by ProfitTrack)

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