CMP :150
PROMOTER HOLDING :61.49
TEXTILE STOCK: - MUST HAVE IN EVERY PORTFOLIO
Future prospects of Indian Textile companies are great In the next 2-3 years Textile stocks can dominate the market. So, quality Textile stocks are must-have in portfolio. Again I want to share this yes this year everyone will see textile shares are touching new highs. So a very good opportunity is still there to take textile shares like Trident , Indo-count, Himatsingka Siede and many more vertical integrated companies. In long term only vertical integrated companies will sustain in competition. So our first pick of the year is Micro cap Nandan Denim with very less downside risk and high potential to get double in 1-2 year. Attractive Buying range(125-130).
ABOUT THE COMPANY- NANDAN DENIM
Nandan Denim Limited (NDL) is the second-largest Denim manufacturing company in India after Arvind. The Company is engaged in the manufacture of denims, cotton fabrics and khakis through fully integrated facilities The Company is denim fabric supplier to major brands across the world. Cotton is the key raw material used for manufacturing denim fabric.
KEY HIGHLIGHTS
· One of the largest denim fabric facility in the world and second largest in India.
· Machinery with latest technology from Germany and Japan, capable of producing wide range of denim fabrics.
· 10% domestic fabric market share.
· 80% denim capacity utilization.
· Sufficient power through 15 MW captive power plant.
DOMESTIC MARKETS
· Leveraging the strong agent-based domestic network of the Chiripal group.
· Strong pan-India network of around 35 – 40 distributors associated with the company for close to a decade.
· Strategic tie-ups with 10 firms to exclusively sell Nandan Denim’s products.
· Around 2/3rd of the orders are confirmed through long term agreements involving minimum yearly quantity commitment.
EXPORTS MARKETS
· Leveraging the strong agent-based global network of the Chiripal group.
· Strong global network of around 15 distributors spread across 8 countries – Peru, Mauritius, Hong Kong, Dubai, Thailand, Bangladesh, New York, Columbia.
· Export of denim fabric to over 28 countries across the globe.
· Merchant exports through various star export houses to give an additional boost to exports
Despite the current over-supply in the domestic denim market, Nandan Denim has been able to grow its revenues at a CAGR of 21%.(Compared to industry growth of 12% - 15%) over last 5 years, while maintaining stable EBITDA margins of around 15%.
WHY TO BUY
1. CAPACITY EXPANSION PLAN
2.PAST THREE YEARS, THE SALES HAVE GROWN AT A CAGR OF 20% WHILE THE PROFIT HAS GROWN AT 33%. THE AVERAGE ROE OVER THE PAST THREE YEARS IS QUITE HEALTHY AT ABOUT 17%.
3. PROMOTER ARE CONTINUOUSLY INCREASING THE STAKE AND BUYING AGGRESSIVELY.
4. PRESTIGIOUS CLIENTELE LIKE POLO, MUFTI, ARMANI, CK, TOMMY, SPYKER, CP ETC.
5. A HEALTHY ORDER BOOK GIVING LONG TERM VISIBILITY INTO THE BUSINESS GROWTH.
6. DOLLY KHANA A WELL KNOWN INVERTER ALREADY TOOK A STAKE IN NDL.
7. CRISIL RESEARCH HAS ASSIGNED FUNDAMENTAL GRADE OF 3/5
8.POLUS GLOBAL FUND INVESTS RS 50 CRORE IN NANDAN DENIM (BUYING PRICE 200 RS FOR POLUS GROUP)
9.NDL HAS EXPANDED ITS CAPACITY FROM 6 MMPA TO THE INTENDED CAPACITY OF 110 MMPAOVER THE PERIOD OF LAST 10 YEARS.
10.MANAGEMENT BELIEVE IN WORLD CLASS MANUFACTURING
