Damodar Industries Ltd
(BSE Code: 521220) (CMP: Rs.99) (FV: Rs.10)
We had recommended this stock at Rs.83.05 in our newsletter ‘Techno Funda Plus’ last week.
Incorporated in 1987, Mumbai-based Damodar Industries Ltd (DIL) manufactures and sells cotton and fancy yarns. It offers air texturizing products like cotton yarns including compact, combed, carded, slub, multi-count multi-twist and single/double/multifold yarns as well as fancy texturizing products. It provides linen blends comprising polyester/linen, polyester/viscose/linen, polyester/cotton/linen, viscose/linen and single/double/multifold; special blends, which include micro polyester, cationic/polyester, cationic/polyester/viscose cationic, polyester bright, viscose/modal/excel and single/double/multifold; synthetic yarns such as polyester/viscose, polyester/cotton, polyester, slub yarn, linen like effect and single/double/multifold; and yarn dyeing products. It exports to around 40 countries across Europe, South Africa, South America, Australia, South Korea, Belgium, Singapore, Italy, Egypt and the Gulf countries. With an equity capital of Rs.11.13 crore and reserves of Rs.82.53 crore, DIL’s share book value works out to Rs.84 and P/BV ratio stands at just 1x, which is attractive. The promoters hold 69.21% of the equity capital, which leaves 30.79% stake with the investing public.
For FY17, DIL’s net profit declined to Rs.8.87 crore from Rs.10.39 crore on 13% higher sales of Rs.704.27 crore fetching an EPS of Rs.8 and it paid 28% dividend for FY17. During Q1FY18, it posted 10% higher net profit at Rs.2.59 crore on sales of Rs.152.98 crore. Its EPS was Rs.2.33. DIL has embarked upon its Rs.165 crore expansion plan at Amravali (MIDC) and the commercial production for Phase I is expected to start from March 2018.
The stock trades at a P/E of just 12.32x and looks attractive for investment at the current level. Investors can buy this stock with a stop loss of Rs.76. On the upper side, it could zoom to Rs.115-135 levels in the medium-to-long-term.