Damodar In­dus­tries Ltd

Money Times - - Techno Funda - By Nayan Pa­tel

(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.

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