VTM Ltd

Money Times - - Stock Analysis Stock Scan - By Rahul Sharma

(BSE Code: 532893) (CMP: Rs.27.80) (FV: Re.1)

Com­pany Back­ground: In­cor­po­rated in 1946, Tamil Nadu based VTM Ltd man­u­fac­tures fab­ric. Its prod­uct port­fo­lio com­prises Square Inch Drills, Twills, Piques, Yarn Dyed, Jacquards, Dob­bies, etc. It of­fers wo­ven fab­rics such as Cam­bric, Voile, Feather Proof, Poplin, Pin­point Ox­ford, Satin, Per­cale, Grey Sheet­ing, Swiss Dot, Birds Eye, etc. It is also en­gaged in ex­ports. Its man­u­fac­tur­ing unit in Virud­hu­na­gar is well-equipped with around 270 looms, 132 Sulzer ma­chines, 135 air jets and 3 Jacquard ma­chines to pro­duce ~10,00,000 me­ters of fab­ric ev­ery month.

Per­for­mance Re­view: Dur­ing Q2FY19, VTM re­ported 76% higher PAT of Rs.3.93 crore on higher sales of Rs.42.01 crore. Dur­ing H1FY19, it re­ported 49% higher PAT of Rs.6.68 crore with an EPS of Rs.1.66 on a small eq­uity of Rs.4.02 crore. The strong growth mo­men­tum is ex­pected to con­tinue go­ing ahead.

Con­clu­sion: Cur­rently, the stock trades cheap at a P/E of 11.16x com­pared to the in­dus­try P/E of 19.15x, S&P BSE Small-Cap P/E of 68.05x and Nifty Small-Cap 250 P/E of 61.4x. Its mar­ket cap is just Rs.111.83 crore as against its turnover of over Rs.165 crore. It paid 75% div­i­dend for FY18. Con­sid­er­ing th­ese fac­tors, we have a Buy on the stock with a long-term tar­get of Rs.45.

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