Acknit Industries Ltd
(BSE Code: 530043) (CMP: Rs.131.70) (FV: Rs.10)
We had recommended this stock at Rs.121.35 on 8 October 2018, where-after it zoomed to Rs.174 in a very short span of time. The stock has fallen sharply in line with the broad market correction and is once again available below its fair value. Moreover, it has posted excellent Q2 results. Incorporated in 1990, Acknit Industries Ltd (AIL), formerly known as Acknit Knitting Ltd, is an ISO 9001-2008 certified company and amongst the largest manufacturers and exporters of industrial gloves and garments having completed 26 years of operations. It has 3 manufacturing divisions near Kolkata:
1. Seamless Gloves: This division is located in a Special Economic Zone (SEZ), where it manufactures seamless gloves of 100% Cotton, Poly/ Cotton, Nylon, Kevlar, HPPE and other special cut resistant blended yarns, etc., for cut lever 1 to 5. AIL has 3 coating facilities that produce PU Coating, Nitrile Coating and Latex Coated Gloves.
2. Industrial Leather Products: AIL owns a fully integrated set up backed by its own tanning facilities for manufacturing leather gloves and special types using Kevlar/ HPPE/ Glass Yarns. It is one of the fastest growing and leading exporters from India.
3. Industrial Garments: This division manufactures various types of industrial garments made of Cotton, Poly/ Cotton, high visibility fabric with 3m reflective tape, heat resistant, Nomex and T-Shirts of all types. All its units are of international standards with sophisticated machinery and state-of-the-art facilities with adequate production
capacity to meet the growing market demand. It is a recognized export house with over 90% of its production is exported to Europe regularly.
With an equity capital of Rs.3.04 crore and reserves of Rs.40.38 crore, AIL’s share book value works out to Rs.136 and P/BV ratio stands at 0.9, which is attractive. The promoters hold 50.33% of the equity capital, which leaves 49.67% stake with the investing public.
For Q2FY19, AIL posted 67% higher PAT of Rs.0.91 crore on higher sales of Rs.41.68 crore and an EPS of
Rs.3. For H1FY19, it posted 107% higher PAT of Rs.2.11 crore on sales of Rs.77.88 crore and an EPS of Rs.7. It paid 15% dividend for FY18. Currently, the stock trades at a P/E of 10x and looks attractive based on its performance parameters. Investors can buy this stock with a stop loss of Rs.110.
On the upper side, it could zoom to Rs.185-200 in the long term.