SHARETIPSINFO >>Research Reports >> ALOK TEXTILE (01-01-2009)

COMPANY OVERVEIW:
Alok Textile Industries Ltd was incorporated as private limited company on 12th March, 1986. Alok Industries Ltd is a multidivisional textile company engaged in the manufacture of variety of fabrics with modern integrated production facilities for home textiles, apparel fabrics, garments and polyester yarn. The company has a balanced market composition mix of domestic, deemed export (supplying fabrics to garment exporter) and international market. Its customers include GAP, JC Penny, Macy`s, Kohl`s, Wal-Mart, Bed bath etc.

BUSINESS MODEL:

PRODUCTION MIX:

RETAIL VENTURE:

Retail foray for Alok is the logical culmination of the textile value chain that starts from cotton procurement and ends with the apparel / home textiles being sold at an Alok outlet to the end-user. Alok has entered the consumer market with its own retail chain of stores named as 'H&A' (Homes & Apparels). These stores are targeted at the rapidly growing mass market across India.
H&A stores are positioned as complete family stores for apparel, home textiles and accessories offering the pleasure of buying high quality textile products at affordable prices. Alok is looking to increase the number of store to 250 by 2009 from 32 stores that it is operating.

INTERNATIONAL PRESENCE:
Alok's international textile operations took off with the acquisition of Mileta in the Czech Republic — a European major in yarn dyed shirting, handkerchiefs and table linen, which specializes in high-value premium products.
The acquisition has created considerable synergies and value addition for both Alok and Mileta. As part of Alok, Mileta is now a provider of technical expertise, especially in yarn dyed fabrics. Well-known apparel brands such as Mileta, Erba, Cottonova and Lord Nelson are now in the Alok portfolio and are in the process of being progressively launched in India. Mileta also provides Alok greater penetration into the European market.

INTERNATIOANAL REATIL OPERATION:

Alok entered into international retailing –by taking strategic stake in a UK based retail company Grabal Alok (UK) Ltd. (formerly known as Hamsard 2353 Ltd.) having 218 retail stores across England, Scotland and Wales. These stores offer value for money ranges of garments for women, men and children and home ware and related accessories.
Alok is presently implementing several strategies to improve the performance of Grabal (UK), which includes: re branding the stores as “Store Twenty One” (from'qs'), repositioning the stores as “value proposition” from “discount stores”,  improving the product profile and improving overall efficiencies. The network of 218 stores is also being expanded to over 300, including shop-in-shops in UK's leading department stores and new stand alone stores.  

REALTY:

Alok's realty business is driven through its wholly owned subsidiary, Alok Infrastructure, which has contracted to develop about 1700,000 square feet of premium office space in Mumbai. This division aims at Alok generating revenue through rentals and capital appreciation.
The company also has around 400 acres of land at Silvassa which can be utilized for developing SEZ, integrated township and other commercial purposes. We would continue to explore opportunities in this sector to maximize the gain for the stake-holders.

INVESTMENT RATIONAL:
Depreciating rupee will increase the income and at the same time make the product competitive in the world market.
Alok is present in the entire value chain of textile and offer fully integrated facility of yarn texturizing, weaving, knitting, processing, made-up and garment besides having largest processing capacity in India.

BUSINESS GROWTH ANALYSIS (BCG MODEL):

SHAREHOLDING PATTERN:

FINANCIAL:

CHANGE IN TOTAL INCOME: CAGR IN TOTAL INCOME IS 21.55%.

CHANGE IN OPERATING INCOME: CAGR IN OPERATING PROFIT IS 33%.

CHANGE IN NET PROFIT: CAGR IN NET PROFIT IS 30.97%.

RATIOS:

COMPARISON OF Q2FY2009 WITH Q2FY2008:

VALUATION&OUTLOOK:
At CMP of Rs18 company is trading at 2 X to trailing twelve month earnings per share and the price to book value per share is 0.3. This is really a worth buying at this lucrative price. It is trading much below its book value. We also expect that company top line will grow at 15% and bottom line will grow at 20%. Benefit from rupee depreciation will start coming from the next Year. The entire negative is discounted at this price, there cannot be anything worst than this to textile industry. We expect a good return at least 30-40% from this level.

CONCLUSION:
Its low risk high return counter. Investor with medium to long term investment horizon can take exposure on this

 

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