Nahar Spinning

Sector:- Textile(Manufacturing)
52 week H/L :- 137.40/45.04
Book Value :-184.65
EPS :- 33.20(mar' 11)
P/E :- 1.75
Industry PE :- 9.32
Face value :- 5
Divid :- 40.00%



Future Outlook

Nahar Spinning is in the process of adding 90,000 spindles (30,000 spindles each in three of its manufacturing units) in a phased manner which is going to complete by in DEC 2011 as the project is going as per schedule . The combined capex of the entire expansion plan is ~Rs 3,500 mn, of which Rs 1,930 mn is funded through TUFS loans at the rate of 6.6%.

The expanded capacity is expected to become operational in FY12. Post expansion, Nahar Spinning will have a total capacity of 440,000 spindles and 1080 rotors.

The expanded capacity will help Nahar Spinning better capitalise on the healthy demand prospects in the cotton yarn segment.


Recommendation

-We would recommend “BUY” for this company.
-The expected growth of the company in coming year will be 13.85% annually.
-Return on equity will be 14.58% on an average.
-Expected EPS will be Rs42.29/- in year 2014 from current Rs33.20/-.
-Even though the debt is increasing all the debt are secured debt, and CRISIL have given AA and A!+ rating for the current debt.
-The government earliar kept the limit on the amount of export to the foreign countries to maintain stability in Indian market, which is to removed by the government in coming year.
-Various help from the government through schemes like TUFS.