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Jun 09, 2017 08:15 AM IST | Source:

Laxmi Cotspin Ltd SME IPO to open on 17th March- HEM Securities

HEM securities have come out with the research report on Laxmi Cotspin

Business overview:

Co is engaged in the business of cotton processing in textile industry with its production facilities located in cotton growing areas of Marathwada and Vidarbha region at Samangaon which is situated in the Jalna district of State of Maharashtra. Co is manufacturer of yarn and have an existing open end and ring spinning unit to cater to the yarn markets in Maharashtra and Gujarat. Co's business is spread among home textiles, weaving sector, Denim Manufactures and hosiery manufacturers through open end yarn and ring spun yarn. Co was established in year 2006 with a capacity of 13200 spindles with combers in the first phase. Over the years co have expanded upto 16800 spindels with compact, lycra and slub attachment. Addition to this co have set up one open end unit with 1200 Rotors. Co have established a strong customer base and good marketing setup. Co have also started its own "Organic Cotton Farming Project and Better Cotton (BCI) Project" in Jalna District, with 4,750 farmers in 13,200 acre of cultivation land and yield capacity of initially 55,000 quintals Kapas (11,000 BCI certified own ginned cotton bales) further expanded upto 40,000 bales per crop seasons in near future. Company is approved as Mega Project under IPS Scheme 2007 of Maharashtra State Government and is enjoying the same for 8 years. And further for 4 years co will get sanction of Mega project status.


Co is bringing the issue at p/e multiple of 8.87 on post issue annualized HFY17 eps of Rs 2.26 at price of Rs 20/share while peers like Kallam Spinning is trading at p/e multiple of 12.5; Nagreeka Exports is trading at p/e multiple of 16.6 . Also, co's NAV post issue will stand at Rs 25.16 thus

converting into p/b ratio of 0.79 .

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