Investment Imperative has come out with its report on SKS textiles IPO , The research firm has recommended to “ Subscribe ” the IPO in its research report as on December 06, 2017.
SKS Textiles Ltd is engaged in manufacturing and marketing of finished fabrics under own brands as well as major players in the space including Raymond, Siyarams, Arvind. The company has garnered topline of Rs.159 crores in FY2017, with an implied CAGR of 9% over the past four years. It is targeting to leverage branded space and high-end offerings in the textile space. SKS is currently operating with three brands including Pierricarrlo, Cotbelly’s and Earthen Belly.
SKS Textiles has an installed capacity of 39 lakh meters per annum made out of manmade and natural fibres with specialization in Giza, Supima, Cotton, Polyester Viscose and Polyester Cotton. The company’s manufacturing facility is located at Sonale, Bhiwandi, Maharashtra as well as a packing unit at Kalher, Bhiwandi, Maharashtra.We recommend “Subscribe” on Valuations, Track Record and Long-Term Investment Opportunity SKS’ promoter and founder Mr. Sukanraj Shah has almost five decades of experience in the textile sector. The company is going to utilize the funds for working capital requirements in order to improve its penetration with major players in the sector. It has At the IPO price of Rs. 150 and FY17 EPS of Rs.5.71, the implied PE ratio stands at 26.3x. The company can see expected growth of 25%-30% in bottomline given new fund availability as well as improving macro scenario. FY18 based price to earnings is expected to be in the range of 16.5x-17.5x. In the longer run, it can target forward integration, branded presence and leverage on its supply chain capabilities to bigger brands.
Branded space in India is at nascent stage compared to their proportion in developed countries. SKS’ product line is apt for foraying into this space in the medium to long run, allowing it to leverage on operating expertise, research and development, strong supply chain, access to dealer network across the country.
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