Expect to grow at CAGR of 42%: Vijayeswari Textiles

Excerpts from Bazaar on CNBC-TV18 Watch the full show » VTX Industries BSE | NSE 25/05/12 Are Mutual Funds betting on VTX Industries?

Vijayeswari Textiles , a company engaged in the production of cotton yarn and textile made ups, has debuted with 10% discount to its offer price of Rs 100 per share.

Chairman of Vijayeswari, AL Ramachandra expects the company to grow at CAGR of 42%. He sees FY08 sales at Rs 200 crore, net profit at Rs 24 crore.

Excerpts from CNBC-TV18's exclusive interview with A L Ramachandra:

 

Q: Its one of the more disappointing listings, along with two others. Tell us a bit in terms of what you expect to do with your financials next year?

 

A: My company is already an established and integrated manufacturing company for home textiles. We are in this sector for the past 14 years; as a company we have been in textiles for 53 years, we are part of the Lakshmi Group in Coimbatore. Our earnings growth from 2006-07 to 2007-08 is going to grow 42%. That has happened by capacity expansion, which is happening from the processing made-ups, spinning and weaving.

 

Our expansion is not the only thing. Our revenue growth has happened because of the value creation in fashion upgrading that we are doing. Our per piece realization also is going to increase YoY. This is our growth story and our capacity expansion is there to meet the needs of our present customers which are direct retail, they sell in the USA and UK market place.

 

Our retailers are the large retail fortune 500 companies such as Macy's, Kohl's in the US, Laura Ashley, Debbenhams and Muji in the UK. We also have presence in the Australian market.

 

We are increasing our presence in retail through ingredient brands, which are brands along with the private label and the national brands we will be placing in. These places are at much higher end retail and these brands give us an identity in international market place, which will give a stamp for a better product quality.

 

Q: Analysts expect that you should top about Rs 300 crore in sales next year i.e. FY08 with about Rs 25 crore of net profit, are those reasonable targets?

 

A: We have projected '08 to be Rs 200 crore, I do not know where that information has come from.

 

Q: What kind of profits?

 

A: The profits EBITDA margins are going to be 24%.

 

Q: What will you deliver in terms of net profit on Rs 200 crore sales?

 

A: Approximately Rs 24 crore that is not on Rs 300 crore but on Rs 200 crore topline.

 

Q: Seems a very muted topline growth. We estimate you will close '07 with Rs 190 crore. Is that a different figure as well?

 

A: We have projected, in all our projections to be a topline at '07 to be Rs 140 crore, that is why the growth from there is 40%, that is Rs 200 crore.