Buy Bombay Rayon; target of Rs 336: Firstcall Research

“Bombay Rayon Fashions, also known as Bombay Rayon Fashions Ltd., is an Indiabased textile manufacturing company. Bombay Rayon Fashions is based out of Mumbai and this textile group is one of the leading textile companies operating in India. The business activities of Bombay Rayon Fashions Ltd. involve manufacturing of textiles for domestic and office use. Within a span of 2 decade, this company has grown by leaps and bounds. Bombay Rayon Fashions is India's most dynamic, professionally-managed, and fast-growing textile group catering to a diverse range of high fashion fabrics to its customers across the world.”

“Bombay Rayon is an innovator and manufactures versatile and technically advanced ranges of fabrics, apparels, and home textiles. Bombay Rayon is a US$ 45 million company and employs around 5,000 personnel in its facilities. The state-of-the-art manufacturing facilities of Bombay Rayon are well networked with wholesalers, distributors, and retailers across India. It exports 100% of its garments to USA and European countries. Its clientele includes major brands like Tom Tailor, DKNY, and Liz Clairborne.”

“Bombay Rayon Fashions Ltd disclosed results for the quarter ended December 2010. Net sales for the quarter moved up 30% to Rs.5441.78 million as compared to Rs.4179.37 million during the corresponding quarter last year. During the quarter, the company has reported Net Profit increased to Rs. 531.87 million from Rs. 472.34 million in previous year same quarter. The Basic EPS of the company stood at Rs.4.16 for the quarter ended December 2010.”

“Price to Book Value of the stock is expected to be at 1.72 x and 1.52 x respectively for FY11E and FY12E. Earning per share (EPS) of the company for the earnings for FY11E and FY12E is seen at Rs.17.66 and Rs.22.05 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 24% and 24% over 2009 to 2012E respectively. During the quarter, the profit of the company rose 12.60% to Rs 531.8 million from Rs 472.3 million in the same quarter previous year. On the basis of EV/EBITDA, the stock trades at 6.28 x for FY11E and 5.38 x for FY12E. At the current market price of Rs 290, the stock is trading at 16.42 x FY11E and 13.15 x FY12E respectively. We recommend ‘BUY’ in this particular scrip with a target price of Rs 336 for medium to long term investment,” says Firstcall Research report.

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