Buy Siyaram Silk Mills; target Rs 296: Firstcall Research

“Siyaram Silk Mills Ltd. (Siyaram’s) is one of the most renowned vertically integrated textile companies in the country. During the quarter ended, the robust growth of Net Profit is increased by 16.93% to Rs.169.80 million. The company offers yarns, fabric, home textiles and apparels in the Indian and global markets. Net Sales and PAT of the company are expected to grow at a CAGR of 18% and 31% over 2010 to 2013E respectively. The company has wide range of latest machinery in its eco-friendly plants at Tarapur, Daman and Mumbai. The Siyaram’s brand retails in over 40000 outlets all over the country.”

“Siyaram Silk Mills has reported net profit of Rs 169.80 million for the quarter ended on September 30, 2011 as against Rs. 145.22 million in the same quarter last year, an increase of 16.93%. It has reported net sales of Rs 2444.40 million for the quarter ended on September 30, 2011 as against Rs 2154.60 million in the same quarter last year, a rise of 13.45%. Total income grew by 14.09% to Rs.2484.10 million from Rs.2177.39 million in the same quarter last year. During the quarter, it reported earnings of Rs 18.12 a share.”

“At the current market price of Rs.262.00, the stock is trading at 3.65 x FY12E and 3.22 x FY13E respectively. Earning per share (EPS) of the company for the earnings for FY12E and FY13E is seen at Rs.71.81 and Rs.81.47 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 18% and 31% over 2010 to 2013E respectively. On the basis of EV/EBITDA, the stock trades at 1.78 x for FY12E and 1.59 x for FY13E. Price to Book Value of the stock is expected to be at 0.85 x and 0.68 x respectively for FY12E and FY13E. We expect that the company will keep its growth story in the coming quarters also. We recommend ‘BUY’ in this particular scrip with a target price of Rs 296 for Medium to Long term investment,” says Firstcall Research report.

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