RSWM an outperformer: SKP Securities

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RSWM an outperformer: SKP Securities

SKP Securities has maintained an outperformer rating on RSWM with a target of Rs 298 in its May 18, 2011 research report.

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SKP Securities has maintained an outperformer rating on RSWM with a target of Rs 298 in its May 18, 2011 research report.

"RSWM Limited, the flagship Company of LNJ Bhilwara Group, is a leading manufacturer and exporter of synthetic and blended spun yarn, PV fabric and Denim fabric. RSWM was established in 1960, has 8 state-of-the-art manufacturing plants which operates about 3,60,000 spindles, having 1,00,000 MTA yarn capacity. RSWM's leading brand `Mayur Suitings' enjoys high brand equity in its target segment in the country."

"RSWM Ltd recorded total income of Rs.602.75 crore in Q4FY11, registering a growth of 46% Y-o-Y basis led by better realization and improved market condition. Revenue from yarn business grew by 43% and fabric business grew by 31%. EBITDA margin improved by 420 basis points to 18.0% as compared to 13.8% in same period last year, largely due to better operational efficiency. Power & fuel cost has reduced as % of sales. Net profit grew by whopping 82% to Rs. 45.08 crore on account of strong operating performance coupled with higher other income. Company's subsidiary Cheslind Textiles Ltd (67% holding) has turned profitable from this year onwards on account of improved global textile demand, better realization and synergies in productivity. For FY11 top line grew by 39% to Rs. 184.97 crore as compared to Rs. 132.93 crore in FY10. Company has reported net profit of Rs. 11.73 crore as against Net loss of Rs. 3.21 crore in FY10."

"At current market price of Rs. 143/-, RSWM is trading at P/E of 2.2x and 1.9x for FY 12E and FY13E respectively. We have revised our FY12E and FY13E EPS to Rs. 63.8 and Rs. 74.4 respectively and arrived at a target price of Rs. 298 /- (108 % upside) in 15 months, implying a PE of 4 x to EPS of FY13E," says research report.

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To read the full report click on the attachment