"Looking at the improved return ratios and growth prospects, we are recommending a short term price target of Rs 85," says Sumit Bilgaiyan, Founder of Equity99.
Lambodhara Textiles produces fancy polyester, rayon and other synthetic yarns and supplies to Siyarams, Donear, etc. The company has a current capacity of 37,856 spindles and operates at 100 percent capacity utilisation.
It has plans to expand capacity to 60,000 spindles, for which it has acquired land to build a new plant.
Exports contribute around 25 percent to the company's revenue, which has grown at a CAGR of 21.5 percent in the last 5 years. Its profitability has also improved a lot, having increased at a CAGR of 45.65 percent in the last 5 years.
The company's return ratios has also improved on the back of a better operating matrix. It’s return on equity has risen to 26.5 percent in the last 3 years. Looking at the improved return ratios and growth prospects, we are recommending a short term price target of Rs 85.Disclaimer: The author is Founder of Equity99. The views and investment tips expressed by investment expert on moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.