Buy Filatex India; target of Rs 125: ICICI Direct

ICICI Direct's research report on Filatex India

Filatex India (FIL) is among the top cost efficient manufacturers of manmade yarns in India with a diversified product portfolio. FIL, over the last decade, has transformed its product mix with enhanced focus on value added products with its share increasing from 10% in FY13 to 78% in FY21. Despite being capital intensive in nature, FIL has maintained a capital efficient business model with stringent working capital policy (NWC days: 17) and high asset turn (2.0x), generating healthy RoCE of 22% Healthy cash flows have enabled it to reduce debt by ~ Rs 140 crore (D/E: 0.8x in FY21 vs. 1.2x in FY20). We expect further deleveraging to result in D/E of ~0.2x in FY23E

Outlook

We continue to remain structurally positive and maintain BUY rating We value FIL at Rs 125 i.e. 7x FY23E EPS