Madhu Kela’s wife adds to her stake in Sangam India: Know what the company does

The company has adopted several expansion plans.

Shares of Sangam (India) Limited have seen heavy traction in the last two sessions following the additional stake acquisition by market veteran Madhusudan Kela’s wife. The stock jumped about 18 percent on June 14 and saw follow-up buying on June 15 but eventually succumbed to profit booking. The stock traded down about 3 percent.

Kela's wife Madhuri Madhusudan Kela bought additional 8.4 lakh shares or a 1.67 percent stake in Sangam (India), the textiles and apparel company, at an average price of Rs 268 per share.

This comes after the company had allotted five lakh shares to Kela's wife in September 2022 on the conversion of warrants at Rs 180 each.

About the company

Though its market capitalisation is just Rs 1,400 crore, the company has a history of nearly four decades. Sangam (India) is a fully integrated textile company based in Rajasthan with a larger focus on export markets.

Its main business activities are textile and garment manufacturing. In its decades of operations, the company has expanded its product portfolio into a full value chain in textile, manufacturing of yarn, fabric, fabric processing and garment.

Sangam (India) has five manufacturing facilities at Bhilwara and Chittorgarh in Rajasthan. It recently finished the first phase of its brownfield expansion at the Bhilwara unit to increase production capacity.

Its factories have the capacity to produce 96,150 million tonnes per annum (MTPA), 80.4 million metres per annum (MMPA) fabric (denim and PV fabric), 72 MMPA fabric processing, 5,500 MTPA knitted fabric and 5.6 million pieces per annum (MPPA) of garments.

The company claims to be one of the largest producers of PolyViscose dyed yarns in South East Asia. It prides itself on having diversity in production line and proclaims of facing limited competition in large and institutional supplies.

Financials

The financial performance of the company has been lukewarm as exports have suffered given the slowdown in Western nations. Gross revenue for the FY22-23 was Rs 2,715 crore against the Rs 2,438 crore in the previous fiscal, which means a growth of 11 percent. The fabric division saw revenue growth of 25 percent YOY.

Total export sales for the year ended FY22-23 was Rs 756.1 crore, declining from Rs 921 crore a year ago. Total domestic sales for the year improved to Rs 1,959.2 crore. Total EBITDA for the fiscal year 22-23 was Rs 319 crore against last year's total EBITDA of Rs 315 crore, registering a growth over 1 percent YoY. Profit declined 4 percent YoY thanks to a rise in costs.

Expansion plans

The company is undertaking a number of projects to expand its operations. These include:
- Cotton Expansion Project: Outlay of Rs 138 cr: to add yarn capacity of 10,500 MTPA and expected to be completed in Q2FY24 .
- Garment Project: Outlay of Rs 157 crore, expected to be completed by December 2023.
- Denim Expansion Project: Outlay of Rs 180 crore; expected to be completed in October 2023.
- PV Fabric Expansion Project I: The company has envisaged further expansion in the weaving unit with a project outlay of Rs 108 crore, putting 67 new advanced technology looms and the expected completion date is October 2023.
- PV Fabric Expansion Project II: The company has envisaged further expansion in the weaving unit with a project outlay of Rs 178 crore and an expected completion date of Q3FY24.
- Yarn Expansion Project: The company has envisaged further expansion in the spinning unit with a project outlay of Rs 327 crore, putting 9,120 Spindles in cotton yarn and 2,400 Open End Rotors.

Outlook
The company is very thinly tracked by analysts, thus it is difficult to gauge its future performance. However, this has not stopped investors from being bullish on the counter. The stock has given a 16.14 percent return in the last one year. However, in the last three months, it is up 35 percent.