Which stocks to buy from Textile stocks now?

Networth Stock Broking has come out with a report on Textile industries and 12 textile stocks.

Shri Lakshmi Cotsyn (SLCL): SLCL is grossly undervalued and is quoting at 4.1x FY12E EV/EBITDA. With presence across high margin, high growth and niche segment, we estimate the Company to trade at 4.8x FY12E EV/EBITDA and derive at a target price of Rs. 156/share with over 86% upside from the CMP.

Vardhman Textiles (VTL): VTL stands to benefit the most with the increased prices of cotton. It is currently trading at 3.1x FY12E EV/EBITDA. According to our assumptions, we conservatively value the Company at 3.8x FY12E EV/EBITDA (premium over the peers due to its size) and arrive at a target price of Rs. 440/share with a potential 71% upside.

Garden Silk Mills (GSM): GSM is grossly undervalued and is currently trading at 3.5x FY12E EV/EBITDA. We expect 4x EV/EBITDA multiple and therefore derive at a target price of Rs. 157/share with a potential upside of 65%.

TT: At CMP of Rs. 29, TTL is trading at 4.0x EV/FY12E EBITDA of Rs. 850mn. We apply at 4.3x multiple due to strong brand presence and catering to the high margin underwear segment and arrive at a target price of Rs. 42/share (45% potential upside)

Sangam India: Sangam is grossly undervalued and is currently trading at 3.7x FY12E EV/EBITDA. We estimate the company to be trading at 4x FY12E EBITDA (discount to other due to liquidity concerns, thus deriving to a target price of Rs. 61 with a potential upside of 41%.

Alok Industries: Alok is currently trading at 5.7x FY12E EV/EBITDA and 3x FY12E Earnings. We estimate the company to be trading at 6x FY12E EBITDA (premium to the players due its size and integrated model), thus deriving to a target price of Rs. 28 with a potential upside of 37%.

RSWM: High contribution of export, installation of thermal power plant, higher economies of scale, advanced productivity, technological up gradation and superior operational efficiencies will continue to be the key driver of company