Siyaram Silk may hit Rs 1,221 in next 1 yr: Mayuresh Joshi

Mayuresh Joshi, Fund Manager (PMS) at Angel Broking told CNBC-TV18, "One really needs to understand that the numbers in Siyaram Silk Mills were not great for the quarter gone by. So we are still expecting sluggish numbers to come for Q2. Within the business line itself, blended fabrics make 75 percent of its topline and garments contribute 18 percent. The volume growth has been quite decent, so if you look at the blended fabrics volume growth, it is close to 9.5 percent and the garments have done a volume growth of 16.5 percent." "What we are expecting is, with improved cash flows coming through for Siyaram Silk Mills, the debt equity will come down from 0.6 percent to 0.4 percent in our opinion over the next two years. With improved cash flows our own take is that the dividend payout should increase from Rs 10 to Rs 15 over the next two years and that should also entail the return ratios perking up," he said. "So return on equity of 20.5 percent and return on investment capital coming close to 20.8 percent over the next two years is not ruled out. Clearly a topline growth of 11.4 percent close to Rs 1,875 crore margin should stabilise and should come back to 12-12.2 percent mark. Valuations again at 8.5 times look quite reasonable with a target of Rs 1,221 over the next 12 months," he added.