This could be that the cost of borrowing is very less. Not sure if they do get any subvention, if yes, then there cost of borrowing could be around 1% after covering for their Forex risks.
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PBT is up by 9% but PAT lower due to higher tax
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segment result for textile are up 25%, but windmills is down 22%.
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higher finance cost, lower windmills results and 4.36 cr of forex loss is impacting PBT andPAT
How forex less, rupee trading 69-72 in financial year. They also importing cotton from other countries
ACM Yearly reports
SALES DOWN 3.36% ,
OPERATING PROFIT DOWN 7.05%
EBITDA DOWN 5.99%,
NET PROFIT DOWN 16.79%
EPS DOWN 16.80% ON YEARLY BASIS
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can i get this excel ā¦currently am unable to download?
Ambika Cotton investing in Dindugal. Aroun Rs 550 cr as per article above.
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What is the horizon of your investment ?
The margins of the company has been steadily decreasing. OPM has dropped from 30% in 2007 to 19% currently. The growth has been due to capacity expansion.
I dont think its a stead declineā¦ Avg OPM for the past 12 years is 22 % and last 5 years its 19.4 %
OPM from 2007 to 2019
30% 25% 23% 22% 30% 20% 22% 22% 20% 19% 20% 19% 19%
It follows the cotton price, 2007 and 2009 had low cotton pricesā¦ It spiked 2011-12
Discl: No holdingsā¦ But trackingā¦
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As per recent shareholding pattern,
Valuequest Moat fund have kept the shareholding same as earlier at -> 4.47% but other marque investors have reduced their stake in the company.Kataraman Advisors(backed by Narayana Murthy) have reduced their stake to 2.07% stake from 2.26%,every quarter they are slowly reducing stake.
Thanks,
Deb
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Is this impacting ACML?
Things are take a sharp turn, for the worse, for the textile industry. Yes, ACML wonāt be spared. Be prepared for serious tumble.
Local business is bad. After demon, it never really picked.
Exports have suddenly stopped due to Trump heavily taxing Chinese imports including Textiles, hence China is importing lesser yarn. In fact, it is looking to sell its own cotton. As a result, the yarn industry is facing a serious issue of oversupply.
The business of Yarn and ACML will see the worst this year. Its stock price too may follow.
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Ambikaās decision to move higher in the value chain from being just yarn producer to knitting might be very apt as per times. Technically Indian Textile industry should benefit from higher Trump tarrifs on Chinese goodsā¦ Textile and Pharma should benefit i supposeā¦
India was exporting a small percentage of textiles to USA before the tariff. It is unlikely that this would change. I suppose, USA has quality requirements which Indian manufacturers cannot fulfill.
China was a big importer of Yarn manufactured in Andra Pradesh, that has taken a huge hit.
If there is any positive that should come out, then it hasnāt happened yet.
Shares of mills such as Vardhman Textiles Ltd, KPR Mills Ltd and Ambika Cotton Mills Ltd slipped on the bourse in the last two weeks, even though they are more resilient compared to smaller unlisted spinners.
Another stable quarter despite broad challenges in the sector.
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Does look like a stable quarterā¦sales are down 10% yoy basisā¦however i was not expecting a sales drop as I remember somewhere in their annual report they mentioned that they are not looking to add any client beyond 12 existing clients (correct me if the number is wrong) as they struggle to full fill their demands only. 30% additional capacity will help them to overcome that pressure.With such strong customer demand there should not be a sales drop as they should be able to substitute lower demand to another client / new client. If the trend persist in next quarter as well that indicate they are not able to push all the production which means either custimer demand is very tepid or the product demand which company claims to be very high may not be completely true.
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Sales are linked to the Cotton Prices. There is a good correction in cotton prices and thus very much possible of overall sales reduction. You need to see the volumes figures to understand about any decline in demand. The fall in Share Prices indicated a poor quarter but company performed decently.
Disc: Invested , added more in last 30 days
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The market paid an average PE of 3.5 in the years 2011 to 2014, when the market was silent, not euphoric. But, currently trading at PE of 8.62 down from 14, this is a sharp fall, and unlikely to be arrested in next few quarters, due to
a. Re being stronger affecting the exports, which is main source of revenue. And not local markets
b. China not exporting fabric to US due to its import due hike, hence lesser Yarn is being imported.
c. Slump in consumption, the world over.
Questions:
- Is it likely that 2014 type PE of 3.5 will arrive?
- If a fair EPS of Rs.110 per share is to happen in coming few quarters, then is the share likely to touch a price of Rs.385, which is another 50% fall from CMP of 900?
If feel this is a great stock at a PE of 7 (actually around 5 considering the bear market); Giving a yield of 15%; But not an good candidate to overpay for, since growth is almost absent.
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This makes sense until China being a major supplier , Chinese exports going down and China importing less yarn . But if China isnāt going to export much, that should not bring down demand which China was fulfilling to Zero? Demand would get fulfilled eventually from somewhere. These should be just temporary issues until supply chain gets sorted. For me , it looks like this is factored in the prices currently . 2013-14 when PE was 3.5 for Ambika was a different time , we were coming out of a Big Bang recession with low confidence in the financial markets about recovery. DXY is gaining strength and is projected to go much higher, with that rupee will depreciate as well. Ambika will gain what they loose from rupee depreciation , thatās what I feel.
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Weāre talking about an intensely consumption oriented developed country. The ādemandā should not be confused with āneedā. As a thought experiment if you buy 50 sherwanis every Diwali but this time bought āonlyā 45, does this demand need to be fulfilled? (Have seen episodes like this first-hand)