Hi All
Just have been reading about this company. Thought will post here and see if we can gather more intel about this company incase anyone has tried to drill it.
Introduction:
AK Spintex is a textile company specializing in fabric processing. The company primarily focuses on processing synthetic and cotton grey fabric on a job-work basis, including dyeing and printing services. Its manufacturing facility is located in Bhilwara and has an installed capacity of 48 lakh meters per month.
https://www.akspintex.com/
Promoter Profile and Financial Performance: The company’s promoter profile showcases over 20 years of experience in the textile industry, indicating a decent level of expertise. In terms of financial performance, AK Spintex has reported positive sales and profit growth over the past three years.
Financial Highlights:
- March 2021: Sales of 48 crore INR, EBIT of 5 crore INR, and NP (Net Profit) of 0 crore INR.
- March 2022: Sales of 73 crore INR, EBIT of 7 crore INR, and NP of 2 crore INR.
- March 2023: Sales of 116 crore INR, EBIT of 16 crore INR, and NP of 7 crore INR.
Promoter Holding: The promoter holding in the company has remained relatively stable over the years. As of March 2021, the promoter holding was 65.3%, which remained unchanged in March 2022. However, by March 2023, the promoter holding had increased to 70%. Recent open market purchases have been made in the range of 72-92 INR.
Operational Margins and Fixed Asset Additions: The company has maintained a stable operating margin (OM) of 10% over the past three years. Additionally, AK Spintex has been adding to its fixed assets, as evidenced by the increase in the value of fixed assets in the balance sheet.
Fixed Assets:
- March 2021: 21 crore INR
- March 2022: 25 crore INR
- March 2023: 28 crore INR (Source: screener)
Borrowing and Internal Accruals: Despite the addition of fixed assets, the company’s borrowing has remained at 10 crore INR over the past three years. This suggests that most of the investments and expansions have been financed through internal accruals.
Annual Report 2022: The annual report for 2022 provides limited information about AK Spintex. The company’s management disclosure and analysis lack details regarding its customers, target market, growth estimates, and future revenue path.
Key Concerns:
- Opaque Management: The management of AK Spintex has not provided substantial information regarding its customers, target market, or growth estimates. This lack of transparency raises concerns about the company’s long-term prospects and strategic direction.
- Increasing Trade Payable: The trade payable of AK Spintex has risen from 10.4 crore INR in March 2021 to 15.1 crore INR in March 2023. This significant increase, relative to the company’s size, raises concerns about the possibility of bad debts or difficulties in collecting payments from debtors. Furthermore, the trade payable of 15 crore INR represents 25% of the company’s total assets and liabilities, which is relatively high compared to other companies in the sector.
- Lack of Disclosure: AK Spintex has not made sufficient efforts to disclose its expansion plans, capacity utilization, funding sources, or future revenue trajectory.
Trying to get some clarification from company management but not too hopeful as such small companies usually are not transparent . The absence of such disclosures makes it challenging for investors to assess the company’s growth potential and investment prospects.
Any thoughts?
Disc: Small position more for tracking purpose