Arrow Textiles : This Arrow surely going to hit multibagger tag

chaitu · April 29, 2015, 10:42am

Brief Introduction:

Arrow Textiles limited (ATL) is in textile segment with products such as Elastic, non-elastic tapes, woven labels and printed labels. ATL promoted by jayadev mody (owner of Delta corp) and holds nearly 69% with out any pledging.

Positives which i observed in the business.

1). The company is demerged entity from arrow webtex and it got a good will amount of 7.16 crores. The good will amount is released between 2008-2013, every year 1.43 crores released. But in 2014 with out any good will amount reported better EPS 1.8rs than previous year 1.5 rs.

2). Much importantly customer base includes strong clientele such as Jockey(Page Industries),Rupa, Fila, Amul, VIP, Turtle andHennes & Mauritz. This provides much needed clarity for business stability and future earnings, this is must for small companies to survive.

3). The company day-to-day operations run by chand arora, who had 25 years of domain experience.

4). The company has excellent track record of product list and all of them introduced in last 3 years. In fact company built the entire business in a span of 4 years(supervised by chand arora) and the current growth in textile segment is going to create lot more value to this hidden company.

5). Good Financials with roe(15) and roce (19) and DE ratio of 0.2 ( Better than Industry Leader arvind ltd though not comparable on any parameter)

6). Company last year profits are crossed with in 9 months of current FY.

Finally the financials speak much louder than my voice.

FY Mar12 Mar13 Mar14 9M

Sales 31 36 45 38

Interest 2.8 2.8 1.6 0.8

NetProfit (0.27) 2.9 3.5 3.4

EPS (0.14) 1.5 1.8 1.8

Reserves (0.11) 3 6 NA

Disclosure : Invested from 25 levels and currently hold 6% of my portfolio and plans to increase further in dips. Currently this stock is trading at 27 rupees.

varadharajanr · April 30, 2015, 9:26am

Does not seem like a great risk reward ratio considering that you can get a bigger, better company with better ratios, better RoE and better visibility ahead for 4 x FY 15 PE.

10 x is par for the course for this industry and unless you believe that EPS growth is going to be super from here, I see this as one that can’t deliver more than 10-15% growth with low probability of re-rating.

jeanpaulva · September 8, 2015, 1:36am

Some points supporting buy:

The Trailing EPS shows 30% growth.
PE & PEG ratios are very good
Promoters Increasing Holdings
New product segments entry
http://www.arrowtextiles.com/Annual%20Report%20of%20the%20Company%20for%20the%20Financial%20Year%202014-2015.pdf
The ace investors are chasing textile industry, due to USD advantage, replacement of the MFA

Is it a good buy now in current bearish-scenario Or wait?

Chaitu_1614 · September 8, 2015, 3:16am

I exited this counter because of following issues:

Even after several mails there is no reply from management to clarify the concerns.
Even after several years of profits, none of the promoter companies arrow textiles, delta magnets, delta corp will declare dividend and they are not promoter friendly.
When i spoke with them in last fy Q4, management told me that they had taken 4cr for capacity expansion and the profits will be reflected in Q1. But Q1 results are not good.
To surprise in the current AR, they invested the same 4Cr in mutual funds which is not good for small cap company.

Disclosure: i exited it completely after holding for more than a year.

jeanpaulva · September 27, 2015, 9:15pm

You mean the Mar’15 quarter or Jun’15 quarter?

onsomani · January 14, 2016, 5:48am

      Listed on both NSE: ARROWTEX & BSE: 533068

Currently trading around 58 with a market cap of around 109 crores.

Promoters hold 68.63% stake.

It has a Debt of around 12 crores.

Total Reserves too are around 12 crores.

Established in 1992 Arrow Textiles Ltd has been into manufacturing
wide-range of products for the fashion apparel industry including woven tapes,
woven labels, and elastic tapes.

Arrow Textiles supplies key branding items for some of the biggest
brands and almost H&M, Hosiery, Rupa Hosiery, VIP, Euro Underwear, Lux
Industries.

The company produces 10000+ different items and processes 175 orders a
day for customers in and around India.

The company is owned by Jaydev Mody the promoter of Delta Corp and the
day to day operations are taken care of by MD Mr Chand Arora.

Promoter holding is at 68.63%, FIIs
don’t have any stake and DIIs own 0.01%, Public holding more than 1% was
nil which means a large concentrated equity if the company is only with
promoters and the remaining with small retail shareholders in the company.

Cash flows from operating activity is positive as
at FY2015.

Ratios as on FY2015:

OPM:28.43%

NPM:9.87%

ROCE:23.16%

ROE:17.01%

Dent-Equity:0.43

OPM 5yr AVG:22.95%

ROCE 3yr AVG:17.55%

ROE 3yr AVG:15.64%

P/E:20

Source: Screener

Although the company has never declared dividend
even when churning out profits. The co. might be keen on giving out dividends
this year.

Since arrow textiles focus on high margin clients,
it can be a wealth creator in the upcoming years looking at the financials and
the growth.

Management looks good. Need opinions of other members in case if I am missing anything

Disclosure:Invested

onsomani · January 14, 2016, 5:50am

I have dropped a mail to the co. for a detailed list of clientele, % share of exports in revenue. I’d like other respected members to look into this co. because of its high margin business and gradual increase in return ratios.

Chaitu_1614 · January 17, 2016, 5:04pm

Dear All,
Being the starter of this thread and i holded this company for more than 1 year.

After several interactions with the management i felt that management is not investor friendly and moved away from this and invested in pioneer embroideries@ lower levels.

Jockey previously used to give work to these guys, now they are doing the work internally rather than outsourcing.

kermitz · January 17, 2016, 7:51pm

Yes need to start a dedicated thread on pioneer embroideries. I have also bought them at lower levels, and feel like accumulating now, but not sure if this is the right time, as dont have much clarity into the growth of their business.

mrai74 · February 6, 2016, 10:54am

The results are out & I don’t see anything spectacular … its same on lines of last year Q3… so all hopes of spikes are gone with wind… as ACE coming with a new pick in this week, I expect ACE family will move out of Arrow to get the next pick early… now retail investors will remain locked with Arrow for next few quraters until we see any major event, which pushes the prices above 60 or so

Arrow Textiles Q3 results

vishal_lehar · March 22, 2019, 4:23am

latest updates:-
Delta magnet is taking over ratio is below:

mrai74 · March 22, 2019, 10:00am

It has turned out to be a penny stock & despite amalgamation future is quite bleak. Can someone having better view of the sector & series of events, share the expected actions & its impact on new merged entity. This may help investors in understanding & tracking this scrip, if it has some hope of being a good investment for medium / long term.

nirajshah85 · April 17, 2019, 5:36am

I think you are right. There is no clear understanding going ahead and the amalgamation seems to be only because it can used to leverage fundraising. Some analysis in this article -Merger of Delta Magnets, Arrow Textiles & MMG India to form Delta Manufacturing

If someone is tracking then need to check on the progress reports.

mrai74 · May 22, 2019, 11:24am

The result is poor & no dividend. Amalgamation has already making impact…