FiberWeb India - Bouncer (growth) or yorker (trap)?

Hi fellow boarders tracking fiberweb.

Anybody went for the offered ‘factory visit’? If so pls update with the details and photos (if any).

Disclosure: No holding, just tracking.

Anyone if you have visited the factory please let us know your thoughts. Holding stock and have seen it hammered and not able to sell out. So still holding. Not sure if its right time to get out given risk-reward offfered at current price.

I am more worried of the corporate governance and if anyone who met the promoter and visited the plant and comfortable then would like to continue to hold.

Also I see company is trying to put as much rosy picture and futuristic benefits by jumping ahead of themselves. Pls see below extract from latest presentation. They have not yet secured funding, just in talks with International consultants on setting the project, they haven’t mentioned when the project will come on stream but they have already provided that it will have superior margins… May be being a small cap effect.

Flatbond project

• The complexities in setting up the project and lower competitive intensity globally,
would enable the company to not only move up the value chain but also earn
significantly superior margins, once commissioned

Why don’t you put such stuff in your company’s website or post it on BSE/NSE. This is not the forum for your publicity or communication.

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My unbiased views on Fiberweb india ltd( cmp rs 35)

As per me, Fiberweb could turn out to be a multibaggar in 3 years time…
Now before we talk about the growth prospects we should first talk about the stock price…if really the company can grow big time then why is the stock price down 80% from its life highs? There are several issues which can be understood from the stock price as of now…i will try to explain as to why the stock is down so much even if i am talking about substantial growth from hereon!

  1. First and the biggest issue is corporate goverance…there have been allegations on the company that it manipulates its books which looks true and fair from the investors community as well…

  2. Back off by new horizon fund some months back raised uncertainty about the future expansion of flat bond machinery(100 crores capex)

  3. Market is clearly now interested in small cap and mid caps ideas since a year…even big market cap companies have been beaten badly for no reason and every stock in the midcap and smallcap index is down from 40% to 90%

  4. ILFS holds substantial stake( roughly 8.3 lac shares) in the company…they have already sold 1.5 lac shares between q2 and q3…moreover AVR investments holds 7 lac shares as per latest shareholding pattern…they have sold 3 lac shares in last three months!
    So this big selling could be the catalyst on the falling stock price…specially on a a daily volume of 30k shares…This selling should continue as per my best guess…

  5. Recently management have made an effort to improve corporate governance issue by arranging plant visit for the retail investors…They are becoming more and more matured and transparent in every passing concall…still they will require lot from their side!

  6. The investment that the company is going to make for flat bond project is equal to the current mcap of the company…so maybe market is uncertain about the flat bond thing…what if the new capex comes a big failure? This will be a big blow to the company…market is definitely not liking this uncertainty and maybe so is reflected in the stock price today…

  7. Now some maths! company will have to pay some taxes from next quarter onwards…in the latest concall, bhavesh sheth has given guidance for next few quarters…according to him, he is expecting to grow its topline by 20% every quarter…and he spoke it that he is being very conservative in his estimates…Also the costs were high in last quarter’s result ie q3 because of bonus and incentives to employees and staff…

For FY 19-20, topline could be somewhere between 250 to 270 crores…now if the topline is 250 crores and less, tax rate is 25% and if more than 250 crores, company falls in 30% tax bracket…so assuming that the tax is 30%, company posts topline of 250 crores and margin remains same as last two quarters ie 20%, pbt comes to 50 crores and PAT comes to 35 crores…so eps will be 12 for fy 19-20

For fy 20-21, flat bond machinery will start contributing to profits…flat bond has a higher NPM of more than 30%…even if flat bond starts from q2 of fy 20-21, we get 9 months of flat bond working…bhavesh sheth has given topline guidance of 150 crores from flat bond machinery…even if company do a sale of 90 crores in the first year of flat bond, PAT will be 27 crores from the flat bond itself…adding both the capacities, pat comes to 27+35= 62 crores of PAT, hence eps comes to 20 for fy 20-21…

  1. In the last one week, promoters are actively buying from open market…till now over 65000 shares have been bought by them from open market…

  2. Gouri gupta have substantially increased her stake by 40k shares and now holds 3.7 lac shares…

Disc- Invested

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Why this company need 20 crores working capital? Is there any expansion programme or production increase? Kindly elaborate.

Yes there is an expansion of melt blown plant with a small capex of 5 crores that’s happening…plus the mega expansion of flat bond is due in a years time…for which payment needs to be done in next few months…

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the company issued a dividend of 50 paise per share , seems not all wrong with it , will it may turn around?

I came across this company today and wanted to dig dip as the financials and pricing looked great for multibagger returns. However, starting the reading from 2017, it looks like a fishy management. They said about expansion from 5000 MT to 15000 MT for spunbond and expected it to be complete by 2018. However, till date as of Dec 2021, this expansion has not taken place and the capacity still stands at 5000 MT.

Also, your analogy was bang on as we can see the exact same price drop like Shilpi Cables. Great respect for it.

Even though the fundamentals are in line with improvements, this looks like an unethical practice of promoters who surged the share price on the account of its exit from BIFR further trapping retail investors.

Disc: Still studying the company to understand how the story unfolds. Not invested.

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Anyone still track this stock…i came across this stock because India is planning to implement PLI scheme in some sectors…