Filatex India Ltd

_CRISIL reserach initiated coverage on Filatex with a valuation grade of â5/5â, indicating that the current market price has a âstrong upsideâ from the current levels._They have used the discounted cash flow method to value Filatex and arrived at a fair value of Rs 64 per share. CMP on Nov 8 is Rs 45.

Filatex India Limited (Filatex) manufactures a range of monofilament and multifilament synthetic yarns. The timely execution of the proposed large-size expansion and volatile raw material prices are the key monitorables for the company. We assign Filatex a fundamental grade ofâ2/5â, indicating that its fundamentals areâmoderateârelative to other listed securities inIndia.

Demand for MMF is expected to increase; PFY will be the main growth driver

CRISIL Research expects demand for man-made fibre (MMF) to grow at 7-8% CAGR over FY10-FY13. Within the MMF segment, the demand for polyester filament yarn (PFY) is expected to grow at a higher CAGR of 9.3% between FY10 and FY13 because of increased price competitiveness of PFY vis–vis cotton yarn.

Capacity expansion and backward integration to boost prospects

Filatex is in the process of setting up a polyester polycondensation plant with a capacity of 216,000 tonnes per annum (TPA). The plant is expected to commence production in the first half of FY12. Consequently, its PFY capacity is expected to increase from ~58,000 TPA in FY10 to ~179,000 TPA by FY12. The backward integration of producing PFY directly from PTA-MEG instead of from externally-sourced polyester chips is expected to reduce operational costs.

Timely execution of the proposed expansion remains the key

The proposed plant is under construction and as per the company, the necessary arrangements for machinery, utilities and funds are in place. However, the size of the expansion is almost three times the companyâs current capacity. An expansion of this magnitude is a first for the companyâs management. Hence, we believe that the execution of the project remains a key challenge for the company.

Filatex to emerge as a mid-size player in the PFY segment

Filatex, with a capacity of ~58,000 TPA as of FY10, constitutes only 3% of the total industry capacity. The PFY industry is dominated by Reliance with a 40% market share. Mid-size players account for ~8% market share each. Post expansion, Filatex will join these second-rung players with a ~7% share in FY12.

Revenues to grow at a CAGR of 57%, EBITDA margin to improve

We expect Filatexâs revenues to grow at a CAGR of 57% from Rs 4.2 bn in FY10 to Rs 15.4 bn in FY13 on account of capacity expansion. We expect EBITDA margin to improve to 10.4% in FY13 from 9.7% in FY10 due to lower operational costs. EPS is expected to increase from Rs 10.0 in FY10 to Rs 30.7 in FY13.

Key monitorables: Project execution, volatile crude oil prices

i) Project execution of the ongoing capacity expansion, which is three times the current size. ii) Volatile crude oil prices as raw materials are derivatives of crude oil. iii) Decline in prices of cotton yarn, PFY substitute, which will lower the demand for polyester yarn.

Valuations - strong upside from current levels

We have used the discounted cash flow method to value Filatex and arrived at a fair value of Rs 64 per share. Consequently, we initiate coverage on Filatex with a valuation grade of â5/5â, indicating that the current market price has a âstrong upsideâ from the current levels

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The stock seems to have taken a pasting from a high of 92 in july 2010 to current levels of around 47. Any reasons?

Reviving the old thread!
The Q1-17 results look quite good with 200% jump in PAT and 43% jump in EBITDA.

Any views on the current state of business and expectations going forward?


any news is there in filatex good result

Dear @Donald,
Of late this has gained interest everywhere.
I am very poor in fundamentals.
The above link tells a news.
Best regards,

FIL was implementing an expansion scheme for the manufacture of high value-added products viz 100 tonnes/day of FDY and 30 tonnes/day of POY from direct melt capacity along with 200 tonnes/day of POY texturing at its exiting unit in Dahej at a capex of Rs.241 crore. FIL has to only set up plant & machinery for implementing the above scheme as other infrastructure facilities like land, roads, utilities, heating systems, etc are already available at the plant. This will result in lower per tonne capital cost and lower operating costs. While commercial production of FDY commenced during Q4FY16, the capacity for texturised yarn and increase in spinning capacity is still under implementation.

FIL has consistently achieved capacity utilisation of over 90% in respect of POY. Its Dadra unit enjoys certain locational advantages such as close proximity to air/seaports and low cost of power (Rs.4/unit). Its products are well accepted in the market. With the implementation of the proposed project, the Company will reap benefits of economies of scale due to optimum utilisation of the existing facilities.

Disclosure - Holding since 60 level, might look to add further at 60-70 level only. Since its a super small company, I am currently holding only a tracking position.

On first glance I see that out of 59.7% promoter holding, 39.15% is pledged. Is there any reason for this, given that the company has performed excellently in last 4 years, including the market slowdown in 2018.

They have done expansion , and pledged shares as security. Presently they are buying constantly from market. One can check bse announcement .

Disc : invested and tracking

Nice article

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Anyone tracking this here? They have reported a breakout quarter in terms of profitability in Dec - 91cr PBT vs 120 to 130cr for the entire years FY19 & FY20.

They say that their mix of value added products has increased from 12% in FY15 to 62% in FY20, so there has been some gradual margin expansion over the years.

But the current quarter performance seems to have some impact of better spreads which - according to the company is driven by fabrics which were earlier imported not coming in anymore, and some capacity exiting the market. They think this could sustain for 2-3 years – i.e. no big plants are coming in. Also there is help from the government - abolition of anti-dumping duty on PTA etc, and some effect of supply chain diversification from China in man-made fibres.

Also their captive thermal plant is expected to start from Q1FY22 which they think will give them 45cr of annual savings on energy cost - which itself is a third of FY19 & 20 annual PBT.

So even if Dec quarter profitability doesn’t fully sustain - we could be looking at 160 to 180cr PBT.

Promoter holding has increased significantly from 60% to 65% in the December quarter and they are saying that the promoter pledging is basically for guaranteeing the term loans which the company has taken. They have 600cr of debt which is not bad for annual EBITDA of 200cr + in the last 3 years.



Last 1 year the traction of the institutional investors meet increases
This is in month of march

Also they have released presentation document



Some very interesting Concall Highlights:

  1. Mgmnt guided for Q4 EBITDA to be better than Q3 EBITDA of 120cr.

  2. Mgmnt expects Q3 EBITDA run rate to be maintained going forward through this decade due to structural supply demand issues globally.

  3. On top of above guided EBITDA, an additional saving of 45cr to be accrued from next year from the new captive thermal power project

  4. Moving up the value chain by introducing new product with higher margin.

  5. New patent pending technology currently being developed, to manufacture yarn from recycled polymer to be commercialised this year and new plant, at a CAPEX of 120cr, to be commissioned next year. Mngmnt guided for ROCE >40% with this technology.

  6. Will be considering giving out dividends or buying-back to reward to shareholders.

Q3 PAT of 65cr on an annualised basis is approx 260cr/year. In the past growth has been >20% over 10 years. Assuming a very modest growth rate of 10% (5% due to inflation & 5% due to capacity/margin enhancement) and expected return on equity of 15%, the implied market valuation of Filatex is 4700cr. That is, stock should trade at approx Rs 210 per share today.

Recommendation: Do read the Q3 concall transcript - full of insights.


Yep, Gone through. Reference here

Hi Anon,

Thanks for nicely putting the valuable points.

In addition, they will also reduce debt of 120-150 cr in FY22. debt reduction will help pledge release and valuation re-rating by market.

Also, this FY22, they will convert low margin chips capacity to high margin DTY etc, that means additional 10% volume growth on high margin products, i.e. overall sales may be same or little higher but EBIDTA will be significantly higher.

So, this is an absolute EBIDTA growth play rather than revenue growth play, but the play is very strong, supported by the strong cash flow generation, controlled working capital , improved ratios, debt reduction, pledge release, dividend/buy back, new recycle plant (300-350 cr revenue from capex of 120 cr, with ROCE 40%+, which is very good)…Promoters knew these in Q3 itself and thus bought 5% from open market

Overall, I feel very good time ahead. Keep sharing , keep up the good work.

Disc- invested


In the presentation they have mentioned about proposed equity fund raising for strengthening balance sheet. Can anyone share additional details known about this proposed plan ?

Discl: Invested

I think thats a generic/long term one, no concrete decision/plan to raise capital as of now ( at least I did not hear anything in last 4-5 con calls).



Steller results Q4 21

Message From management

Divident announced after 9 years I guess 0.40Rs Per share (25% at the facevalue )

Going forward, CEO expects better than Q3 FY21 Margins to be maintained on sustainable basis.

He mentioned about near term uncertainty and concerns of disruption (starting Mid march) due to 2nd wave ferocity.

Discl: Invested

Very useful summary of the Q4 FY 21 concall by Tycoon Mindset