Nahar Industrial Enterprise Ltd - A good value buy emerged

Nahar Industrial Enterprise is looking like a good value buy after recent change in market condition. Its revenue is Rs 1775.71 Cr but PE is just 6.6 after March, 2016 Qtr result.

Sector: Yarn, Fabric and Sugar.

Debt is on higher side. Debt/Equity:1.68.
Interest coverage ratio is 1.7 which was just 1.2 prior to Mar, 2016 result. I took data. At many places Debt/Equity is not that high but Interest coverage is lower.

Past four quarters profit:
June 2015: 3.91,
Sept 2015: 1.09,
Dec 2016: 13.92,
Mar 2016: 23.97.

So, you can see how fast it is improving. Lower profit in June and Sept 2015 result should help in base effect. Sugar price realization should be good. Earlier it was making loss and now it will add to profit. From loss to profit will add good amount to bottom-line.
22 Cr was the loss due to sugar in 2015 against profit of 4 cr previous year.

Yearly Result:

Quarterly Result:

Revenue has increased at steady pace but profit has not. Generating profit is a problem for the company. I see few reasons for this:

  • Sugar division: Sugar is highly regulated commodity in India. It has its own cycle. Govt has taken few good steps in previous year and Sugar’s good time has come.

  • Debt was increasing with the revenue. Recently debt has been reduced. With the lower interest rate regime, I see Interest and depreciation burden has reduced which is leaving money for counting in profit. We see Operating profit is not a problem for the company in-spite of being in Sugar sector. Margin is pretty much maintained.

Textile: 93% of revenue.

Recently many insider trading has happened here before result. Though the amount involved in that was small.

It has installed capacity of 2500 tones of cane crushed per day (“TCD”) at Fatehgarh Sahib, Punjab. Sugar plant is small.

Co-generation power plant of :
Lalru (Pb) - 29 MW.
Amloh (Pb) 16 MW.

It is Punjab based company. Check its products here.

Credit Rating: [ICRA]A- (Stable) for Short term,
[ICRA]A2+ for long term.

Good credit rating gives us security with low interest coverage. Improving profit at rapid pace is giving us prospect for future growth.

Many domestic and international clients.

Subsidiary: Cotton County Retail Ltd.
Brand: Cotton County and Monte Carlo.

Distillery plant is not working as on Mar, 2015 due to farmers has filed an appeal in National Green Tribunal. Company has setup a plant and everything is ready.
@What has happened to distillery plant now?
Could not find it. :frowning:

ASHISH DHAWAN is also invested here. He has invested Rs 18 Cr in Nahar Industrial Enterprise.

Revenue of Rs 1775.71 cr and PE is just 6. Revenue is not projected it is already there. So, with good profit, I am pretty sure of it getting good valuation in future.

I want to know from experts here if there is any management concern or something which is not visible on Balance Sheet!

Promoters: 68.38%
Corporate: 1.21%
DII: 1.25%
FII: 0

Change in promoter holding 3Years: 1.41%
Current ratio: 5.13,
Quick ratio: 1.71.

Finished products:
Yarn: 50%
Fabric: 39%
Sugar: 5%
Others: 2%

Raw material:
Fibers: 82%,
Sugar cane: 11%
Yarn: 3%

Volume is a concern here. So, may not be a good investment for very short term. But time-to-time, I see volume increase here which is enough for me.
MoneyControl gives 16k and 14k as 10days and 30days volume average.


  • I could not find any positive comments from management about the change is company structures or products portfolio which assures me of better future.

  • I am relying on Sugar profit from loss in the past to good profit in coming quarters.

  • I am hoping for Bangladesh’s increased import of yarn and fabric to continue or China won’t lower the import bill of Indian textile. Overall market has become better in 2015 compared to 2014 as mentioned in Annual Report 2015. Recently I read Vietnam has increased export to China which has affected Indian export but Bangladesh has increased import of Indian yarn. Bangladesh is 2nd largest importer of Indian yarn after China.

  • As Bangladesh is the 2nd largest importer of Indian yarn, any change in custom etc can affect the export of Indian yarn. Increasing export of yarn to Bangladesh has affected local Bangladeshi manufacturer and the concern has been raised by local body.

But I am not much concerned by the negative risk of export etc as everything negative is priced-in now. Previous year most yarn manufacturer has not shown growth.

Update: June 04, 2016
Particulars of Holding , Subsidiary and associate companies:
Cotton County Retail Ltd - Associate - 49.99%
J.L. Growth Fund Limited - Associate - 41.10%
Vardhman Investments Limited - Associate - 47.17%
Atam Vallabh Financiers Limited - Associate - 36.85%

Two key people in management:

  • Jawahar Oswal: Hold positions in many group companies.
  • Dinesh Gogna: Hold positions in many group companies.

Jawahar Lal Oswal bags lifetime - Sept 2013. Chief Minister Parkash Singh Badal on Tuesday gave away awards during the annual award function of the Ludhiana Management Association (LMA).

Disclosure: I am invested here.


Subsidiary: Cotton County Retail Ltd.
Brand: “Cotton County” and “Monte Carlo”.

I was comparing it with Gokaldas as Gokaldas was in news past week due to 54% gain. Porenju is invested here so in lime-light as well.

I don’t know whether this kind of info is allowed here or not!

Gokaldas forward PE can be = 10
Nahar ind ent forward PE can be = 3.

- Nahar: 1775.71
- Gokaldas: 1122.71

-Debt to equity: 1.68
-Interest Coverage Ratio: 1.72

-Debt to equity: 1.99
-Interest Coverage Ratio: 2.49 Gokaldas is better here.

Cash readiness:
-Current ratio: 5.13
-Quick ratio: 1.71
-Current ratio: 2.62
-Quick ratio: 1.03


I see Export is very high in case of Gokaldas and interest coverage is also better. Interest coverage can change for Nahar very fast. Sugar instead of pinching profit from Textile (yarn, fabric), will add to the bottom-line.


  • Nahar: 6.51
  • Gokaldas: 25.27

Market Cap.:

  • Nahar: 280.47
  • Gokaldas: 25.27


  • Nahar: 0.16
  • Gokaldas: 0.34


  • Nahar: 0.45
  • Gokaldas: 1.78


  • Nahar: 4.34%
  • Gokaldas: -2.15%


  • Nahar: -4.58%
  • Gokaldas: -6.94%


  • Nahar: 33,291
  • Gokaldas: 3,192,216


  • Nahar: Long term dividend track record. But nothing in 2015.
  • Gokaldas: Not paid since 2010 to 2014 not paid. But paid in 2015.
    Here it is interesting. One (Gokaldas) has not paid from long and in past paid but payout was small. Nahar has paid good dividend in past but not paid in 2015. But on May 30, 2016, Nahar Ind board has recommended Rs 1 per share. It is not reflecting in Screener currently.

Came to know that Punjab and Haryana has reduced VAT in March budget.
Nahar is a Punjab based company.
Punjab has reduced VAT from 6.05% to 3.6%.
Haryana reduced VAT from 5 to 0%.
So, how much it can affect bottom-line? 2.4% full!

All Nahar group companies are capricious in their financial numbers and management never guides of future outlook in much detail. So, although there might be value, inherent risks remain.

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I also saw cross investment in various subsidiaries confusing but not sure if that is not ok. Few names appeared everywhere. Now with better rules, only few can afford to mess with numbers. I don’t think this company is a fraud and don’t have a way to correct itself so will decide to stay evil.

For future outlook, aggressive planning is not there but they are integrated. Textile is there. Yarn is there and subsidiary is there to sell readymade garments. So, here I am playing with value gab and normal boarder market outlook.

Result is out and that is good. 4.4 vs 19.7 YoY.
I was expecting stronger on profit side.

My question is - corresponding YoY qtr tax paid was at 30% but this qtr it is at 18%.

I am looking at it because I know that Punjab has reduced tax. That is roughly 3% reduced. But why this big difference? Is that due to recent announcement! If yes, why? Tax cut …?

Recent news about expansion and that expansion can help the existing capacity get utilized is positive for the company.
This will increase the production by 1/3rd.

We have not been able to run at our full capacity before, as we did not
have the dyeing capacity. Installing the Thermex dyeing range and the
Montex stenter will enable us to reach our full capacity of 2.2
million metres within the next 12 months.


Monte carlo is part of Nahar Industrial. In Monte Carlo, insider trading from last one year.

Sugar is still strong and expected to be strong.

But ASHISH DHAWAN is out now. He came out at Rs 108.

Disclosure: I entered here again.


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Dolly Khanna gets into Nahar Ent…

Shares of smallcap company Nahar Industrial Enterprises advanced as much as 11.39 per cent in morning trade on Monday after data showed Chennai-based marquee investor Dolly Khanna had bought 1.05 per cent stake in the company during the January-March quarter.

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Dolly Khanna could get it highlight. But due to Sugar, I am not sure how high PE it could gain. It is like holding company.
When I first entered here that time Sugar price has not played well here in price. That is why I entered here. Now, I don’t know how to value it?

Sugar constitutes only 9% of their turnover. Sugar volatility will have minimal impact on their. performance.Bountiful cotton productionin Punjab region will have positive influence on their performance. Hope yesteryears glory will come back to Nahar Ind with the interest of ace investors.

Disclosure: Invested.

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What else has or is going to change here, if not sugar?
What was its past glory and how and why it can regain that?

I am not invested now.

With changing fortunes for textile industry, Nahar has posted turn around results for qtr ending Dec 2016.Being a Punjab based Co and with expected decline of cotton prices with bountiful cotton in Punjab, Nahar is expected to post good results in coming qtrs. Co in their AR has predicted bright future for the co with reduced Chinese imports(with increasing labor costs and stricter pollution norms Chinese fabric becoming less competitive.) With bullish sugar cycle expected to last few more qtrs, I expect good performance with re rating of scrip. I sold fully earlier with their declining performance few years back. I hv reentered and adding on dips.

Since Nahar Industrial Enterprise Ltd is owned by the same promoters as another listed company Nahar spinning mills making similar products, do we need to be concerned about conflict of interest?

Nahar Spinning is in Hosiery and Knitwear sector whereas Nahar Ind is a composite mill with interest in yarn,fabrics,apparels and sugar. Nahar Ind is a multi product conglammarate. Yes Management is having interest in many companies including Nahar spinning with criss cross holding under the broad catagory of Textiles.

Yes, and that criss cross holding does not looks good. Most of the time, too complex products structure and complex holdings don’t allow high PE.


If we check ashish dhawans holding…He has constantly reduced his holdings from 6.5 to 1.69 currently.
There is no consistency of profits in last 10 years…some years they make profits and some years losses & then again profits…markets doesnt like such inconsistency so it is bound to have a lower pe then its peers & one more negative point is its difficult to find any management interviews or concalls
Only positives here is dolly khanna has entered & so lets see how it plans out.
Disc - have taken small position at 118 and not sure of adding more in correction

Their Grp Company Nahar Capital is Best, Hugely Undervalued, Vast Asset Quality Trading below Book Value & with just 11 PE while Peers at 40PE

On April 24, 2017, it was trading at Rs 146. Now trading at Rs 103. So, my shot proved right that time. I was here and gained but existed near to Dolly Khanna entry - Don’t know before or after. But not influenced by Dolly worked well.

Nahar capital is a holding company of the group. The company receives dividends from investments (largely group companies) and have profit from sale of investments (equity, MFs and debt instruments). Historically, markets have not given any value to holding companies. Anything specific happening in this stock which should warrant our attention?

I know that current the value of investments including mutual funds is close to Rs650cr

I see worth Rs 42 Lakh (approx) of shares buy in Insider trading since Dec, 2017, but could not find any positive news. So, nothing special to invest for big gain.
I entered at lower level when I have posted here. Later booked profit and mentioned about it on Oct 2017 post.
Sugar corrected and now trading at Rs 31-32 per kg. This price is near to cost price for many sugar mill. So, this advantage is not there for which I picked it.

Disc: I am not invested.