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RSWM LTD (Ascending triangle + Multiyear break out )

Textile Theme is on the way must hold

Textile sector can be broadly categorized into jute, sericulture, wool & woolen, man-made fiber & filament yarn industry. The Indian textiles industry contributes substantially to India�s exports earnings. The export basket consists of wide range of items containing cotton yarn and fabrics, man-made yarn and fabrics, wool and silk fabrics, made-ups and variety of garments. The major competitors for the Indian textile industry are China, Vietnam, and Bangladesh. USA is the single largest importer of textiles & clothing items. The rupee vis-�-vis dollar movement does have an impact on export of the textile industry. A 100% FDI is allowed in the textile sector under the automatic route. Textile Upgradation Fund scheme provides an option to the power loom units to avail of 20% Margin Money subsidy in lieu of 5% interest reimbursement on investment in TUF compatible machinery. Under the Scheme for Integrated Textiles Park (SITP), thirty nine (39) textile park projects have been approved so far

RSWM LTD CMP 330 as on 23/7/2015

Introduction
RSWM, incorporated in 1960 as Rajasthan Spinning & Weaving Mills, has business interests in areas of yarn, fabrics, garments and denim. It is one of the largest producers and exporters of polyester viscose blended yarn in the country. RSWM has built one of the most impressive textile manufacturing infrastructures in the country – 8 state-of-the-art manufacturing plants; 360.000 spindle machines; 176 looms: 100,000 MTA yarn capacity: 35.6 MMA fabric capacity, including denim fabric. The company is part of the LNJ Bhilwara Group. RSWM markets its products under the brand name Mayur Suitings for which it roped in Salman Khan as its brand ambassador.

RSWM possesses strengths and expertise to deliver Indias largest quantities of grey, dyed and melange yarn, while specializing in technical fabric. It is equipped with in-house fabric weaving and processing facilities, with an installed capacity of 12 million metres per annum. Modern technologies and world-class skills have enabled the company to produce the finest quality adhering to stringent international norms. The company has a state-of-the-art garment unit for global customers with a capacity to deliver 13,000 units daily. RSWN also operates 46 MW Captive Thermal Power Plant at Mordi

The company acquired 50% equity stake in SISA SA, Spain that has enhances its presence in higher value added international yarn market.

RSWM exports a complete range of yarn, fabric and garments to over 60 countries across Europe, South Africa, Australia, Korea, Belgium, Singapore, Italy, Egypt and the Gulf countries. With nearly 50% of RSWM’s production exported, the company has a significant presence in the world of textiles.

The compnay has also been recognised as a Golden Trading House by the Government of India, having won the prestigious SRTEPC Export Award for several consecutive years.

RSWM set up a 100% subsidiary under the name RSWM International BV Holland. The company also acquired a Bengaluru based textile unit – Cheslind Textile.

Awards and Recognition

RSWM was felicitated with the Rajiv Gandhi National Quality Award.
RSWM received the Niryat Shree award-Certificate of Excellence in the Textile and Textile Products (non-SSI) category for the year 2005-2006.
RSWM’s Rishabhdev unit bagged National Export Award. The unit also bagged SRTEPC Excellence award for highest production in export of 100% Polyester spun yarn.
RSWM won the 2007 Excellence Award for Financial Performance and Analysis by Rajasthan Chamber of Commerce and Industry, Jaipur.

Future Plans

RSWM expects to improve in all its existing businesses, especially due to reduction in the cost of energy with the thermal power plant. Equally, it expects its technologically modern and scaled-up operations to contribute more significantly to the company’s performance in the future
(taken from source**)

TECHNICAL HIGHLIGHTER

1.Ascending triangle break out on weekly chart .(bullish pattern )
2.Multi year Break out ( 1st top 1994, 2nd top 2007 ,3 rd at 2014)
3.Fits in to my system of multibagger (weakly closing above 50 day Exponential moving average )
4. Volume is with trend .

How to execute ??

1.Buy 20-25% of allocated amount at CMP 330 .
2. Next support zone is 233 so allocate 30-50% if it comes .

Target price

1.Minimum target price is 525 ( arrived from ascending triangle ).
2.Investor must also keep in mind that it has come out from multi year top , so it may be in its bull run at least for 10 year from 2015 . Deriving at accurate target is not healthy discussion , rather one may use 50 day EMA as trailing stop loss , so that Investor may take maximum advantage .

Financials

Industry PE: 18.04 | Industry Price to BV: 1.43

Stock P/E: 7.51
Market Cap: 750.99 Crores
Current Price: 330
Book Value: 213.44

Profit and Loss

  1. There is steady increase in Sales , Net profit and EPS

Balance Sheet

  1. Increase in reserve
  2. Decrease in unsecured loan

Cash flow

  1. Increase in cash from operation

(Financial taken from screener .in )

Disclosure :- I own this stock .

3 Likes

There are some good names invested in the company such as Dolly Khanna, Kenneth Andrade and Anil Kumar Goel. This has been a case of borrowed conviction for me. Also couldn’t ignore the textile sector theme.

Disclosure : I’m invested

According to FY15 financial results,

  • Current assets = 753cr and Current Liability = 830. Therefore company has working capital crunch.
  • Revenue FY14 = 2882 and FY15 = 3023. Growth = 4.8%.
  • Net Profit FY14 = 98cr and FY15 = 85. Growth = Negative 13%
  • Long term borrowings = 669cr and Short term borrowing = 447cr

Company can run into debt trap very fast. It is to be seen how well management could run this tight ship?

1 Like

@Gaurav_Agarwal, you mean FY15 expectation ??

I fell March 2015 qty results are ok not bad .
Need more insight

@Gaurav_Agarwal , and if ,what you mentioned is correct , then we may witness BULL trap on charts too. it will be below 230 level .
Lets see
Happy investing .

There has been an amalgamation (Cheslind Textiles from TN) which was supposed to happen 2 years back, but I think has just been completed after the approvals in previous quarter.

From BSE,
“RSWM Ltd has informed BSE that the Board of Directors of the Company at its meeting held on May 30, 2015, has allotted 1,36,65,435 Optionally Convertible Redeemable Preference Shares (OCRPS) to the Shareholders as on the Record Date i.e. May 22, 2015 of erstwhile Cheslind Textiles Limited (CTL) pursuant to the Scheme of Amalgamation of CTL with the Company. …”

How would this impact the story. Will the increase in Equity (in future, as now it is preference shares) dampen the ROE? At present the preferential dividends will reduce the profits?

Further, even though this is effective from May 15, the note to quarterly accounts say that the figures for year end March 31 already include the results of Chesind and hence not comparable. Could this be a reason for the dip in profitability?

I do agree about debt , interest is really a concern.

which charting software are you using? thanks.

sir i use falcon software

Any view on this guys, company hold nearly 10 lakh shares of heg value approx 430 CR

Should be used to repay debt

FY19Q1 results looks good

Turnaround on d cards

View invited by senior members @ayushmit

Any body tracking this stock?? any reason on recent stock movements