Textile industry is currently in focus on the back of rising export as the ‘Unlock theme’ gains steam. P Sundararajan, CMD, SP Apparels joins ET NOW to help us understand the unlock trade, overview of the textile industry and what are the key triggers for the stock to rally.
The company is a leading manufacturers and exporters of knitted garments for infants and children in India. It exports to big stores in UK, Europe and USA and has significant presence.
Currently, the market situation is favorable and the company is getting various opportunities to grow its business. The company expects to add 2 more big retailers in UK and USA; business expected to commence Q3FY22 onwards. Looking at the current order book size company is planning to increase its operating capacity to meet its demand momentum.
The company is currently working towards adding 2 shifts operations at few of its manufacturing plants by Diwali to meet its increased demand. Order Inflow demands for increasing the existing operating capacity says P Sundararajan.
SP Apparels is current working at an operating capacity of 60-75% and its aiming to reach 85-90% capacity post capacity increase. Management is confident to that this move will clock in a growth of about 15%.
Likely to generate revenue of 1100cr, PAT ~150 cr FY23E and ROCE of 20%+. He believes company has the potential to grow further at 15-20% beyond FY22E.
The company is taking conscious effort to reduce its debt levels over the past several years. “We are working towards becoming zero net debt company in the next two years” says P Sundararajan.
