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India Equity Research Reports, IPO and Stock News
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Siyaram Silk Mills (SSML) has built a strong brand presence in the country through
continuous advertisement and brand-building efforts over the past 30 years.
(SSML spends 3-5% of its net sales on advertising). The company has created a
niche for itself in a highly competitive industry. The company enjoys a strong brand
presence across the country, with brands such as Siyaram, Mistair, J Hampstead
and Oxemberg in its kitty.
The company is expanding the capacity of its fabric division by over 50% (adding
286 looms) in a phased manner over FY2011-13. The company will also add 400
stitching machines to its ready-made garments (RMG) division by 2QFY2012, which
will result in 23% volume growth by FY2012E.
The RMG and yarn divisions have been reporting improved utilization rates on the
back of strong growth. The yarn division, which achieved ~57% utilization in
FY2011, is expected to further improve to 80% by FY2012E. The RMG division also
achieved optimum utilization in FY2011. Higher utilization will further aid revenue
growth and will help the company to maintain its margins going forward.
Currently, the stock is attractively placed at 4.0x FY2013E earnings, compared to its
historical median of 6x one-year forward EPS. We maintain our Buy recommendation
on the stock with a target price of `426, valuing the stock at 6x FY2013E earnings.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Siyaram Silk Mills (SSML) has built a strong brand presence in the country through
continuous advertisement and brand-building efforts over the past 30 years.
(SSML spends 3-5% of its net sales on advertising). The company has created a
niche for itself in a highly competitive industry. The company enjoys a strong brand
presence across the country, with brands such as Siyaram, Mistair, J Hampstead
and Oxemberg in its kitty.
The company is expanding the capacity of its fabric division by over 50% (adding
286 looms) in a phased manner over FY2011-13. The company will also add 400
stitching machines to its ready-made garments (RMG) division by 2QFY2012, which
will result in 23% volume growth by FY2012E.
The RMG and yarn divisions have been reporting improved utilization rates on the
back of strong growth. The yarn division, which achieved ~57% utilization in
FY2011, is expected to further improve to 80% by FY2012E. The RMG division also
achieved optimum utilization in FY2011. Higher utilization will further aid revenue
growth and will help the company to maintain its margins going forward.
Currently, the stock is attractively placed at 4.0x FY2013E earnings, compared to its
historical median of 6x one-year forward EPS. We maintain our Buy recommendation
on the stock with a target price of `426, valuing the stock at 6x FY2013E earnings.
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