Indo Count Industries Ltd (ICIL) was incorporated in 1990. It has two main business division’s textiles and electronics. In 1990’s company only manufactured cotton yarn. In 2004, ICIL diversified into electronics business, where the company undertakes contract manufacturing (assembling) for large number of electronic brands like LG, Onida, BPL, etc. In 2007, the company expanded its textiles business by venturing into home textiles.It exports textile products to US and European markets.
KEY HIGHLIGHTS
Company under Corporate Debt Restructuring scheme ICIL incurred huge losses on forex derivatives over the years during 2007 to 2010 causing significant erosion of its net worth. This led the company into Corporate Debt Restructuring scheme. ICIL revalued its assets to the tune of Rs 1,509 million and Rs 212 million in 2008-09 and 2009-10 respectively, as one of the requirements under CDR scheme. Although it continued to make losses at the net level, the quantum of losses reduced as interest costs fell in 2009-10 due to restructuring of debt Integrated across the textile chain ICIL, initially present only into cotton yarn business, forward integrated into fabric and textile business in March 2007, wherein it is involved into manufacturing of knitted/woven fabric, and exporting of the same. An established client base, sourcing from captive yarn production and an increase in outsourcing from international players has boosted the company’s revenues.And we are on the right track in 2013 as rupee continue to depreciate which helped company to earn better margin in export oriented business.
In the FY13 company has posted 7 rs revenue. However, as export business continues to do well, company posted EPS of 17 rs in half year of FY14. Looking at the revenue to be remain in the same range in coming quarter, company is significantly undervalued.
TARGETS
As we are seeing lots of improving in the balance sheet, we can safely assume the targets of 105 and for risk takers can easily hold the stock for the target of 120+. Hence, we recommend a buy at the CMP of 87 Rs.
KEY HIGHLIGHTS
Company under Corporate Debt Restructuring scheme ICIL incurred huge losses on forex derivatives over the years during 2007 to 2010 causing significant erosion of its net worth. This led the company into Corporate Debt Restructuring scheme. ICIL revalued its assets to the tune of Rs 1,509 million and Rs 212 million in 2008-09 and 2009-10 respectively, as one of the requirements under CDR scheme. Although it continued to make losses at the net level, the quantum of losses reduced as interest costs fell in 2009-10 due to restructuring of debt Integrated across the textile chain ICIL, initially present only into cotton yarn business, forward integrated into fabric and textile business in March 2007, wherein it is involved into manufacturing of knitted/woven fabric, and exporting of the same. An established client base, sourcing from captive yarn production and an increase in outsourcing from international players has boosted the company’s revenues.And we are on the right track in 2013 as rupee continue to depreciate which helped company to earn better margin in export oriented business.
In the FY13 company has posted 7 rs revenue. However, as export business continues to do well, company posted EPS of 17 rs in half year of FY14. Looking at the revenue to be remain in the same range in coming quarter, company is significantly undervalued.
TARGETS
As we are seeing lots of improving in the balance sheet, we can safely assume the targets of 105 and for risk takers can easily hold the stock for the target of 120+. Hence, we recommend a buy at the CMP of 87 Rs.
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