While many may have missed this one but over the past 36 months, textile stocks in India have generated tremendous returns despite inconsistency in their financial performance and stretched balance sheets. The sector has gained investor’s attention after the government approved Rs. 6,000 Cr. special package for the textiles and apparel sector to create 1 Cr. new jobs, attract about U.S. $11 billion investment and generate U.S. $30 billion export revenue in three years (Union Budget 2017-18).
Top 20 Textile Stocks by Market Capitalization
|Company||Price as on 12 April 2017||P/E||Market Cap
(In Rs. Cr.)
|Rupa and Comp||340.5||36.97||2,707.81|
High Valuations – In the past about 24 months, valuations of textile companies have increased significantly. Many leading companies, such as Page Industries, Arvind, Kitex Garments, Indo Count Industries, Welspun India, Trident, Raymond, Himatsingka Seide, Donear Industries, Siyaram Silk Mills are trading at high valuations.
There are many stocks in this space whose financial fundamentals are quite disappointing but still they have doubled investor’s wealth in the last one year. Soma Textiles, for example has reported a loss in FY 2016 but the stock price is up 138.39 % in the last one year. Such is the power of what I often call ’flavor of the month’ sectors.
20 textile stocks that have doubled investor wealth over the past 12 months
|Company||1 Year Return
Textile Stocks that of interest – Across Various Market Caps
 Nandan Denim
Nandan Denim is the fifth largest denim fabric manufacturing company in the world and the second largest manufacturer in India. The denim segment has been growing at a CAGR of 18% in the past 10 years. To capture the growing demand in the denim space, the Company is continuously increasing its manufacturing capacity from 6 Million Metric Per Annum (MMPA) in FY 2004 to 71 MMPA in FY 2014 and is planning to increase the capacity to 110 MMPA in FY 2018.
Over the last 5 years (i.e. 2011-12 to 2015-16) Nandan Denim has shown consistent growth. It’s net revenue from operations over this period grew at an impressive CAGR of 15.05 % and the Company has delivered stable operating profit margin of 17%. On the valuation front, Nandan Denim is trading at price-to-earnings multiple of 9.87 times.
RSWM is one of the largest textile manufacturers of yarns like synthetic, blended, mélange, cotton suitable for suitings, shirtings, hosiery, carpet, denim, technical textiles and industrial applications. The Company operates with 11 manufacturing facilities and has its presence in 78 countries. Over the last 5 years (i.e. 2011-12 to 2015-16) RSWM has shown consistent growth. It’s net revenue from operations and EBITDA over this period grew at an impressive CAGR of 8.20 % and 21.15% respectively. The Company has delivered stable operating profit margin of 14.22%. On the valuation front, RSWM is trading at price-to-earnings multiple of 9.68 times.
 Vardhman Textiles
Vardhman Textiles has its presence across the value chain – from the manufacture of fibres and yarns to sewing threads and fabrics. The Company operates through 22 manufacturing facilities and enjoys global alliances with leading textile companies such as American & Efird Global LLC (USA). The Company’s yarn business is its largest revenue generator – accounting for nearly 60% of its top line.
The Company is planning to invest Rs. 1000 Cr. over the next three years for expansion in a fabric printing line and yarn dyed fabric capacity.
Over the last 5 years (i.e. 2011-12 to 2015-16) Vardhman Textiles has shown consistent growth. It’s net revenue from operations and EBITDA over this period grew at an impressive CAGR of 10 % and 24.12% respectively. The Company has delivered stable operating profit margin of 23.51%. On the valuation front, Vardhman Textiles is trading at price-to-earnings multiple of 7.72 times.
 Welspun India
Welspun India is one of world’s largest home textile manufacturers. Its product portfolio comprises of towels, bath robes, bath rugs/mats, area rugs, carpets, bed sheets, utility bedding and fashion bedding. The Company’s products are exported to over 50 countries and are sold by 18 out of the top 30 global retailers such as Walmart, J C Penny and Macy’s. Welspun India is increasing its presence in markets such as Europe, India, Japan, the Middle East, Australia, Russia and South Africa.
Over the last 5 years (i.e. 2011-12 to 2015-16) Welspun India has shown consistent growth. It’s net revenue from operations and EBITDA over this period grew at an impressive CAGR of 18 % and 37% respectively. The Company has delivered stable operating profit margin of 14.22%. On the valuation front, Welspun India is trading at price-to-earnings multiple of 29.17 times.
 Sutlej Textiles and Industries
Sutlej Textiles manufacture value added synthetic, natural and blended yarns, all types of spun yarns, processing of fabrics and home textile furnishing. Over the years, the Company has invested in capacity addition, enhancing aggregate capacity from 1, 55,456 MMTA in 2005 to 3, 77,688 MMTA in 2016.
Over the last 5 years (i.e. 2011-12 to 2015-16) Sutlej Textiles has shown consistent growth. It’s net revenue from operations and EBITDA over this period grew at an impressive CAGR of 8.12 % and 11.79% respectively. The Company has delivered stable operating profit margin of 14.22%. On the valuation front, Sutlej Textiles is trading at price-to-earnings multiple of 8.17 times.
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