Why should you invest in textile?
Personal Protective Equipment (PPE’s)
Textile industry in India has shown a high flexibility by changing over from their core sector to the now booming sector of Personal Protective Equipment’s (PPE). As India recovers from the economic impact of lock-down and as the clothing retail business opens up, there will be two major sources of income for the Textile sector one would be the core business and other of PPE’s.
Due to the Textile business being a seasonal business, there is a good chance of influx of sales in textile industries as the fashion industry would drive sales in the Textile sector. Also, there would be a boost in the sector during different seasons and festivals in India.
Now would be a good chance to enter in the textile industry as with the PPEs being the center of focus from protecting the front-line workers from Covid-19. India has also become second largest manufacturer of PPE’s in the Projected international market for PPE’s is worth $79 billion by 2025 and with the current rate of new pandemics its demand will be ever increasing.
There is a good probability that textile sector will be making sales in the PPE which contributes to 60 billon dollar market.
Alok Industries has been in focus after recent acquisition by (RIL) and currently it taking advantage of the supply chain infrastructure and goodwill that (RIL) has may become advantageous for the underdog in the coming time.
What are our picks?
Grasim (Large market cap and good financials)
|CMP-601.95||CMP/Sales- 0.51||P/E Ratio-8.56||Market Cap-39596.53||Valuation -Over Valued||Our Reco-Hold|
Raymond (Well balanced performance in long term)
|CMP-290.65||CMP/Sales- 0.28||P/E Ratio-5.82||Market Cap-1934.97 cr||Valuation -Neutral||Our Reco-Buy|
|Strengths – Strong cash flow positive financials, MFs have increased investments.||Weakness- Declining ROE, Decline in net profit.|
|Opportunity- Low PE, Backed by goodwill of Aditya Birla.||Threat- Decreasing profit in last few quarters.|
|Strengths – High profit margin and Strong financial strength,Low PE.||Weakness- Weak performance in last 5 years|
|Opportunity- Healthy dividend payout||Threat- Decreasing stock C.A.G.R in last 3 years.|
|Strengths–Increased promotor holdings||Weakness – Decreasing net profit, decreasing cash flow – Decreasing net profit, decreasing cash flow|
|Opportunity- High dividend opportunity.||Threat- Low operating profit, Decreasing cash flow.|
|Strengths -High financial strength, low debt||Weakness – Decreasing ROE|
|Opportunity-low debt||Threat-decreasing net profit.|
PPEs may create a new sea of buying opportunities in the overall PPEs sector.
Has given international attention to Indian Textile sector and this may lead to getting more international investments in the sector.
Trident and Alok Industries are already working on PPEs.
As the world recovers there will be a increased demands for PPEs as a precautionary measure in various places which will mean more international contracts for the companies which have already moved towards manufacture of PPEs. Hence Alok industries and Trident would be a good bet.