Prefer Siyaram Silk Mills in the textile space: Kunj Bansal, Centrum Wealth

In a chat with ET Now, Kunj Bansal, Centrum Wealth, shares his view on Siyaram Silk Mills.

ET Now: Do you like anything in textiles?

Kunj Bansal: Yes. Specifically, we have this relatively midcap company called Siyaram Silk Mills. It is a branded garments company, not necessarily export oriented so this will fall perhaps in the category of domestic economy-oriented companies because that is one sector which would not over a medium term get affected by this short term global volatility. So, this is a company which we feel now has come to very attractive valuations of almost six times forward PE and has margins in the range of around of 11-12 per cent. Double digit margin in a branded textile company is a challenge, I mean, generally, the companies would have an 8-9 per cent kind of margin range whereas, this company hass 11-12 per cent margin and with this correction the stock is available at PE of almost six forward PE.

The growth has been a challenge given the facts of the Indian economy so if we look at the last quarter number specifically June, there was not much growth in the company but then the expectation is that the growth will pick up over a period of time. If we look at last 10-year CAGR, my numbers might be little bit here or there but roughly company has grown its top line as well bottom line in the range of 15-18 per cent CAGR. So, that is why I do not want to look at those one or two specific quarters where it did not report growth and as I said that is a challenge but having said that in terms of valuation, in terms of historical numbers, margins, return ratios, it is quite a comfortable bet.