After a tepid debut, Lux finds comfort on day two

MUMBAI: Hosiery maker Lux Industries, which found no buyers on two regional bourses for almost two years, is seeing strong investor demand on the NSE. After a listless debut on the NSE on Monday, Lux shares on Tuesday rose 5% — the highest tradable limit for the day — as cheaper valuations compared to listed peers prompted value pickers to lap up the stock.

Lux shares, which opened at `3342.05 on Tuesday, closed at `3,509.15 with volumes of over 21,367 shares. Buy orders for about 1,736 shares were pending. Higher share from premium products, expansion in distribution and increasing exports will help the company enhance margins. This could attract investors to the stock.

The company, India’s largest exporter of innerwear with a market share of 20% in the organised hosiery segment, was listed on the Calcutta and Ahmedabad exchanges but they were hardly traded in the last couple of years.

Brokers said the absence of trades on these exchanges has resulted in the stock trading at a discount to peers on the main bourses. Promoters hold 75% in the company. Among peers, Maxwell Industries trades at P/E ratio of 62 times, Rupa & Co is at 33, while Page Industries trades at 67 times. Lux Industries trades at a P/E ratio of 39. Lux’s sales grew to `909 crore in FY15 against `871 crore in the previous year. PAT grew by 44.15% to `45.22 crore in 2014-15 from `31.37 crore in 2013-14. Over the last 5 years, sales have grown at a compounded rate of 21.97%, while PAT has grown by 59.29%. The company is setting up a manufacturing unit at Dankuni in West Bengal.