Bombay Rayon stock looks good: Prabhudas Lilladher
Sanjeev Patni, president and head, Institutional Equities, Prabhudas Lilladher, in a chat with ET Now talks about Bombay Rayon.
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| Sanjeev Patni, president and head, Institutional Equities, Prabhudas Lilladher, in a chat with ET Now talks about Bombay Rayon.
What’s making you excited about Bombay Rayon at the moment?
Well just as the other stocks this stock is also a very high growth. They have expanded capacities in the last three years by almost five times and they have got high profile client base with them. Most of the major global companies actually buy garments shirts from them and they are fully integrated. They have fabric capacity - that also they have expanded.
So all of the capacity expansions are now over and over the next three years they are going to be growing their sales at a phenomenal pace and we are expecting the earnings to rise almost 50% per annum for the next three years and no new dilution or capacity or no new capital raise. So the stock from this juncture looks very good to us.
How do you see their capacity utilisation and do you think they will get the full capacity utilisation in the next 6 to 12 months?
Well whenever you expand capacity at such a aggressive pace, it really takes time for the capacities to fill up. But the good thing is that they have already created capacities. We expect the capacity utilisaiton, which is about 40%-45% right now, to grow to almost 65% to 70% by FY12 and that is what is actually driving the earnings for them. The shirting capacity they will be utilising more of their fabric for shirting and that will increase their margins as well.
What’s making you excited about Bombay Rayon at the moment?
Well just as the other stocks this stock is also a very high growth. They have expanded capacities in the last three years by almost five times and they have got high profile client base with them. Most of the major global companies actually buy garments shirts from them and they are fully integrated. They have fabric capacity - that also they have expanded.
So all of the capacity expansions are now over and over the next three years they are going to be growing their sales at a phenomenal pace and we are expecting the earnings to rise almost 50% per annum for the next three years and no new dilution or capacity or no new capital raise. So the stock from this juncture looks very good to us.
How do you see their capacity utilisation and do you think they will get the full capacity utilisation in the next 6 to 12 months?
Well whenever you expand capacity at such a aggressive pace, it really takes time for the capacities to fill up. But the good thing is that they have already created capacities. We expect the capacity utilisaiton, which is about 40%-45% right now, to grow to almost 65% to 70% by FY12 and that is what is actually driving the earnings for them. The shirting capacity they will be utilising more of their fabric for shirting and that will increase their margins as well.
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