You are on page 1of 22

Stock Idea

Presentation on

Indo Count
Industries Ltd.
By: Kalpesh Gothi

Revenue Break-Up (FY14 &

Revenue Mix (Rs. in Cr., % Contribution to total revenue)

Spinning Division
Total Capacity 80,016*
Cotton Yarn Production is
14,000 tn
Internal Usage is 15-25%

* Of which listed subsidiary Pranavaditya Spinning has 20,496


Home Textile Division

Current Capacity 45 mln
Expanded Capacity 68*
mln meters
Output leads to 17 mln
meters of bed sheets
100% exports

* Expanded capacity to be operational in Q4FY15

Consumer Durable Division

- Discontinued
Assembly for large MNC`s LG, Samsung etc.
Started to earn VAT refund
Discontinued from Q2FY15

Home Textile Segment - Key

growth driver:

Manufacturer of Bed Sheet, Pillow Cases, Duvet Covers, Bed Skirts,

Comforters, Quilts, Fashion Bedding, Utility Bedding and Institutional

Currently, 70% of the Home textile exporting to USA

Emerged as one of the leading player in the Home Textile Segment

3rd largest manufacturer exporter of bed sheets from India
4th largest supplier of Bed Sheets into USA
14th Largest Home textile supplier to USA from across the globe

Global Presence -United States, Canada, Brazil, France, Germany,

Austria, Spain, UAE

Expanding Presence in United Kingdom, Japan, Australia and Russia

India - Advantage
Chinas Challenges
Importer of cotton

Losing export Competitiveness

Wage inflation

Rising power costs

Stricter environmental

Shift to higher value-added


Focus on domestic consumption

Yuan appreciation

Indias Advantage
Second largest producer of

Competitive Cost structure

Rising government focus and

favourable policies

FTA with ASEAN countries

Proposed FTA with EU

Rupee depreciation

Textile sector imports by


Made-ups- an article manufactured and/or stitched from any type of cloth,

other than a garment

Growth in Made Ups Imports

to USA

Home Textile Business in USA

95% of its
HT Business

50% of

Shifting Product Portfolio

Existing Bed Linen

Institutional Bedding
Hotels - Hospitals - Others

Fashion Bedding
Wide range of products

Utility or Basic Bedding

Bed & Pillows filled with poly fill fibre

Cotton Bed Sheets exports

to USA
Indias share increased by 20
percentage points in 5 years

Expanding Capacity

New Product Leading to growth

in Margin
Home textile revenue mix

Home Textiles EBIDTA & Margin


Company to come out of CDR in


After the company went into CDR in Aug 2008 on the back of
demand slowdown and derivative loss to the tune of ~Rs.80 cr, it
has been making sustained and continuous efforts to get out of
the CDR.

In this process the promoters infused funds and followed proper

corporate practices to come out of the CDR in the quickest
possible time.

At the same time the company has been focusing on its core
competencies and growing the business in leaps and bounds
through new product development, new client acquisition and
geographical expansion.

Once out of the CDR, ICIL will be able to witness better growth
prospects along with ease of working environment.

Peer Comparison:

Fig: Revenue Trend

EBIDTA and Margin

PAT and Margin

Fig: ROANW Trend


Turnover Ratios

Fig: D/E Trend

Cash flow from Operation


Increased share of home textiles to overall revenue and forayed into

value added product will lead to margin expansion.

Higher EBITDA margins on account of change in revenue mix and a

decline in interest expenses on gradual debt reduction will significantly
expand ROACE going further.

At the expected EPS of Rs.44.4 for FY16E and Rs.57.2 for FY17E, the
stock to trades at attractive valuations with a P/E(X) of 8.97 and 6.95
for FY16E and FY17E, respectively.

We assign a PE multiple of 10x on FY17E and arrive at a value of

Rs.572 per share. We maintained BUY rating on Indo Count
Ind. Ltd. with a target price of Rs.572, an upside of 44%.

Risks and Concerns

Significant exposure to United States

Volatility in raw material prices

Currency fluctuation risk

Slowdown in developed world markets

Thank You

Disclaimer: This Document has been prepared by Wallfort Research (Wallfort Financial Services
LTD).The information, analysis and estimates contained herein are based on Wallfort Research
assessment and have been obtained from sources believed to be reliable. This document is meant for
the use of the intended recipient only. This document, at best, represents Wallfort Research opinion
and is meant for general information only. Wallfort Research desk, its directors, officers or employees
shall not in anyway be responsible for the contents stated herein. Wallfort Research expressly
disclaims any and all liabilities that may arise from information, errors or omissions in this connection.
This document is not to be considered as an offer to sell or a solicitation to buy any securities. Wallfort
Research, its affiliates and their employees may from time to time hold positions in securities referred
to herein. Wallfort Research or its affiliates may from time to time solicit from or perform investment
banking or other services for any company mentioned in this document.