Valson Industries Ltd CMP 34

Discussion in 'Ask A Query About Your Stock Picks And Portfolio' started by Guru Vachaal, Jun 30, 2017.

?

Did you like Valson at first sight ?

Poll closed Oct 28, 2017.
  1. Yes

    2 vote(s)
    40.0%
  2. No

    3 vote(s)
    60.0%
  3. Confused

    0 vote(s)
    0.0%
Multiple votes are allowed.
  1. Guru Vachaal

    Guru Vachaal Let's discuss the fundamentals..

    Joined:
    Apr 3, 2015
    Messages:
    304
    Likes Received:
    198
    Valson Industries Ltd (Listed in BSE only)

    Annual Sales 102 crores

    Market Cap 26 crores
    PE 11
    Reserves 19 crores
    Book Value 38
    Current Price 34
    OPM 6% approx
    Dividend Payout - Rs 1 per share



    About Company
    :- The company has established its brand name "VALSON" in polyester texturised yarn since 1983. Today they are one of the leading manufacturers of Polyester Texturised & Twisted Yarn and Processors of Cotton, Polyester and other Fancy yarns in India with Customers having diverse uses its end-users comprise players from the shirting, suiting's, label, upholstery, hosiery, furnishings, automative and ready-made garments industries etc. Quality Products and Services has been their top most priority and after continuous research, they have ventured into the dyeing of various qualities of yarns. They have more than 65000 shades in their data bank. The Company is into manufacturing and exporter of Polyester Dyed Yarn and processors of Cotton and other fancy yarn. It has activities like Texturising, Twisting, Coning and Dyeing Plants to produce Quality Polyester Texturised Twisted Yarn and other fancy yarn. The Manufacturing process is as under: The basic raw material used for texturising is Partially Oriented Yarn popularly known as POY. It is fragile, weak, delicate and easily breakable. POY does not have any purposeful use as it lacks the stability, strength, and therefore it cannot be directly used for weaving or knitting. The term texturising means the production of a permanent crimp in the initially straight fiber or filament yarn. It increases the bulk and improves the elasticity of yarn. This activity fully draws POY yarn to comply with the market requirement and therefore it is different commercial commodity. The POY after the texturising process is known as "Weft Yarn". The twisted crimp yarn is hard, strong and not easily breakable. It gives the yarn a feel of natural like cotton or wool. The "Weft Yarn" is further twisted for the purpose of imparting the required strength, which is necessary to withstand the high speed run on looms for the purpose of weaving. The twisted yarn is known in commercial parlance as "Warp Yarn". The Texturised and twisted yarn is properly washed and thereafter is dyed under quality parameters to get Colour Strength, Tone, Dispersion and Sublimation fastness. The Dyed Yarn is wound around standard size cones before they are packed for dispatch. The Company has established its brand as reputed manufacturer of quality, polyester dyed yarn and processors of cotton and other fancy yarn. It has been supplying its products through the network of agents in market. There are about 10 to 15 major agents spread over in Maharashtra, Delhi, Punjab, Northern and Southern India.

    The Company is exploring new avenues to increase the export base and has chalked out strategic growth plan for the potential market in Middle East, U K, Egypt, Mexico and other European markets. They are getting incentives like duty drawback for export of their goods and have covered their products under Focus Scheme declared by Ministry of Commerce as an additional incentive to increase the export and capture global market.

    Business Operations: The company is one of the leading manufacturers of Polyester Texturised Dyed Yarn and Processors of Cotton and other Fancy yarns with Customers having diverse uses. Quality Products and Services has been the top most priority and after continuous research and efforts, the company has ventured into the dyeing of various qualities of yarns. The Company today has wide range of Polyester Dyed Yarn with a strong market acceptance and niche position for exclusive shades and grades. After the continuous efforts and research this year the company has focus on producing and marketing it's value added products i.e. dyed yarns compare to white yarn and it has also focus on denier wise costing / profitability which will result into the best product mix to sell season wise so that the company always gets the better profitability. The company has done the consolidation and shifted its all plant and machinery to Silli units from the small units situated at D & NH which result into the saving on manpower cost, power cost, administration cost and other miscellaneous cost

    Opportunities: The biggest growth opportunity for the textile industry arises from the changed global scenario of quota free business environment. Valson Industries Limited has already grabbed the opportunity and is rapidly growing in the huge domestic and export market. India's strong performance and growth in the textiles sector is aided by several key advantages that the country enjoys, in terms of easy availability of labour and material, large market demand, presence of supporting industries and supporting policy initiatives from the government.

    Threats: Along with the opportunity that the quota free regime offers, there lies the threat of stiff global competition which indirectly would result in price pressure. Indian textile exporters are facing stiff competition and they lack policy and labour law reforms. But the Company through its quality production competes well with other players in this sector.

    Salary and Age of Key Managerial personnel
    Mr. Kunal Mutreja CEO 12 Lacs (son of Suresh Mutreja CEO)
    Mr Suresh Mutreja MD 32 Lacs (father of Varun (CFO) Age - 60 years old (B.Com)
    Mr Varun Mutreja CFO 12 Lacs (son of Mr. Suresh Mutreja) Age - 34 years old (MBA finance / Export/ Finance/ Marketing)

    Dividend Company has been maintaining a healthy dividend payout of 28.22%

    Other Info The company is making every effort to reduce cost and increase the overall efficiency, which will result increase in overall profitability of the Company. The company is expecting growth in the measurable terms turnover and profit due to expansion of production capacities and expecting to do good Export turnover in future (page number 9 of annual report)

    There have been reduction in Depreciation and some growth in Net Profit before tax

    { I believe it makes sense to have some exposure in this stock }

    I am not a SEBI registered analyst and own this stock.

    So what is your opinion about this company ?
     
    Last edited: Jun 30, 2017
  2. Manmohan Gupta

    Manmohan Gupta Member

    Joined:
    Nov 13, 2016
    Messages:
    48
    Likes Received:
    11
    Bought 1000 shs at 33.5 today

    Hope it will follow the trend set by Guruji's previous picks. :)
     
  3. Guru Vachaal

    Guru Vachaal Let's discuss the fundamentals..

    Joined:
    Apr 3, 2015
    Messages:
    304
    Likes Received:
    198
    Thanks for your trust but i dont set the trend.

    I just buy the stocks where i see value regardless of its market cap.

    Once the stock is idenfified by any popular investor or media, it catches fire.

    Good volumes were seen today in valson. I may increase my holding if it comes down.

    Good thing is it does not seem to be a company run by greedy promoters as they distribute cash dividends also.
     
    Manmohan Gupta likes this.
  4. Guru Vachaal

    Guru Vachaal Let's discuss the fundamentals..

    Joined:
    Apr 3, 2015
    Messages:
    304
    Likes Received:
    198
    I also noticed that promoter has raised the stake by almost 65% since year 2006.

    People usually have doubts on such tiny companies as they are not well known but "thodi bahot baazigari is alright" :D:eek:

    Warning :- I don't recommend anyone to invest much in this stock but its certainly an interesting pick to me.

    Any opinion sir ? @RAMA MURTHY SASTRY CHALLA @w4wealth @Farhan Ghumra @Warren Buffet Jr.
     
    Manmohan Gupta likes this.
  5. RAMA MURTHY SASTRY CHALLA

    RAMA MURTHY SASTRY CHALLA Well-Known Member

    Joined:
    Sep 8, 2015
    Messages:
    3,638
    Likes Received:
    1,953
    Valson Industries is a good stock ....

    but my choice in textile " Vardhman Acrylics Ltd"
    it is a Debt free company also
     
    Guru Vachaal likes this.
  6. Guru Vachaal

    Guru Vachaal Let's discuss the fundamentals..

    Joined:
    Apr 3, 2015
    Messages:
    304
    Likes Received:
    198
    Manmohan Gupta likes this.
  7. Guru Vachaal

    Guru Vachaal Let's discuss the fundamentals..

    Joined:
    Apr 3, 2015
    Messages:
    304
    Likes Received:
    198
    VAL is a nice stock that I bought when it was 22. Sold at 42 because of topline growth issues.
     
  8. Guru Vachaal

    Guru Vachaal Let's discuss the fundamentals..

    Joined:
    Apr 3, 2015
    Messages:
    304
    Likes Received:
    198
    Just had a conversation with company's CFO and came to know that they have capex plans and are expecting double turnover after commencement of Amaravati Project (Spinning and Dyeing). They were just waiting for the GST implementation and effect of same in Textile Industry.

    The Company is optimistic to achieve the targeted sales i.e. more than 100 crores, the only constraint the effect of GST in textile market for the current quarter i.e. July to September 2017. Apart from the growth in top lines company is doing constant efforts to keep growth in bottom lines also.

    Net sales for the year 2015-2016 were Rs. 9162.69 Lacs as compared to Rs. 10627.19 Lacs in 2014-15. The net sales have come down mainly due to the drastic reduction in raw-materials price by almost 20 to 25% and also due to loss of production around 5 to 7% had occured due to consolidation i.e. transfers of its machinery from obsolete units to existing unit which took almost 2 months. The same has been recovered in the year 2017-2018.
     
    Manmohan Gupta likes this.
Loading...