That Dolly Khanna a.k.a. Rajiv Khanna is a visionary stock-picker goes without saying. She not only knows what stocks to buy but also which stocks to sell/ avoid (e.g. Hawkins Cooker). She has made a massive fortune by mastering the technique of being in the right stock at the right time.
When Dolly realized that the textiles sector was on the verge of a cyclical turnaround and that the boom times were around the corner, she chose two textile stocks to fortify her portfolio. The first is Nandan Denim. The second is RSWM.
The reason Dolly chose two stocks is because of a brilliant strategy. While Nandan Denim is a high-growth high-risk sort of stock owing to its ambitious expansion plans and high debt, RSWM is a relatively safer stock owing to its high dividend yield (presently 3.52%). By giving both stocks pride of place in her portfolio, Dolly is seeking to manage a masterful balance between risk and safety.
Dolly has been richly rewarded for her trust in Nandan Denim. She bought 5,06,754 shares in the period between Jan to March 2015. Even if you look at it from 1st April 2015, the stock has given nearly a 100% return. Dolly’s take-home will obviously be higher.
It is no surprise that the other ace stock pickers are slowly waking up to the potential of Nandan Denim.
Sunidhi Securities wrote a glowing report about Nandan. This was followed by Daljeet Kohli & Jignesh Kampani of Nirmal Bang. The latest to be charmed by Nandan Denim is Jagannadham Thunuguntla, the articulate expert with Karvy Broking.
Jagannadham points out that Nandan already has a strong client base in the domestic market with players like Spyker, Mufti, Gini & Jony, Color Plus, Tirupati Denim and Vardhman Textiles and that it has developed relationship with a few international players. He points out that Nandan plans to carry out huge capacity expansion in denim fabric, spinning and shirting segments. The company has increased the denim capacity from 76 MMPA in FY14 to 99 MMPA in FY15; and plans to further increase its capacity to 110 MMPA, which is set to be operational by H2FY16E.
Jagannadham Thunuguntla has recommended a buy on the basis that:
“At CMP, the stock is trading at 4.7x and 4.0x FY16E & FY17E EV/EBITDA respectively. With capacity expansion, change in product mix & plans to diversify into multiple segments, we initiate a “BUY” recommendation with a target price of Rs. 158 per share, which represents an upside potential of 31%”.
If you are feeling inspired to load up on a textile stock, you have a wide choice. Ambika Cotton comes endorsed by Prof. Sanjay Bakshi and Kenneth Andrade. Welspun Syntex is the favourite of Ashish Kacholia. KPR Mills comes with the seal of approval of Daljeet Kohli and Anil Kumar Goel. Sutlej Textile Mills comes strongly recommended by Nirmal Bang. You can also consider RSWM which offers nice downside protection thanks to the high dividend yield. Yet another contender for your money is Gokaldas Exports, which has the backing of Porinju Veliyath.