Amarjothi spinning mill colour melange yarn waiting to be rerated

Amarjothi spinning mill ltd is Tirupur based speciality yarn manufacturers promoted by Mr.rajan very good reputed person in Tirupur it started in 1992 and been consistently growing. There speciality is in supply of colour melange yarn and special purpose dyed yarn like anti bacterial fire retardant and oil and water repellent and in blended segment they have huge options which even includes bamboo soya model and various blend combination.
They are basically serving to large garment manufacturers and hosiery manufacturers in Tirupur area with organic certification as per Oeko-Tex standard they are able to even increase there export market in fy 14 export stood around 27 cr around 13% of the revenue and they have very good brand name among the local hosiery and garment manufacturers in Tirupur
Fy 15 Rev around 200 cr EBITA of 44 cr and net profit of 14 cr and debt is around 85 cr half of it taken from the promoters they have shown consistent OPM OF greater than 20% the fy 14 npm 9% and fy 15 6.5% there capex of installing the imported machinery is completed in fy 14 and fy 15 which will be seen in improving revenue in fy 16 they are paying dividend regulary and avg ROE above 22% and ROCE above 28% available at around 5 PE
Compared to others in this sector this seems undervalued with the niche area in value added colour blended yarn they will be able maintain a good NPM
Also in the share holding pattern we can see Mr Anil Kumar Goel holding around 4.2% increased from 2.5% to 4.2% in fy 15 this information is posted only for awareness and not to be considered as any sort of recommendations from Mr.anil Kumar Goel.
Also off late there is huge increase in volume of shares with high delivery volume as regards the valuation part please post your suggestion
Disclosure. Iam invested a tracking qty.

 

yes the volumes are building up and huge accumalation is going on also they have very good reputation in tirupur even they reduced the debt this year installed imported machinery in there dying unit only manufacturer in speciality yarn sector they even supply blended yarn of bamboo modal varities expect a very good qtr results

 

first of the all the tail winds are in favour of textile sector and this company has consistent in maintaining operating profit margin and cash flow from operations
secondly if you read the annual report the 53 cr loan was taken from the promoters and not from the bank even that was used for the installing dye machine fong in the 12 acre campus in perundurai which is very modern coloring plant
there speciality is in blended yarn pre coloured which is mainly preferred by garment manufactures and inner garment manufactures
also the 5 yr cagr growth in revenue is 22% and profit growth 40%
the average return on equity 5 yr 22% and growth in return on equity on 5 yr is 21% the roce avg 16% This year they have reduced the long term debt and they have very good interest coverage ratio also note the last three year cash flow from fy 12 to fy 14 is 125 cr and fy 14 is 30 cr promoters has not pledged any shares and paying diviedend regularly with opm and npm set to improve we can expect the market to rate it along with it peers

 

I really like this company. I had a first look at it when it was around 87 (a few weeks back). Due to the rally in the whole sector, it also spiked above 100. Still valuations look attractive. Decent company and management. Looks like a long term bet though. Currently investing to increase their capacity it seems.

 

With the competitor Sulochana not able to supply the multi modal glow variety of melange yarn Amarjothi melange is in huge demand in Tirupur and also the modernistation is fully completed in there mill with the help of Italian Mnc with 9monto result showing 15 cr profit this year end profit will be 20 cr and eps will be 30 and target price will be 300 also interesting to note is Anil kumar Goel Ayush mittal are also Golding this stock

 

huge accumulation seen in this counter more than 2 lac shares at 155 in last 2 weeks

 

It has undergone some correction recently. Is it a good buy at the CMP?