Ashish Kacholia’s aggressive buying action on two successive days of Welspun Syntex (and probably Nandan Denim) shows that we can no longer take the textile sector for granted. Kacholia’s aggression has been matched by other ace stock pickers like Dolly Khanna, Prof. Sanjay Bakshi, Anil Kumar Goel, Porinju Veliyath, Kenneth Andrade etc.
The consensus bullishness of all the wizards suggests that the boom time for textile stocks is here to stay for some time.
Daljeet Kohli unceremoniously recommended a buy of KPR Mills on 1st October 2014 when the stock was languishing at Rs. 312. He repeated his recommendation on 5th December 2014 when the stock touched Rs. 370. His logic was quite simple, namely, that the entire textile industry is posed for growth owing to a number of factors and that KPR Mills, with an EPS CAGR of 30.5%, was/is well poised to take advantage of that growth.
KPR Mills touched a high of Rs. 874 on 30th July 2015. It is presently resting at Rs. 770. There are gains of 107% on the table since Daljeet’s second recommendation.
Daljeet has now issued a Q1FY16 result update in which he claims that the “financial and operating leverage” for KPR Mills will continue and that the stock is still a buy for a target price of Rs. 822.
If you are inclined to look at textile stocks, you must also evaluate Nandan Denim and RSWM in which Dolly Khanna has a major stake.
Nandan Denim has also been flying like a rocket. In just the preceding four months (08.04.2015) since my report on her purchase, the stock is up an incredible 100%.
RSWM requires to be evaluated because it hasn’t flown as much as its peers. Also, the stock is at a P/E of 7.72 and offers a dividend yield of 3.56%. So, there appears to be some valuation comfort here. However, it reported so-so results for Q1FY16 and so may be a bit soft till the bullishness revives.