The textiles sector is in trend these days. Once the textile companies were not favourites even at P/E below 10 and now the sector has caught attention. Don’t know how long the frenzy goes.
Regarding Ambika , though a great management but a lot of cash is stucked into inventory. The margins were once around 20%+ 4 quarters back but have been below 15% in last 4 quarters. Do not know what gains they got for holding the inventories.
There are reports of early Cotton Crops in South. The sowing area is also increased vis a vis last year. A good Monsoon is seem to be on the table. Cotton prices may cool off. Lets see how Ambika dilutes it’s inventories and reaches back to 20+ Operating Margins. The sector seems to be Street’s favourite right now. Let’s see for how long.
Farmers start sowing early cotton varieties in Indore div - Cotton: Farmers start sowing early cotton varieties in Indore div | Indore News - Times of India
Cotton sowing begins in South India as monsoon advances Cotton sowing begins in South India as monsoon advances - The Hindu BusinessLine
Disc: No Investments in Any textile Stocks. Watching the space and learning.
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