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GINNI FILAMENTS LTD >>(BSE Code: 590025) (CMP: Rs.62.80) (FV: Rs.10) By Sachin Oak The markets are now awaiting the GST rollout event, which is surely capable of causing big disruptions. As a result, if good quality stocks fall, then it would be an excellent buying opportunity at discounted prices. One such stock is Ginni Filaments Ltd (GFL).  Background: GFL was incorporated on 28 July 1982 as a public limited company and promoted by J.K. Bhagat. With the objective of manufacturing cotton yarn, it set up a 100% export oriented unit (EOU) to manufacture cotton combed yarn of fine counts. The plant and machinery were procured from Lakshmi Machine Works Ltd, Coimbatore, Rieter Machine Works, Switzerland, Volkmann GmbH & Company and W. Schlathorst & Company, West Germany. In 1991, it enhanced its capacity by 10,224 spindles. GFL’s product lines are as follows: 1. GFL produces 100% cotton carded, combed and open end yarns at its two units at Kosi (U.P.) and Panoli (Gujarat). The plant and machinery was procured from world-renowned machinery manufacturers viz. Rieter, Schlafhorst. These two units have top of the line support system for quality monitoring. It has a combined capacity of 90,000 spindles and 720 rotors. It produces various types of yarns such as ring spun, open end, and speciality yarns like core spun, ring slub and Elli twist yarns. 2. GFL’s monthly capacity is 300 tonnes of processed knitted fabrics consisting of open-width and tubular width finishes. It produces single jersey, double jersey and flat knit fabrics. 3. GFL has an annual capacity of 10 million knitted basic and fashion garments at its two units in Noida. It has an in-house lab testing facility for all incoming fabric/ trims/ embellishments and the capability of value additions like machine sequin work, bead work, hand sequins work and hand embroidery. It also offers a blend of the above with various print techniques. 4. Its product range includes plain, aperture, embossed, colored, printed, impregnated and chemical treated spunlace roll goods. 5. It desings Ginni NEO filters for removing contaminants from water and other liquids. Due to its novel gradient design and high void volume, it has high filtration efficiency, extremely high dirt holding capacity as well as good retention capability of the contaminants along with low pressure drop. Particulars FY16 FY17 FY18E FY19E P/E (x) 129.9 47 37.4 30.3 P/BV (x) 59.7 25.3 18.1 13.4 EV/EBITDA (x) 67.9 29.1 24.7 20.3 RoCE (%) 46.5 40.3 42.1 44.4
VALUE PICK Financial performance:                                                                   (Rs. in Lakh)
Particulars Q4FY17 Q3FY17 Q4FY16 FY17 FY16 Total Income 20741 18581 19938 77247 75474 Total Expenses 19678 17765 19581 74067 74627 Exceptional Items - - -119 - -119 Finance Costs 500 641 623 2771 3505 Tax Expense 496 342 18 1385 287 Net Profit 568 474 221 1795 440 EPS (Rs.) 0.78 0.65 0.29 2.46 0.54 6.
GFL also  makes  disposable  wipes  with  non-woven  spunlace fabric,  which  is  treated  with  active agents  for  all  wiping solutions. Currently,  in  the  traditional  textiles  business,  GFL  exports  to  elite  global  consumers  such  as  Disney  and  Benneton.  In  the non-woven  segments,  it  supplies  products  like wet  wipes,  water  filters,  etc.  to  consumers  such  as  Johnson  &  Johnson. This  segment  has  huge potential  for  growth  with  hefty  margins,  which  would  propel  the Company’s  fortunes. Performance  Review:  For  FY17,  GFL’s  profits  jumped  over  4  times  compared  to  FY16.  Its  Q4FY17  profits  were  over  2.5 times  higher  compared  to  Q4FY16 and  20%  higher  compared  to  Q3FY16.       Industry  Outlook:  The  Indian  textile  industry  has  the  potential  to reach  $500 bn  in  size,  according  to a  study  by  Wazir Advisors  and  PCI  Xylenes  &  Polyester.  This  growth  implies  domestic  sales  to  rise to  $315  bn  from  $68  bn  currently  and exports  to grow  to $185 bn  from  ~$41 bn  currently. Indian  exports  of  locally  made  retail  and  lifestyle  products  grew  at  10%  CAGR  over  2013-16,  mainly  led  by  bedding  bath and  home  decor  products  and  textiles.  This  trend  will  benefit  companies  like GFL. Conclusion:  The  non-woven  segment  will  boost  the  Company’s  bottom-line  since  it  is  a  leader  in  this  segment. Assuming  a  modest  EPS  of  Rs.3.5  for  FY18  and  a  P/E  ratio  of  24.72x,  its  share  price  could  zoom  to  Rs.88  in  FY18  while  an EPS  of  Rs.4 could  take  it further  to Rs.100.  Therefore,  we  have  a  Buy  on  the  stock  with  sequential  price  targets  of  this is
The shares of this textile sector company are listed in the B Group and have face value of Rs. 10. The shares touched a high of Rs. 65 and low of Rs. 10 in the last 52 weeks. The company exports its products to top companies such as Disney and Benetton. In the non-woven segment, Ginni supplies products such as wet wipes, water filters, to Johnson & Johnson. For the year ended March 2017, it reported turnover of Rs. 208 crores. The net profit was Rs. 5.68 crores. EPS for the year was Rs. 2.56. The shares are trading near the 52-week high due to aggressive buying by top market players. The stock looks poised to touch Rs. 100 in the short to medium term.

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