ALOK INDUSTRIES LIMITED

Alok Industries Limited is into integrated textile business company. It operates in five divisions: Cotton Yarn, Apparel Fabric, Home Textiles, Garments and Polyester Yarn. The Company provides textile solutions through its five divisions. Its products include woven fabrics of cotton, man made filament yarn and pile fabric. Its pile fabric includes long pile fabrics, terry fabrics, and knitted or crocheted fabrics. The Company exports about 35% of its products to over 70 countries, such as United States, Europe, Latin America, Asia and Africa. The Company has manufacturing units in Navi Mumbai, Vapi and Silvassa. During the fiscal year ended March 31, 2010 (fiscal 2010), the Company manufactured 192.387 million meters of woven fabric; 6,852.32 million tons of knitted fabric; 10,989.08 million tons of cotton yarn, and 106,958.80 million tons of texturised yarn. Its subsidiaries include Alok Industries International Ltd, Alok International Inc., Alok Inc. and Alok H&A Limited.

Why buy Alok ?

Alok has a Market Cap: Rs.2627 crores and PE is 9.23. Face Value is Rs.10/= and Book Value is Rs.36. The company enjoys good top line and bottom line: In FY 2009-10 Total Revenues Rs.4314 crores and PAT Rs. 242 crores [ Previous fiscal Rs.2966 crs and Rs.187 crs ] Operating net profit for the six month ended September 30 this year stood at Rs 126.32 crore as against Rs 89.01 crore in the corresponding period last fiscal, a rise of 41.91 per cent. For the six month period ended September, the company''s net sales rose by 44.83 per cent to Rs 2,550.48 crore, as against Rs 1,761.07 crore for the same period last year.

           Proposed merger of Grabal Alok Impex union to add Rs 150cr to sales of Alok Industries Ltd.  The company seeks to double its revenue to around USD 3 billion over the next three years. Managing Director Dilip Jiwrajka asserts " we are driving on a highway, and on highway we can only drive in the fifth gear." The company's current gross debt is at Rs 8600 crore, which it seeks to pare through increased internal accruals and fund-raising by selling off its real estate properties.

Conclusion: Buy in the range of Rs.29 – 33/share with stop loss of Rs.26/ and hold for one to three months in order to obtain25 to 50 per cent returns.

Kishor S. Khot, [Kishor@hbjcapital.com], Equity Strategist, HBJ Capital Services Pvt Ltd