Dynamic Levels Himatsingka Seide Ltd. · Blankets, Throws, Towels, Bathrobes, Turndown Mats and...

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Surbhi Lohia – [email protected]

Vikash Kandoi – [email protected]

mailto:[email protected]

mailto:[email protected]

Source: Company, www.dynamiclevels.com

Himatsingka Seide Ltd - Reap the reward of CAPEX

Company Overview……………………………………………………………3

Company’s Milestone and Stock price…………………….…….……..4

Product Overview……………………………………………………….……..5

Retail and Distribution…………………………………………….……..…8

Textile Outlook Industry……………………………....………….…..….10

Company Financials………………………………………………….……..12

Peer Comparison……………………….......…………….………….……..17

Company’s Future Outlook…………………………………….…….…..20

Capex Plan of the Company…………………………………………...….21

Investment Rationale…………………………………….…………...….…22

www.dynamiclevels.com


Company’s Overview

The Himatsingka Group focuses on the manufacturing, retailing and

distribution of Home Textile products.

The Group operates with the largest capacities in the world for producing upholstery fabrics, drapery fabrics and bed linen products.

The Company has its wings across Asia, Europe and North America. Its retail and wholesale distribution divisions carry some of the most prestigious brands in the Home Textile space.

Himatsingka Group, founded in 1985, focuses on design and product development, best-in-class manufacturing processes and efficient supply chain capabilities. The company ensures the highest level of customer service in the industry. It has a team of over 5000 people. The Group continues to expand its reach and build capacities in the Home Textile space.

Himatsingka Group is integrated from manufacturing in India to

retail and distribution networks across North America, Europe and

Asia. The Company‟s retail and distribution networks cater to over

8000 points of sale including 200 shop-in-shops of its licensed

brands in major departmental stores and 25 exclusive retail stores.

An integrated model and supply chain expertise enables the Group

to service retail and distribution networks across 22 countries.

North America

In North & South America, company operates through

1. DWI Holdings 2. Divatex.

DWI Holdings is the licensee of brands such as

1. Calvin Klein Home 2. Barbara Barry

Divatex is the licensee of Esprit and caters to Private Label programs of major retailers.

Europe

In Europe, the Group operates through Guiseppe Bellora S.P.A. Bellora is amongst the most recognized Italian luxury-bedding brand and has broad distribution reach across Italy and other parts of Western Europe.

Asia

In Asia, the Group operates through Himatsingka Wovens. This division controls the „Atmosphere‟ brand and has retail networks in India, the Middle East and South East Asia.

Geographic Segments in INR (2015)

Sales (M)

% Revenue

USA 1682.50 86.70%

Europe 150.40 7.75%

Others 42.60 2.19%

Reconciliation 36.60 1.89%

India 28.50 1.47%

Total Sales 1940.60 100%

Geographic Segment

USA

Europe

Others

COMPANY PROFILE OF HIMATSINGKA, NSE, INDIA

Date of Incorporation 23-Jan-1985

Date of Listing 10-Jan-1995

Management

Name Designation

Dilip J Thakkar Chairman

K R S Murthy Director

Berjis M Desai Director

Rajiv Khaitan Director

Aditya Himatsingka Executive Director

Shrikant Himatsingka Executive Director

Jayshree Poddar Executive Director

D K Himatsingka Managing Director

A K Himatsingka Vice Chairman

Registered Office Address

No. 10/24 Kumara Krupa Road,High Grounds (Near Sindhi High School),560001,Bengaluru,Karnataka,India

Website

http://www.himatsingka.com



Company’s Milestone & Stock Price

1985: Himatsinka Seide Ltd incorporated

1986: Launched IPO

1998: Expansion of weaving capacity - Stock Price ranged between Rs. 11 to 16

2003: India's first luxury home furnishing brand 'Atmosphere' is

launched- Stock Price ranged between Rs. 23 to 84.15.

2005: Construction of the vertically integrated Greenfield Bed Linen manufacturing facility at the Hassan SEZ, Karnataka, India commences. Stock Price ranged between Rs. 96 to 169.

2007: Acquisition of Giuseppe Bellora S.p.A (Italy) bed linen brands in Europe. Acquisition of Divatex Home Fashions, Inc., the acquisition of DWI Holdings, Inc., a leading branded Home Textile player in the North American market and a licensee of the Calvin Klein Home and Barbara Barry brands. Stock Price fell from Rs. 150 to 95.

2008: Retail supply chain center at Doddaballapur, Karnataka, India goes on stream. 'Atmosphere' launches its first international stores in Dubai and Singapore. Stock Price fell from Rs. 135 to 24.

Stock is trading at Rs. 209.50 made 52 week high of Rs. 248.40 on 6

th Jan 2016 and 52 week low of Rs. 74.05 on 9

th Jun 2015.

Life time high for the stock is at Rs. 337.50 on 30th

Aug 2005 and life time low of Rs. 18.00 on 6

th Mar 2009.

Stock has surged 152.58% in 1 year having a beta with index of 1.65.

Himatsingka Share Price Performance

SYMBOL HIMATSINGKA

Current Price 209.50

Face Value 5

52 Week High 248.40 (06-Jan-16)

52 Week Low 74.05 (09-Jun-15)

Life Time high) 337.50 (30-Aug-05)

Life Time low 18.00 (06-Mar-09)

ADM (Avg Movt) 9.87

Average Volume 216994

1 Month Return 12.12%

P/E Ratio (x) 13.93

Book Value 81.75

Market Cap 2090.25 (Cr)

Promoter pledged Nil

Red – Himatsingka Yellow – Nifty Source: Bloomberg



Product Overview

Bed Linen

Himatsingka is one of the largest producers of bed linen products in the world. Its vertically integrated manufacturing facility is equipped with the latest warping, sizing, weaving, continuous processing, yarn dyeing and sewing facilities.

The Company has a capability to offer both piece dyed and yarn dyed products along with embroidery and quilting. Himatsingka holds a diverse position in this area.

Plant Location: Hassan SEZ, Karnataka, India

No. of employees: 4000

Weaving Capacity: 21 million metres per annum.

Processing Capacity: 23 million metres per annum.

Cut & Sew Capacity: 3.8 million sheet sets per annum.

Products Offered: Complete bed ensembles including

Sheet Sets,

Pillowcases & Decorative Pillows

Duvets

Comforters

Bed Skirts

Shams and Dust Ruffles

The facility also offers a wide range of quilted products.

Weaves: This facility offers a wide range of weaves from basic Percale and Sateen to more complex hybrid weaves such as

Dobbies

Twills

Matelesse and Jacquards.

Finishing: Products are offered with a variety of handle and finishes such as

Soft

Wrinkle-free

Antibacterial

Water Repellent and Stain Resistant

Plant Located at

Karnataka

With 4000

Employees

Capacity

21

Million

Mtrs

Products

a. Sheet Sets

b. Pillowcase

c. Duvets

d. Comforters

e. Decorative Pillow

f. Bedskrits

g. Shams

h. Dust Ruffles

Bed Linen



Cut & Sew: The cut & sew facility is equipped with automatic cutting machines and has the largest installation of ETON conveyer systems for bedding products in India.

Design Capabilities: The Group's design studios offers a variety of fabric and hem treatments along with embellishments like embroidery of logos, insignias and crystals. The design team continuously strives to create fresh, functional and appealing bedding components. Embroidery treatments add flavor to the fashion bedding products.

Fibre Specifications: Finest cotton yarns such as

Supima

Egyptian

Seasell blends and Indian cotton

Drapery & Upholstery

The Drapery and Upholstery fabrics manufacturing facility is one of the largest of its kind in India and in the world. The operation is vertically integrated from pre-weaving yarn preparation to post-weaving finishing processes.

The facility was built with a vision to produce Drapery and Upholstery products that epitomize cutting edge design and quality. Over the years, products have become most recognized brands in the world.

Plant Location: Doddaballapur, Karnataka, India


Capacity: The facility has an installed capacity of 2.2 million metres per annum.

Products Offered: Fabrics for Drapery and Upholstery applications.

Product Type: The facility manufactures a wide range of fabrics from ultra lightweight sheers to heavy velvets in a variety of weaves from simple Dobbies to very complex Jacquards. This facility is equipped to weave fabrics on high-density warps with a repeat size of up to 140 cms.

Design Capabilities: The Group's design studios in New York, Milan and Bangalore have over the years created an archive of over 25000 products. The teams add 1500 new products every year. Customers have the flexibility to choose from the existing product archives or provide customized requirements.

Drapery &

Upholstery

Plant Located

at Karnataka

700

Employees

Capacity

2.2

million

meters

p.a

Product:

Complex

Jacqards



Processing & Finishing:

Abrasion Resistance

Knit Backing

Stain Resistant

Flame Retardancy

Fibre Specifications: Fibres like Silk, Cotton, Linen, Acrylic, Wool, Polyester and Viscose are used to produce an assortment of fine Drapery and Upholstery fabrics suitable for both residential and institutional applications.

Quality Certifications: This facility is certified for ISO 9002 and has recently acquired certification for ISO 14001 which ensures that the production of fabrics has no harmful effect on the environment.

Silk & Blended Yarn

The Spun Silk facility at Himatsingka manufactures 100% Spun Silk yarn as well as Silk yarns blended with Wool, Tussar & Linen. This division predominantly caters to the requirements of the Drapery and Upholstery manufacturing division and also selectively caters to clientele who require high quality Spun Silk and blended yarns.

Plant Location: Doddaballapur, Karnataka, India


Capacity: The facility has an installed capacity of 200 MT per annum.

Product Type: A wide variety of yarns – singles and twisted, are produced at this facility. Plain and fancy yarns suitable for weaving as well as for flat bed and circular knitting are produced here. Regular, Gassed and Shantung qualities are offered from this facility.

Products Offered:

Spun Silk

Silk Blended

Silk Blended with Linen

Silk Blended with Tusaar

Silk Blended

Yarns

Plant Located at

Karnataka

Located at

Karnataka

Capacity 200 MT

p.a

Product: Single

and Twisted Yarn



Retail and Distribution

North America

DWI Holdings, a subsidiary of Himatsingka, is focused in operating in the branded Home Textile space.

DWI Holdings has exclusive licenses for the sourcing, marketing and distribution of luxury home textile brands –

Calvin Klein Home

Barbara Barry

Bellora Hospitality

These brands are amongst the most prestigious and recognized home textile labels in the North American market.

Calvin Klein Home is the second largest luxury bedding brand distributed through department stores in the United States.

The DWI product line includes

Sheets

Pillowcases

Duvet Covers

Bed Skirts, Pillow Shams

Decorative Pillows

In addition the product line includes home accessories as well as Blankets, Throws, Towels, Bathrobes, Turndown Mats and Bath Rugs.

DWI is equipped with state-of-the-art warehousing and supply chain capabilities to ensure the highest standards of service for its customers.

Divatex

Divatex, a subsidiary of Himatsingka, is amongst the largest Home Textile distribution companies in North America.

Divatex sources and distributes a wide range of products from Sheets and Pillowcases in cotton, polycotton, microfiber and other blends to Top-of-Bed products, Duvets, Shams, Comforters, Decorative Pillows, Bed Skirts, Coverlets, Quilts, Throws, Blankets and more.

Divatex is committed to its customers, and services them through major Specialty Home Stores, Department Stores, Warehouse Clubs and Catalogues.

Himatsingka

Seide Ltd at

North America

DDWI Holding

Divatex

Calvin

Klein

Home

Barbara

Barry

Bellora

Hospitality

Operating

Branded

Textile

Textile

Textile

Distribution



Europe

Giuseppe Bellora S.P.A

Bellora, a subsidiary of Himatsingka, is amongst the most recognized luxury bedding brands in Italy.

Founded in 1883, the brand epitomizes heritage and tradition. The brand retails through 35 exclusive Bellora stores, multi-brand outlets and luxury departmental stores in Italy and other parts of Western Europe.

Its product lines include

Fine bedding,

Bath

Allied home accessories

The design and product development capabilities of Bellora give its products a unique presence across markets.

India / Asia

Himatsingka Wovens

A global luxury home textile brand, Atmosphere is designed for

the discerning. The brand offers an exclusive collection of luxury products like

Drapery

Upholstery

Bed Linen

Its products are tailored to comply with both residential and institutional applications.

A large part of the Atmosphere collection has been conceived

and developed at the design studios of Himatsingka. Its emphasis on evolved aesthetic and superior quality enables the manufacture of finest fabrics in the world.

Atmosphere has 9 exclusive stores across India and U.A.E. Of its

9 stores, 8 are located in India across 7 cities with 1 store in Dubai.

Himatsingka Seide

LTD

Atmosphere

35 Stores

India /

Asia

Europe

Bellora

9 Stores



Textile Industry Outlook

Why textile Industry is a priority sector in India

India‟s textiles sector is one of the oldest industries in

Indian economy.

Textiles sector is among the largest contributors to India‟s

exports with around 11 per cent of total exports.

The textiles industry is also labour intensive and is one of

the largest employers.

The industry has export earnings of worth US$ 41.4 billion

in 2014-15, a growth of 5.4 per cent, as per The Cotton

Textiles Export Promotion Council (Texprocil).

The industry is the second largest employer after

agriculture, providing employment to over 45 million people

directly and 60 million people indirectly.

The Indian Textile Industry contributes approximately 5 per

cent to India‟s gross domestic product (GDP)

The Industry contributes 14 per cent to overall Index of

Industrial Production (IIP).

The textile industry caters both organized and unorganized segment.

Unorganised sector consists of:

Handloom

Handicrafts

Sericulture, These are operated on a small scale and through traditional tools and methods.

Organised Sector consists of:

Spinning

Apparel and

Garments segment This applies modern machinery and techniques such as economies of scale.

Export earnings is of worth

US$41.4 billion in 2014-15

Provide

employment to

45 million people

directly & 60

million people

indirectly

Contribute 5%

to GDP

Contribute

14% to IIP



Expectations and Achievements of Textile Industry

The Indian textiles industry, currently estimated at around US$ 108 billion, is expected to reach US$ 223 billion by 2021

The Indian textile industry has the potential to reach US$ 500 billion in size according to a study by Wazir Advisors and PCI Xylenes & Polyester.

The textiles sector has experienced a spurt in investment in last five years. The effect is seen in stock price which has given multiple returns to the investors.

Foreign Direct Investment (FDI) worth US$ 1.77 billion during April 2000 to September 2015 has been attracted.

Government initiatives on Textile industry Narendra Modi led Government wanted to create job for both skilled and unskilled labour to fulfill his promise post budget. This sector has potential to generate employment and at the same time can help in boosting Indian economy. Government has taken lots of initiatives in this direction.

It has allowed 100 per cent FDI in the Indian textiles sector under the automatic route.

Government has promoted “India Handloom” on social media to connect to people outside India.

The Ministry of Textiles invested Rs 200 crore in Technology Mission on Technical Textiles (TMTT). The objective of TMTT is to develop world class testing facilities at eight Centres of Excellence across India.

The Government will soon announce a new National Textiles Policy. With the help of this new policy government expects to create 35 million new jobs by attracting investments from foreign companies, as per Textiles Secretary Mr. S K Panda.

The Government of India provides aid for creation of infrastructure in the parks to the extent of 40 per cent with a limit up to Rs 40 crore (US$ 6 million).

The major machinery for production of technical textiles receives a concessional customs duty list of 5 per cent.

The government has also proposed to extend 24/7 customs

clearance facility at 13 airports and 14 sea ports resulting in

faster clearance of import and export cargo.

Indian Textile

Industry is expected

to reach US$ 223

billion by 2021



Company Financials

Analysis of Profit

Statement of Profit

In Cr

Dec-15 Mar-15 Mar-14 Mar-13

3 Quarter Cumulative

Annual Annual Annual

Revenue 1436.03 1940.58 2028.22 1689.43

Operating Profit 187.44 169.89 142.59 105.69

Other Income 3.78 6.66 4.65 8.98

Interest 65.66 85.09 79.69 65.28

P/L Before Tax 125.66 91.46 63.41 51.74

Tax 1.68 -3.04 8.91 -1.21

PAT 123.98 94.50 54.50 52.95

EPS (Rs.) 12.59 9.69 6.43 5.82

% Growth

Particulars FY 2015 to FY 2016*

FY 2014 to FY 2015

FY 2013 to FY 2014

Revenue -26.00% -4.32% 20.05%

Operating Profit 10.33% 19.15% 34.91%

Other Income -43.24% 43.23% -48.22%

Interest -22.83% 6.78% 22.07%

P/L Before Tax 37.39% 44.24% 22.56%

PAT 31.20% 73.39% 2.93%

EPS (Rs.) 29.93% 50.70% 10.48%

In last 3 Quarter (2015-2016) company has made sales of Rs.

1436.03 Crs. vs Rs. 1940.58 Crs last year and has an average

quarterly sale of Rs. 485 Cr. So if the company‟s post sales for

March Quarter of 2016 is in same line, then annual sale should

stand at Rs. 1921 crs. i.e. annual sales would be at par with that

of March 2015 annual sales.

However, company has already beat its last year ‟s profitability in

3 quarters and the EPS for three quarter stands at 12.56 VS 9.69

growth of 29.93%.

Interest cost has fallen by 22.83%. Net Debt is 780 Crores.

Segment wise revenue % of

STO

Sheet Sets - Bed Linen

Fabrics

Bed Linen - Traded

Power

Yarns

Fabrics -Bed Linen

Segment wise revenue

Product Name % of STO

Sheet Sets - Bed Linen 78.63

Fabrics 12.06

Bed Linen - Traded 3.27

Power 2.18

Yarns 1.14

Fabrics - Bed Linen 0.96



Analysis of cost

Analysis of Cost

In Cr

15-Dec 15-Mar 14-Mar 13-Mar

3 Quarter cumulative

Annual Annual Annual

Consumption of Raw Materials

416.44 496.40 995.26 442.59

Purchase of Traded Goods

417.41 695.61 507.86 652.01

Employees Cost 141.39 193.44 200.15 171.83

Depreciation 35.22 44.64 54.38 52.16

Other Expenses 205.99 281.40 311.19 259.16

Total Expenditure 1248.59 1770.69 1885.63 1583.74

% Movement In Cost

In Cr FY 2015 to FY 2016*

FY 2014 to FY 2015

FY 2013 to FY 2014

Consumption of Raw Materials

-16.11% -50.12% 124.87%

Purchase of Traded Goods

-39.99% 36.97% -22.11%

Employees Cost -26.91% -3.35% 16.48%

Other Expenses -26.80% -9.57% 20.08%

Total Expenditure -29.49% -6.10% 19.06%

From above table it is clear that the company has been able to

lower down its cost i.e. the company is performing with cost

efficiency and overhead cost well managed year on year.

We can see from above table that the company‟s topline is

consistent Year on Year, but by well managed cost and

economies of scale, the company is able to grow on bottom line.



Balance Sheet Himatsingka seide Limited | As at March 31, 2015



Peer Comparison

Price & Volume Comparison

INSTRUMENT Price Avg.

Volume Market Cap (Rs. in Cr)

HIMATSINGKA 209.50 216994 2090

WELSPUN INDIA 99.30 1010091 9580

SRF 1398.00 163057 7960

ARVIND 267.60 1658161 6982

INDO COUNT 1068.90 62430 3872

KPR MILL 869.30 12668 3179

TRIDENT 51.80 575334 2600

Above comparison shows that average Market cap of the industry is 2500cr (removing extremes) and Himatsingka Seide has Market cap of 2090 and average volume is 2 lakhs which means company has good market liquidity.

FII Holding & Ratio Comparison

INSTRUMENT % FII

Holding P/E Ratio

(X) Debt Equity

Ratio (X)

HIMATSINGKA 7.40 14.00 0.83

WELSPUN INDIA 5.02 14.00 1.81

SRF 16.09 21.00 0.89

ARVIND 10.47 23.00 1.26

INDO COUNT 8.50 20.00 1.1

KPR MILL 3.20 15.00 0.8

TRIDENT 0.00 12.00 1.52

Industry PE of textile sector is at 18.50 and standard Debt Equity ratio should be below 2. This suggests that comparing to Industry PE stock is still trading at a lower level.

Financial Comparison

INSTRUMENT Annual Sales

Mar 15 Operating Profit in Cr

Net Profit in Cr

HIMATSINGKA 1940.58 168.89 94.5

WELSPUN INDIA 5302.51 941.25 544.29

SRF 4539.85 481.87 302.81

ARVIND 7851.4 800.5 337.62

INDO COUNT 1781.8 297.68 145.87

KPR MILL 2565.75 283.28 173.57

TRIDENT 3786.05 370.18 117.87

Ratio Analysis

Current Ratio (x) 1.8

Quick Ratio (x) 0.59

Dividend Yield (%) 0.94

Interest Coverage Ratio (x) 2.59

Debt Equity Ratio (x) 0.83

Return On Asset (%) 7.61

Return On Equity (%) 11.85



Profitable Comparison

INSTRUMENT Net Profit

in Cr Equity in

Cr FV

EPS

HIMATSINGKA 94.50 49.23 5.00 9.69

WELSPUN INDIA 544.29 10.46 53.76

SRF 302.81 5.84 52.74

ARVIND 337.62 25.84 13.21

INDO COUNT 145.87 3.94 38.95

KPR MILL 173.57 3.76 45.73

TRIDENT 117.87 50.80 2.47

Price Performance Comparison

INSTRUMENT 1M 3M 6M 1Y Movt Post

Budget

HIMATSINGKA 7% 6% -4% 153% 38%

SRF 15% 26% 6% 25% 32%

KPR MILL 9% 16% 10% 46% 31%

INDO COUNT 13% 5% 14% 138% 28%

KITEX 8% -19% -46% -39% 23%

TRIDENT -1% 19% 11% 117% 21%

WELSPUN INDIA 1% 23% 25% 134% 14%

ARVIND -2% -11% -7% 3% 6%

Post budget* Himatsingka seide has been a top performer in textile sector with return of 38%. (*Budget was announced on 29

th

Feb 2016).

Dividend History

Announcement Date Ex-Date Amount Interim/Final

11-Mar-16 22-Mar-16 1 Interim

25-May-15 4-Sep-15 2 Final

15-May-14 8-Sep-14 1.5 Final

27-May-13 26-Jul-13 1 Final

26-May-12 9-Aug-12 0.5 Final

31-May-10 24-Aug-10 0.25 Final

5-Mar-07 16-Mar-07 1.25 Interim

9-Oct-06 2-Nov-06 1.25 Interim

31-May-06 13-Jul-06 1.25 Final

Share Price Performance in INR

Price 212.30

52 Week High 248.40

52 Week Low 74.05

52 Wk Beta 1.65

1M Return 7.2%

6M Return -4.2%

52 Wk Return 152.8%



Last 2 Week Delivery Position

Date High Price

Low Price

Total Traded

Qty

Deliverable Qty

Delivery % Qty

4-Apr-16 201.2 195.55 146318 54346 37%

5-Apr-16 196.35 186.6 142991 76254 53%

6-Apr-16 192.7 187 132162 55498 42%

7-Apr-16 194.9 188.25 108896 49109 45%

8-Apr-16 190.5 185.55 179082 76149 43%

11-Apr-16 189 185.3 154493 85661 55%

12-Apr-16 194.75 187.6 239024 109308 46%

13-Apr-16 195.6 191.4 174622 92968 53%

18-Apr-16 213.8 191.2 1288574 432229 34%

Highest deliverable quantity was seen at 194.75 to 187.60 levels on 12

th April 2016 and at 191.20 to 213.80 with deliverable

quantity of 1.09 lakhs shares and 4.32 lakhs shares respectively. So 190 level can be a good base for the stock.

Top Large Deals

Date Exchange Quantity Price Value(Cr) Time

21-Mar-16 NSE 490755 199.50 9.79 10:58

Shareholding Pattern Mar-16 Dec-15 Sep-15 Jun-15

Promoter & Promoter Group (%)

57.22 57.22 57.22 57.07

Indian 55.96 55.96 55.96 55.81

Foreign 1.26 1.26 1.26 1.26

Institutions (%) 14.92 15.01 12.42 15.15

FII 8.26 7.40 4.64 0.26

DII 6.62 7.61 7.78 14.89

Non Institutions (%) 27.86 27.77 30.36 27.77

Bodies Corporate 3.76 NIL 5.69 4.74

Others 24.10 27.77 24.67 23.03

Custodians NIL NIL NIL NIL

No. of shares (cr.) 9.85 9.85 9.85 9.85



Company’s Future Outlook - by Management:

Shrikant Himatsingka Executive director

1. Company is operating about 12-14 brands and aspire to

achieve about Rs 1200 crore in revenue from brands in the

next two-three years.

2. North America is largest market so company has a large

position in that geography across the United States, Canada

and Mexico.

3. Shrikant expect some softness in demand in the European

geographies and the Indonesian areas where they are

present. So, North America is the geography that will sort of

lead the growth for them.

4. Company‟s manufacturing performance has been extremely

strong and they see the underlying buoyancy to continue as

far as manufacturing is concerned.

5. Both plants perform reasonably well and in FY 2017 as stated

earlier they are scheduled to commission new sheeting

capacities by June 2016 for which they are running on

schedule, so next year is also going to see some incremental

capacities that will come their way which would give further

boost to company‟s manufacturing performance.

6. Debt number of the company is 878 Crores gross 780 Crores

net 98 cash and cash equivalents.

7. Larger benefits were expected in FY 2016 but company admits

that they are seeing some delays in some of the initiatives

that they have taken. They have some delays in it bearing

fruit so they see the greater impact of these initiatives coming

through in FY 2017.

8. Company expects stable state for retail and distribution

business that should throw up EBITDAs in the region of 6%, to

7%.

9. More than Channels Company is more focused on building

mid and large size client basis and that is why they are

exiting micro clients as far as their business complexion is

concerned on the bedding side and bath side of the business

that has because some soften in revenue. They see it

stabilize going into Q1 at this point and they see the uptick

begin possibly in Q2 FY 2017.

Greater impact of initiatives

will be seen in FY 2017.

Expected EBITDAs in the

region of 6%, to 7%.

Company is focusing on

mid and large size clients



Capex Plan of the company

1. The cumulative Capex Plan that has been planned by the

company, stands at 1281 Crores across three projects

which is sheeting project, spinning project and the terry

towel project.

2. The company has indicated earlier that the timeframe for

these projects will be over in the next three years. Of

these three projects, the company has commenced work

on the expansion of its current sheeting plant, the

capacity of which will be enhanced from 23 million

meters per annum to 46 million meters per annum.

3. The schedule date of commissioning of this expansion

currently stands for June 2016 this project entails an

investment of just over 200 Crores.

4. The total investment that the company foresees in its

spinning plant will stand at just over 600 Crores and the

total investment in the terry towel facility will stand at just

over 400 Crores.

5. Himatsingka plans to set up a total capacity of 211584

spindles, for which construction has not commenced

yet.

Capex Plan planned

stands at 1281 Cr.

Project will be over

in next 3 years

23 million meters

will enhanced to

46million meters

p.a.

Spinning & Terry

towel plants will

start in next quarter



Investment Rationale Increasing manufacturing capacity & backward integration will

lead to growth in margin.

With a long-term focus on sustainable and profitable growth,

Himatsinka Seide Ltd has earmarked a capacity expansion plan

of Rs.1281cr. to expand company‟s manufacturing capacity.

The investments entail an increase in its current bed linen

capacity, backward integration into spinning and foray into terry

towels.

The company‟s stock price is trading below industry PE of 20.

The company has planned a Capital Expenditure of Rs.600cr.

for backward integration into spinning with a capacity of

211,584 Spindles, for captive purpose which can cater to

existing bed linen capacity.

Spinning plant is expected to start operation by FY18. The

backward integration process is expected to be margin

accretive with improving operational flexibility, execution

consistency and quality standards.

The company plans to foray into Terry towels manufacturing

with a capacity of 25,000 TN per annum with a CapEX of

Rs.450cr. Terry towel plant is expected to generate revenue

from FY19.

Himatsinka Seide Ltd is a Multibagger Stock recommended by

Dynamic Levels.

Data source: Bloomberg, BSE India, NSE India


https://www.dynamiclevels.com/en/himatsingka-share-price-forecast


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Dynamic Levels Himatsingka Seide Ltd. · Blankets, Throws, Towels, Bathrobes, Turndown Mats and...

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