CARE Equity Research assigns 3/5 on fundamental grade to Sutlej Textile and Industries Ltd

CARE Equity Research assigns a fundamental grade of 3/5 to STIL. This indicates 'Good Fundamentals'. STIL manufactures synthetic/blended/cotton yarns, fabrics, home textiles and garments. The revenues are concentrated more towards the yarn segment which contributed around 94% in FY11 (refers to period April, 1 2010 - March, 31 2011) (cotton yarn contributed around 30% and synthetic yarn contributed around 64%). However the sales are skewed more towards domestic market (contributing around 66% of its revenue for the period FY09-FY11).

CARE Equity Research believes key catalysts for STIL would be increase in realization from the yarn business and increased revenue share from the segments other than yarn. Furthermore the turnaround of fabric & apparel segment would be critical going forward.

Valuation

CARE Equity Research assigns a valuation grade of 5/5 to STIL, indicating 'Considerable Upside Potential'. The valuation grade is based on the upside/downside indicated by difference in the Current Intrinsic Value (CIV) of Rs.255 and Current Market Price (CMP) of Rs.190. CARE Equity Research has used the Discounted Cash Flows (DCF) methodology to value the equity shares of STIL.

Source : Equity Bulls

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