X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Indian Rayon: The excise concern - Views on News from Equitymaster
 
 
  • PRINT
  • E-MAIL
  • FEEDBACK
  • A  A  A
  • Mar 22, 2001

    Indian Rayon: The excise concern

    Though Indian Rayon, the market leader in the readymade garment segment, has reported robust growth in sales for the first nine months of the current year, margins might come under pressure due to the recently levied excise duty.

    The company has strong brands like Peter England, Van Heusen, Louis Phillipe, San Frisco and Byford. The garment division, for the first nine months of the current year, has recorded a turnover of Rs 2,536 m (24% of turnover). With operating margins of around 19%, this division is expected to be the growth driver for the company in the future because of its well established brands and distribution network.

    But, the government in an attempt to boost revenues has levied a 16% excise duty on garment manufacturers, which incidentally has created lot of deliberations from its manufacturers association. This does not augur well for Indian Rayon, as margins would come under pressure (margins are expected to come down by 1.5%). The company has decided to partly pass on the increase in excise duty to the consumers for all its brands in the range of 7%-8%. As a result, even if margins do not fall sharply, sales growth might be affected given the price sensitive nature of the Indian consumer.

    After prolonged representations by the garment manufacturers association, the finance ministry has decided to consider the reduction in excise duty. But given the current unstable political scenario, the prospects are bleak.

    The stock is currently trading at Rs 72, at a P/E multiple of 7.0x the annualised nine months earnings. On the annualised sales of Rs 14,174 m, the market capitalisation to sales works out to 0.3 times (market capitalisation is Rs 4,331 m).

    At current valuations, the scrips has good upside potential given the fact that the company has strengthened its presence in other core businesses like carbon black, insulators and Viscose Filament yarn. Moreover, it has recently won the international rights for all it brands from Coats Viyella, which will also boost revenues and profitability. It has recently ventured into the women’s wear segment, which hitherto has substantial unorganised sector presence. The company is the market leader in the all the segment and is also one of the most cost efficient producers in the country.

     

     

    Equitymaster requests your view! Post a comment on "Indian Rayon: The excise concern ". Click here!

      
     

    More Views on News

    Sorry! There are no related views on news for this company/sector.

    Most Popular

    Demonetisation Barely Made Any Difference to Tax Collections(Vivek Kaul's Diary)

    Aug 7, 2017

    The data tells us quite a different story from the one the government is trying to project.

    Proxy Plays: A Smart Way to Bet on 'Off Limits' Companies(The 5 Minute Wrapup)

    Aug 4, 2017

    The small-cap space is full of small players that are clear proxies to great growth stories and Indian megatrends.

    Should You Invest In Bharat-22 ETF? Know Here...(Outside View)

    Aug 8, 2017

    Bharat-22 is one of the most diverse ETFs offered so far by the Government. Know here if you should invest...

    Signs of Life in the India VIX(Daily Profit Hunter)

    Aug 12, 2017

    The India VIX is up 36% in the last week. Fear has gone up but is still low by historical standards.

    7 Financial Gifts For Your Sister This Raksha Bandhan(Outside View)

    Aug 7, 2017

    Raksha Bandhan signifies the brother-sister bond. Here are 7 thoughtful financial gifts for sisters...

    More
    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407
     

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms

    ADITYA BIRLA NUVO SHARE PRICE


    Jul 4, 2017 (Close)

    TRACK ADITYA BIRLA NUVO

    • Track your investment in ADITYA BIRLA NUVO with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks

    MORE ON ADITYA BIRLA NUVO

    ADITYA BIRLA NUVO 8-QTR ANALYSIS

    Detailed Quarterly Results With Charts

    COMPARE ADITYA BIRLA NUVO WITH

    MARKET STATS