Vijay Kedia and Sunil Singhania Increase Stake in this Smallcap Textile Stock

When it comes to investing, it's always a good idea to pay attention to what the big investors are doing.

And right now, two of the top investing gurus of India are making a big bet on a smallcap textile firm.

This bullish sentiment is obviously hard to ignore, as these investors have a proven track record of success and have consistently outperformed the market.

The two investing gurus we're talking about are Vijay Kedia and Sunil Singhania.

Who is Vijay Kedia?

Vijay Kishanlal Kedia is an Indian investor and trader based out of Mumbai. His company - Kedia Securities - is the largest shareholder (after the promoter) in several listed companies.

Kedia has been involved in the Indian stock market since the age of 19. He has been described by many as a 'market master'.

To point out a few of his investments, he bought ACC at Rs 300 in 1992-93 and sold the stock around Rs 3,000 within a year and a half.

During the years 2004 and 2005, he picked several multibagger stocks which gave returns of over 1,000% in the next 10-12 years. Few of these stocks were Atul Auto, Aegis Logistics, and Cera Sanitary.

A word about Sunil Singhania and Abakkus Asset Manager LLP

Abakkus Asset Manager is an investment management company founded by Sunil Singhania, who was the CIO of Equity Investments at Reliance Mutual Funds.

Sunil Singhania has a track record of over two decades in equity markets and he played an important role in building Reliance-Nippon MF into one of India's largest asset management companies (AMCs).

Which textile stock did both investors buy recently?

In the quarter gone by, both Vijay Kedia and Sunil Singhania have increased their stake in one of the reputed textile companies - Siyaram Silk Mills.

The latest shareholding pattern of Siyaram Silk Mills shows that during the March 2023 quarter, Kedia bought an additional 0.01% stake and Sunil Singhania increased his stake by 0.03% via Abakkus Fund.

In the December 2022 quarter, Vijay Kedia and Sunil Singhania held 1.07% and 2.11% stake in company. Now, Vijay Kedia holds 1.08% of the total equity whereas Sunil Singhania holds 2.14%.

While we don't know why both these ace investors have this stock in their portfolio, there are some reasons we can guess...

The moment I heard the name Siyaram Silk Mills, I could vividly remember the popular slogan of the company that is 'Coming home to Siyarams'.

I haven't seen any Siyaram's latest advertisement and yet I clearly remember the slogan. This just shows the company's strong brand reputation.

Siyaram is a well-established brand closely associated with the Indian landscape with immense brand recall value.

Today, the company benefits from having the longest surviving and resilient serving portfolios of brands within India.

It sells its products under multiple brands such as Siyaram, J. Hampstead, Oxemberg, and Cadini.

The company's product portfolio is a well-balanced mix of affordable and luxury products, appealing to both the mass and the premium consumer segments.

The company also has a wide distribution network, which gives ready access to a wide range of population. This makes Siyaram's brands the preferred choice in India's fast-growing yet untapped market.

The company has a strong offline presence in the market and now it is steadily strengthening its online platform while using leading third-party online channels.

This strong brand value has translated into robust financial. During the last five years, the company's financials have grown steadily, increasing investor confidence.

CAGR Growth of Siyaram Silk Mills Financials (2018-2022)

For nine months ended December 2022, the company's revenue saw a growth of 20%.

During the same period, it reported net profit of Rs 1,635 million (m), up 21% from Rs 1,352 m reported in corresponding period of the previous year.

Siyaram Silk Mills Financial Performance (9 Months Ended December 2022)

In the past five years, the company's long term debt has reduced significantly. In 2018 the company's total debt stood at Rs 1,345 m which was reduced to Rs 368 m by 2022.

Fashion industry is one of the most competitive industries in India. Despite strong competition from players within the industry, the company has been able to stand its ground.

The company's growth prospects for financial year 2023 look bright on the back of sectoral tailwinds.

For the past few quarters, the Indian textile industry was under pressure. High cotton prices, weak demand, muted cotton yarn spreads and sizeable premium in domestic cotton prices relative to international prices weakened the overall performance of the industry.

However, the sector's fortunes may soon improve as correction in domestic cotton prices, expanding yarn-cotton spread, initiation of demand from some retailers, and better demand from China are some of the factors currently in favour.

Apart from that, lowering of premium of domestic cotton over international cotton prices might boost the performance of textile companies.

How shares of Siyaram Silk Mills have performed recently

Over the last five years, Siyaram Silk Mills share price has fallen by 24.6%. In the past one year, it has fallen by 26.2%

In 2023 so far, Siyaram Silk Mills share price is down around 9%.

The company touched its 52-week high of Rs 697 on 2 May 2022 and its 52-week low of Rs 400 on 29 March 2023.

About Siyaram Silk Mills

Siyaram Silk Mills is an Indian blended fabric and garment-manufacturer, with an associated chain of retail outlets and branded showrooms.

The company was incorporated in 1978, and is headquartered in the Kamala Mills compound, Lower Parel, Mumbai.

The company is one of the most renowned vertically integrated textile companies in the country. It operates the widest range of latest machinery in its eco-friendly plant at Tarapur, Daman, and Mumbai.

To know more about the company, check out its factsheet and quarterly results.

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