Shares of Indo Count Industries, one of India’s largest home textile manufacturers, have recently gone through a rollercoaster ride. From October last year to March this year, the stock witnessed a significant decline, losing approximately 54% of its value.
However, in April, there was a strong rebound with a gain of 20.85%, followed by an even more impressive return of 27.75% in May. As of the current month, the stock has continued its upward momentum with a rally of 13%, resulting in a cumulative gain of nearly 74.47%.
During the period from May 31 to June 05, the stock skyrocketed 36.5% to record a new one-year high of ₹214.85 apiece. This recent surge pushed the stock to trade 93.09% higher than its 52-week low of ₹101.2.
Investors responded positively to the company's Q4FY23 numbers, leading to this impressive performance.
The company recorded a substantial 150% QoQ surge in consolidated net profit to ₹95 crore, marking an 11.75% YoY increase. During the quarter, sales volume showed notable improvement, reaching 20.4 million meters compared to 17.6 million meters. For the full fiscal year (FY23), total volume came in at 74.7 million meters, with average realisations rising by 6% YoY to ₹387/meter.
Driven by strong volume growth, revenues experienced a 22.35% QoQ and a 17.40% YoY rise to ₹810 crore. On the operating front, EBITDA reached ₹147 crore in Q4 FY23, compared to ₹78 crore in Q3 FY23, while the EBITDA margin expanded by 600 basis points to 18% in Q4.
Looking ahead, Indian textile manufacturers stand to benefit from government initiatives like Atmanirbhar Bharat, PLI schemes, and textile parks. Furthermore, the ban on cotton from the Xinjiang region could drive higher demand for Indian cotton textiles.
Meanwhile, the government has recently executed FTAs with Australia and UAE, and ongoing negotiations with the UK, Canada, EU, and GCC present new market opportunities for Indian home textile exports.
Domestic brokerage firm ICICI Direct Research projects a revenue CAGR of 13%, driven by a volume CAGR of 16% in FY23–25E. It anticipates EBITDA margins of 15.5–16% in FY24–25E.
With the recent acquisition of GHCL, the company aims to tap into an untapped customer base, expanding its global market share. Cross-selling value-added categories to GHCL's existing clientele and focusing on the B2C and D2C segments through branded portfolios are expected to enhance margins, according to the brokerage.
Indo Count Industries is a small-cap stock with a market capitalisation of ₹3,872 crore. The company is one of India’s largest home textile manufacturers and exporters, with an extensive product range that spans across bed sheets, quilts, and bed linen. It has a presence in the nine out of 10 top big box retailers in the US.
The company exports to nearly 54 countries, with the US being the prime market.
03 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.