The business of supplying textile fabrics to wholesalers and apparel and garment

Tag : weaving fabrics

First Winner Industries, a small textile trader in the completetextile industry chain, is into the business of supplying textile fabrics to wholesalers and apparel and garment manufacturers. InFY07-08, to enter the manufacturing activity, it had fullycommissioned 100 looms (weaving machines) to manufacture fabrics.Its facility is located at Tarapur, Maharshtra.
It has two subsidiaries - Ramshyam Textile Industries and FirstWinner Lifestyle (formerly called Realgold
Exports), both are into similar line of business. Both entitiesbecame subsidiaries of First Winner from April 1, 2007. Eachsubsidiaries is equipped with 48 weaving machines with a totalproduction capacity of 104 lakh meters of fabric per annum.
Core aim
Through this public issue, First Winner intends to utilise thefunds to set up an apparel manufacturing facility and an additionalweaving unit. The project will be commissioned in March 2009. Theissues size is between Rs 66 crore and Rs 71.5 crore, consideringthe lower and higher end of the price band. It is understood fromits expansion plans that the company intends to become a completeintegrated player in the textile market. Being a late entrant inthe manufacturing activity in this wafer-margin and intensecompetitive industry, providing quality and consistent gradation offabric and maintaining stable margin would be a major issue.
Be cautious!
Considering all the above factors, it is better for the investor towait and see how the company shapes up post-commission of the plantand the subsequent results delivered by the company. If one looksat valuation, the fully diluted, consolidated and standaloneannualised earning per share is Rs 8.56 and Rs 3.46, respectively.Considering the lower and higher price band, the consolidated priceto earning is 14 times to 15 times.
The post-issue valuation looks steep as compared to Richa Knits hasa annualised P/E of 6.55(x) which is much lower. Investors mustconsider the above factors before investing.