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Wednesday, June 23, 2010

Hot Pick : Shri Lakshmi Cotsyn Ltd. Bse Code: 526049

Shri Lakshmi Cotsyn Ltd. is a USD 250 million company. A premier manufacturer of home furnishing products and enjoys competency in manufacturing denim fabric, terry towels, bed linen, cotton fusible interlining, embroidered fabric, technical textile products and ballistic products.

An armoring division of Shri Lakshmi Cotsyn Ltd. (SLCL) has recently made an entry into India’s growing defence market with the launch of complete 360 degree armored vehicles for Indian armed forces and police. The company has introduced an exclusive range of uniquely designed models of 360 deg. protected Armored Vehicles which includes “DHRUV – ATC” (Armored troop career), “DRONA – MPV” (Blast & Mine protection vehicle) and “VIPER” (Fast Moving Attacking vehicle). The company engaged in processing a very wide range of end-to -end textile products has diversified its portfolio by getting into specialized armored vehicle segment.

The high-end 360 degree protected armored vehicle, which is a first- of its- kind in India with bullet, mine and blast proof capabilities will be showcased in New Delhi in October 2009.

The company has recently renamed Armet Armored Vehicles (India) Ltd. as Shri Lakshmi Defense Solution Limited, a 100% subsidiary of SLCL. It’s new unit near Kanpur, Uttar Pradesh has commenced commercial production and is in the process of delivering its first bullet proof vehicle “DHRUV” (Armor troop carrier) to Special Task Force.

The company imports chassis from reputed international firms like Ford Motor and General Motors and then fabricates indigenously at its plant. SLCL plans to make around 300-400 vehicles a year and expects a turnover of Rs 150 cr in the first year of its operation.

The company currently is in talks with Indian paramilitary forces and also some high-value customers in India, Europe and the Middle-East who want their vehicles to be armored with Level-B7 protection with bullet, mine and bomb-proof accessories. The armoring could cost anywhere between Rs 50 lakh to over Rs 1 crore, depending upon the accessories embedded in the vehicle.

Dr. M. P Agarwal, CMD, Shri Lakshmi Cotsyn Limited said in a recorded interview: “While presenting the Union Budget Finance Minister Pranab Mukherjee allocated $28 billion for defense which is the highest ever allocation for the defense sector. For SLCL it is a logical move to be part of the Indian government's efforts to broad base defense procurement from the private sector. We see significant growth opportunities in the domestic as well as global defense market. Our high-end 360 degree armored vehicle will aid security forces counter threat and enhance combat efficiency.”

“SLCL is an approved vendor with host of Indian defense establishments. The company has been already supplying safety textiles such as bio- chemical, high altitude fabric, bullet-proof jackets and bullet-proof helmets, camouflage fabrics, uniform fabric, IR fabric and carbon fabric to Indian defense establishments. The company post its exhibition in Delhi expects to fetch large orders for its 360 degree protection armored vehicle from Indian defense forces and state police forces. The order flow is expected to give significant boost to our commercial sales.” Dr Agarwal added.

At cmp of 140, the Stock is trading at a mouth-watering PE of just 2.5!! The Book Value of Shri Lakshmi Cotsyn Ltd. in June, 2009 itself was Rs. 175.33 (source: moneycontrol). Add to it the Enterprise Value and the Fair Value of such a high growth company should not be less than 500, giving it a fair PE ratio of 10. The company's business prospects are excellent and it has shown a growth of 63% in the last quarter as compared to the same quarter in the preceding year. The Promoters have increased their shareholding in the company from 43.31% in March, 2009 to 47.91% in March, 2010. To conclude, this stock is an excellent Investment Opportunity.

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