Share Trading Tips

CMP – 120

Belonging to LNJ, Bhilwara Group, RSWM Ltd. is the biggest and amongst the oldest manufacturer of P V Yarn in India. Company has installed capacity of 3.50 lakh spindles: RSWM also has following divisions :- 1. Mayur Suitings: Comprising of weaving, processing etc. Earlier, this division was making big losses. Now, it is breaking even. 2. Denim: Last year this division made losses. Now, due to turnaround, denim division has started making reasonably good profits. 3. 48 MW Power Plant. RSWM is also largest exporter of yarn from India. Small Equity of 23 cr. which means, Equity: Turnover Ratio is more than 70 Yarn prices have touched all time high whereas, R/M prices are still at reasonable levels. Present market cap of RSWM is just Rs. 250 cr. whereas, cash profit of 2 years is also to be around 250 cr. Finally, RSWM is holding significant stake in Bhilwara Energy. Bhilwara Energy is in Hydel Power and on the verge of launching IPO. Exact valuation of RSWM holding is not known. But, it can be more than Rs. 500 cr. Stock is trading at :- A) 1 x FY10E/11E Cash Profit. B) 6.05 x FY10E EPS. C) 3.18 x FY10E Cash EPS. D) 3.90 x FY11E EPS. E) 1.90 x FY11E Cash EPS. RSWM is ‘Vardhman Textile’ of Synthetic Textile Industry. Scrip has potential to deliver 50% appreciation in next few months
and more than 100% appreciation in 2011. Investors may buy big quantity.