.: Technical view by Nooresh on Sensex/Stocks/Commodities

Monday 13 October 2014

Technical view by Nooresh on Sensex/Stocks/Commodities

Interesting Small Cap Company – T T Limited

Posted: 13 Oct 2014 01:34 AM PDT

This is an interesting company in the Textile Sector.

Disclosure : The stock has been recommended at 34-38 and 42-43 in Big Value 2.0 and Technical Traders Club. So we have vested interests. Please do your own research and read the disclaimer.

Technical Reason

-> The company has been listed for last 20-25 years.
-> It is only back to the price of 40-50 what it was in 1992.
-> Price and volumes have picked up in last 6 months.
-> After making 2 attempts at similar price points in 2005/2010 the stock has given a breakout.
-> Such breakouts are generally an indication of a big change in the company going forward.

Fundamental Reasons

The good

-> First undergarments company listed in India. ( been a downslide post it)

-> A 750 cr topline , 60 cr ebidta, 8-9 cr PAT. Current Market Cap at 90-100 cr. The concern is the 300 cr debt.

-> Expansion in Gujarat and a not so good advertisement being seen as well as a lot of PR activities. Like this video.

-> Promoters have increased stake in the last 3 years by 3%.

-> Company pays dividend of 1 rs for past couple of years.

-> If the company can get its act right it can have a potential to do 20-40 cr PAT also. They did 15 cr PAT in 2010 with a good industry headwinds on a 480 cr topline.

-> It was a well known brand in the 1990s and if it can rebuild on it , there is a huge potential.

-> I personally believe times are changing for textile sector in India. We do prefer KPR Mills for a larger allocation.

The bad.

-> The management has not shown good capabilities ? Why do i say so. They expected a 20 cr Pat in 2011 and ended up with a loss. But a lot of textile companies were gung ho in 2011 and then the cycle changed.

-> This is the interview – TT Ltd eyes Rs 550cr topline, Rs 20cr profit this year

Conclusion

We already have an exposure to the stock at lower levels but allocations are low as its a small cap co and risky. But expectations are for good returns over the next 1-2 years.

Downside risk in such stocks can be big but on declines can be an interesting company.

Interesting Small Cap Company – T T Limited is a post from: Technical view by Nooresh