Scripscan:Bannari Amman Spinning Mills Ltd
Code:501209
Cmp:55
Story:Bannari Amman Spinning Mills Limited (BASM), established in 1995 is a reputed player & a leader in cotton yarn segment in South India. BASM is a part of the Rs. 1,200 crs. Coimbatore based Bannari Amman group.Since inception BASM has evolved to be a leader in cotton yarn spinning in South India,Commanding a premium in the market for its products.Spinning and weaving units were expanded/modernized during 2008-09.About 25% of production is exported to countries such as Israel, Mauritius, Egypt, Taiwan, South Korea etc.The company operates in a niche segment and is a focused quality player earning higher than industry margins.It has two spinning units near Dindigul with installed capacity of 1.37,232 spindles, weaving division near Palladam with installed capacity of 135 looms, processing and technical textiles near Annur with capacity to produce 24 lakh meters of coated fabric per year and 27 windmills with installed capacity 23.40 MW of power all in Tamil Nadu.The expansion of its spinning unit, and integration into fabrics and home textiles has enabled the company to compete in the export markets with larger scale of operations.The higher value addition insulates the company from pricing pressures in the highly commoditised cotton yarn industry.Bannari came with its ipo in 2005 at 135 bucks and since then have been struggling to find attention from the retail fraternity.Valuations are pretty cheap with company quoting at a forward PE of less than 2.Low discounting suggests lack of investor confidence in the company.Investors who are stuck on this scrip should hold at the moment.Any inspiring announcement or some aggressive developments may just be the order of the day for the company.
