First Winner Industries, a small textile trader in the complete textile industry chain, is into the business of supplying textile fabrics to wholesalers and apparel and garment manufacturers. In FY07-08, to enter the manufacturing activity, it had fully commissioned 100 looms (weaving machines) to manufacture fabrics. Its facility is located at Tarapur, Maharshtra.
It has two subsidiaries – Ramshyam Textile Industries and First Winner Lifestyle (formerly called Realgold
Exports), both are into similar line of business. Both entities became subsidiaries of First Winner from April 1, 2007. Each subsidiaries is equipped with 48 weaving machines with a total production capacity of 104 lakh meters of fabric per annum.
Core aim
Through this public issue, First Winner intends to utilise the funds to set up an apparel manufacturing facility and an additional weaving unit. The project will be commissioned in March 2009. The issue?s size is between Rs 66 crore and Rs 71.5 crore, considering the lower and higher end of the price band. It is understood from its expansion plans that the company intends to become a complete integrated player in the textile market. Being a late entrant in the manufacturing activity in this wafer-margin and intense competitive industry, providing quality and consistent gradation of fabric and maintaining stable margin would be a major issue.
Be cautious!
Considering all the above factors, it is better for the investor to wait and see how the company shapes up post-commission of the plant and the subsequent results delivered by the company. If one looks at valuation, the fully diluted, consolidated and standalone annualised earning per share is Rs 8.56 and Rs 3.46, respectively. Considering the lower and higher price band, the consolidated price to earning is 14 times to 15 times.
The post-issue valuation looks steep as compared to Richa Knits has a annualised P/E of 6.55(x) which is much lower. Investors must consider the above factors before investing.