The Hindu Business Line : Alok Ind makes gains on robust business model

Brokers said that of late FII interest has been on the rise at this counter. The stock has appreciated by almost 62 per cent from around Rs 37 level on October 17, 2003 to its current market price of Rs 60.

Analysts maintain that the `export story' will be the main trigger at this counter. ``Alok has developed a strong presence in the global home textile segment. It has a strong and diversified client list which stands testimony to this fact,'' says analyst Ms Bela Agarwal of B&K Securities.

It supplies to global brands such as Target, Bed & Bath Linen, CMN and Walmart. It also supplies to big garment houses that cater to international labels such as Tommy Hilfiger, JC penny, DKNY and Calvin Klein. In the domestic front it supplies to Indian brands like Zodiac Clothing.

Analysts opine that the company's USP is that it is as competitive as China in terms of price and quality. ``Plus it is able to produce short run value-added products with varied degree of design. Above all, it has a big cushion to guard against any price cuts post quota, owing to high operating margins,'' sources said.

The company proposes to increase its weaving and texturing capacity to further enhance profitability.

Market sources maintain that while in the past there have been concern over the management, these have been assuaged by the fact that IFC has extended it $20 million. This is viewed as an indication of its credit worthiness.

The fact that a Rs 3,50-crore quota has been allotted to it for the year 2004 has only served to strengthen its position in the market. These quotas are allotted on the basis of past performance, capital expenditure and the realisations of the company. Higher the realisations, more is the quota allotted to the company since this means higher earnings for the country. ``Considering Alok's business model, it will be one of the immediate beneficiaries in the post quota-era. And with its product mix shifting to more profitable products and increase in capacity, turnover and earnings are expected to go up. Looking at its potential growth, we believe that the company is trading at a discount to its fundamental,'' Ms Bela Agarwal said.

The stock ended the day at Rs 59.80, up 3.46 per cent, with around 1.2 lakh shares traded on the BSE. On the NSE, the stock ended the day at Rs 60.15, up 3.62 per cent, with around 3.19 lakh shares traded.