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Mahavir Spinning: Buy
Shanthi Venkatraman
AN investment can be considered in the stock of Mahavir Spinning. It has notched up smart gains over the past couple of months, there is, still, room for appreciation.
As one of the larger producers and exporters of cotton yarn, Mahavir Spinning is poised to capitalise on the growth opportunity in domestic and export demand from 2005. Quantitative restrictions on imports of textiles and clothing would be removed in January 2005 and this would expand the market.
Despite a worrying lull (which has now ended) in the monsoon, there are indications of an increase in cotton production. This may ensure that cotton prices remain stable, and ease the pressure on margin of Mahavir's yarn and thread business. Its yarn is used to make high-quality garments. This should stand it in good stead in catering to the demands of higher-end domestic garment manufacturers. The company plans to set up a weaving unit to supply to Vardhman Spinning; this should further augment revenues. An impressive growth in its special steel business, on the back of improved realisation has also pepped revenues and earnings. Buy with a one to two-year perspective.
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