Financial Daily from THE HINDU group of publications
Sunday, Dec 04, 2005
Financial Daily from THE HINDU group of publications Sunday, Dec 04, 2005 |
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Investment World
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Stocks Markets - Recommendation Pioneer Embroideries: Buy Shanthi Venkataraman
AN investment can be considered in Pioneer Embroideries. At Rs 92, the stock trades at a valuation of nine times its trailing four-quarter per-share earnings. With a market capitalisation of about Rs 100 crore, the stock could, however, be subject to greater volatility. Pioneer Embroideries has a 15 per cent share of the embroidered fabrics and laces market, which primarily find application in ladies apparel. Revenues are likely to be buoyant in the forthcoming quarters on the back of robust demand from domestic garment manufacturers and exporters. Over the past year, reduction of export incentives and better realisations in the domestic market has resulted in a lower contribution of exports to its overall revenue of Rs 115 crore. The company is, however, in the process of setting up a plant in Nigeria, expected to be operation in FY07, to cater to the strong market in Africa. The Korean unit, which it acquired earlier this year, would also equip it with the design and marketing base to tap the European market. The domestic market, however, holds greater potential. Pioneer Embroideries has scaled up its retail presence with about 17 stores under the brand name "Hakoba" spread across the country. The retail division is operated through its subsidiary Hakoba Lifestyle. The division has seen a strong growth over the past year and has begun to make profits. Increasing visibility, as it penetrates more cities, is likely to help demand, even as the company adds to its product range. Expansion plans include setting up of a facility in North India to meet the additional demand from its outlets. It is to also set up a rope dyeing plant in Himachal Pradesh to partly meet its in-house demand for coloured yarn.
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