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The scrips of apparel companies are riding a wave of positive consumer sentiment and strong fundamentals. Clothing manufacturers have seen increased retail offtake and exports over the last one year, consolidating their positions on the stock exchanges.
Indian Terrain Fashions’ scrip ended Thursday’s trade at ₹180 on the BSE. The stock hit its ceiling price in each of its past five trading sessions, achieving a 29 per cent growth in one month.
“The rally is on budget expectations from the new Government, which we believe will be supportive of the consumer sector,” said Charath Narasimhan, Chief Executive Officer, Indian Terrain Fashions.
The company’s net profit for the fiscal year 2014 more than doubled to ₹9.88 crore. The brand’s prospects are brightening with aggressive expansion in Tier II and Tier III cities. It opened three stores in Andhra Pradesh during the June quarter.
Raymond hits 52-week high The bull run also covers other garment manufacturers with their own retail front-ends such as Arvind and Raymond Textiles. Arvind, a large player in denim exports and apparel retailing, has seen its scrip rise 27 per cent in a month. It hovered at ₹244 on Thursday. Raymond, a branded fabric manufacturer, saw its net profit zoom from ₹29 crore to ₹107 crore on cost rationalisations, according to research reports by stock broking firm Sharekhan. The share price hit its 52-week high on Thursday.
“The scrips are helped by the general optimism in the stock markets. People are buying more clothes, leading to increased offtake by retailers,” says Ankur Bisen, Vice-President — Retail and Consumer Products at Technopak, a consultancy.
He added that garment makers running their own retail stores are better placed in executing growth strategies, compared to those who sell to retailers. “Rising costs associated with the brick and mortar format may make it slow for retail expansion. In this scenario, investors will favour companies with a strong track record,” he said.
Garment maker Provogue’s scrip has held its position around at ₹12.5 while Future Lifestyle Fashion of the Future Group has gained 14 per cent over a month. The company raised ₹300 crore through preferential allotment during the fourth quarter of last fiscal to fund retail expansion.
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