This textile stock has rallied over 100% in 2 months as promoters up stake

Shares of Filatex India hit a fresh 52-week high of Rs 57.90 on the BSE in the intra-day trade on Tuesday, having more-than-doubled in the past two months, after promoters hiked stake in the company via open market.

In the past two months, the stock of the textile company​ has​ rallied 111 per cent from ​a ​level of Rs 27.40, as compared to​ a​ 23-per cent surge in the S&P BSE Smallcap index. Between November 19 and December 22, the promoters of Filatex India purchased 11.93 million equity shares, worth Rs 41 crore, of the company via open market, according to the disclosure made by the company to the stock exchanges.

The December quarter shareholding pattern also reveals that total promoter holding in the company has increased by 476 basis points to 65.23 per cent. The promoters held 60.47 per cent stake in the company at the end of September quarter, data shows.​ 

​​​Bodies corporate, which held 11.72 per cent stake in the September quarter, have reduced their stake in the company to 4.32 per cent during the quarter. While individual shareholders increased​ their holding in the firm​ to 16.4 per cent from 15.4 per cent​ earlier​.

According to ICICI Securities, Filatex​,​ being a major player in the Indian polyester industry​,​ appears well placed to benefit from enhanced margin profile for products like polyester chips, polyester oriented yarn (POY)​,​ fully drawn yarn (FDY)​ and​ drawn textured yarn (DTY).

As per Crisil data, margins for POY, that had fallen from around Rs 26​ per ​kg in March 2020 to Rs 12​ per ​kg in July 2020, have improved significantly and are trending better than pre-Covid levels at Rs 27​ per ​kg ​as of October 2020. The improved product margins augur well for its overall profitability, it said.

The brokerage expects margins to stay strong in ​October-March (H2FY21E) ​period, ​driven by improved demand scenario (both domestic​ and​ export) and capacity constraint ​as​ 7-8 per cent of ​the ​industry capacity ​is not functional owing to fire at one of ​the ​major manufacturer’s production facility in Silvassa. The supply shortfall is expected to continue as restarting the manufacturing facility would take some time​ and​​ that would enable better realisations ​for other players in the industry.

"The outlook for the polyester industry appears to be better​,​ owing to enhanced government focus on the sector with support for the sector through production linked incentive (PLI) scheme. Also, withdrawal of antidumping duty on PTA (key raw material for polyester) from February 2020 is ​a ​positive for the sector as yarn manufacturers are now able to procure PTA at international price parity that is expected to improve their margin profile. The enhanced demand for polyester-based products would improve Filatex’s utilisation levels and will further augment the margin profile," the brokerage said in a stock update. The stock is​,​ however​,​ trading above ​the ​target price of Rs 55 per share.

The board of directors of Filatex India ​are scheduled to meet on January 12​ ​to consider and approve the financial results for the quarter ended December 31, 2020 (Q3FY21).