Gtn Textiles

GTN Textiles is an exporter of yarn mainly in the value-added upper count range. Of its total annual output almost 90 per cent is exported with 70 per cent of its production exported to Japan and Italy. GTN's three units in the South gives it an advantage to high count cotton.

The company undertook an expansion and modernisation programme at its existing units at a cost of Rs 56.26 crore. This programme envisaged the enhancement of its spindleage to 90,160 spindles. During 1996-97 the company spent Rs 45 crore and increased its spindleage to 89,284. In addition to this, GTN also decided to set up a yarn processing unit with a capacity of 8 tonnes per day at a cost of Rs 47.7 crore.

The benefits of this have started to accrue in the second half of 1996-97 came at a time when the prospects for the industry were beginning to look up. This has paid off for the company as it has put up a good performance in the first half of 1997-98. During the period, GTN has recorded a 60 per cent increase in sales to Rs 85.53 crore and despite interest going up from Rs 3.71 crore to Rs 6.37 crore and depreciation rising from Rs 2.45 crore to Rs 3.88 crore resulting from these ventures the company's net profit has risen by 75 per cent to Rs 7.07 crore.

Technicals

The scrip has dropped from Rs 215 in the last quarter of 1994 to a recent four year low at Rs 33. It has found support on very high volumes at the current levels. It ought to rise to the Rs 43-48 zone before it sees strong resistance. The next upside resistance will be at Rs 60. The scrip seems to have hit rock bottom and the short and intermediate trends are positive. However there is lots of selling pressure in the Rs 43-48 zone and that will take many months to overcome. Buying the GTN stock seems a good calculated risk. The trader can take profits at the Rs 45 level while the long term investor can accumulate a large position anywhere below Rs 40.