Denim Demand Spurs Arvind, Kg Denim

Revival in the global demand for denim had led to a surge in the scrip prices of domestic companies such as Arvind Mills and K G Denim.

The shares of Arvind closed 4.5 per cent higher at Rs 22.25, hitting an intra-day high of Rs 22.85. More than 8.7 lakh shares were traded on the Bombay Stock Exchange on Monday. The scrip of K G Denim also climbed by around 5 per cent to close at Rs 13.35, which was also the day's high. Nearly 3 lakh shares exchanged hands on the BSE in this counter.

The price movements of two scrips over the last few months have been interesting. The share price of Arvind has appreciated by around 151 per cent in the past six months, from Rs 8.85 on January 18, 2002 to today's close of Rs 22.25. K G Denim has also jumped by a massive 434 per cent from Rs 2.50 on April 11 to today's Rs13.35.

 

There has been a recovery in the international market - not only in terms of demand for the product but a bullishness in the prices of denim owing to a sudden shortage of the fabric, which is a result of several manufacturers shutting shop.

Raw material prices such as cotton and yarn are also expected to stable in the near term and this has lent some stability to the sector as well.

At a micro level, Arvind Mills has restructured itself to some extent by retiring high cost debt.