Stock watch: Rajasthan Spinning

The bullish outlook on Rajasthan Spinning and Weaving Mills has seen a surge in volumes at the counter. The trading volume at the counter has doubled over the past week, while it has gone up three times over the past month.

However, the advance in stock price has not reflected the growing interest, as the stock has only appreciated 2 per cent over the last week. Analysts feel that the stock looks cheap at the current levels, given the bullish outlook on the company and its attractive valuations.

The stock trades at a trailing 12-month price-to-earnings ratio of 12.6 times. The Rs 730-crore company, a part of the LNG Bhilwara Group, is an integrated textile player. It is the largest manufacturer and exporter of synthetic spun yarn and a leading supplier of fabrics, under the flagship brand "Mayur" suitings.

The company has earmarked a total investment of Rs 400 crore for modernisation and enhancement of spindleage, a 20-million metre denim project, a 48 MW captive power plant and increase of garment capacity to 13,000 per day.

The companies' profitability is expe cted to improve due to better realisations on account of high-end products and substantial savings in interest and power costs due to loans availed under TUFs and captive power plant respectively.