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Wednesday, Aug 17, 2005

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S Kumars Nationwide gains on retail and export focus

Virendra Verma

Mumbai , Aug. 16

SHARES of S Kumars Nationwide Ltd (SKNL), a textile company, are moving upward on news that it plans to focus on exports and retailing of branded textiles and garments.

The company's financial restructuring is also seen as positive for the stock, analysts said.

In today's trading, the SKNL stock rose 8.19 per cent at Rs 44.25 on the BSE, with volumes of 3.65 lakh shares.

According to broking firm Prime Securities, SKNL would leverage the retail set-up of its worsted fabrics division with the exclusive stores marketing `Reid & Taylor' fabrics and ready-to-wear garments. In addition, the company has retail plans for its Reid & Taylor ready-to-wear garments. Within this segment, it plans presence in 50 multi-brand outlets in the current fiscal, taking the figure to 150 by fiscal 2008.

Traders said the company has also set up a separate division to export textile to Scottish company Reid & Taylor, which owns this brand globally.

For its mid-price brand Tamariind, the company plans to set up 20 exclusive stores this fiscal, increasing the figure to 30 in 2008. It also plans presence in 600 multi-brand outlets this fiscal.

It is setting up a high-value fine cotton fabrics division for exports and this would target international premium brands.

"SKNL's operations range from spinning, at one end of the spectrum, to garments at the other. With a presence across the entire value chain, coupled with an ability to deal with almost all key fibres, SKNL has great scope for new product development," Prime Securities said. "With enhanced focus on more value, SKNL plans to alter its sales mix towards more value-added products, using various fibres yielding better margins."

The recent financial restructuring would help the company reduce interest cost as the interest rate on loans has been reduced from 15 per cent to 6-7 per cent, and the repayment programme would match future business cash flows.

"With declining interest rates, growing domestic demand, revival in the global economy, mushrooming organised retail, government initiatives and growth potential in the post-quota regime, SKNL is expected to have significantly better times ahead," said Prime Securities, which has recommended a `buy' on the stock.

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