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Friday, July 10, 2009

Good Small Cap Stock To Buy - Sarla Performance Fibers Ltd

Sarla Performance Fibers Ltd. (formerly Sarla Polyester Ltd) is a 100% Export Oriented Unit (EOU) manufacturing Polyester, Polyamide (Nylon) Texturised yarns & conventional/air covered Lycra/Spandex yarns.

Good Small Cap Stock To Buy - Sarla Performance Fibers LtdSarla Performance Fibers ,is one of the well established and niche companies exporting Regular as well as High Tenacity Polyester and Nylon Yarns. It started its operations 15 years back as a commodity manufacturer of Man Made Fiber. However, in the last five years, it has successfully transformed its business strategy and implemented a niche business model. It has an installed capacity of 11464 MTPA for manufacturing yarns in Silvassa and a Dyeing unit at Vapi.

The companys emphasis has been to focus on niche end user applications, higher value added yarns to leading global apparel brands and companies. While it still manufactures some commodity yarns, the major focus has been in the area of Performance Fibers. To aid the strategy further, the company has also set up a manufacturing facility under JV in 2006 in Honduras, Central America. This would enable the company to tap the North American market, the largest market for performance yarns in the world. With this JV, it now positions the company to supply the global textile majors such as Delta, Hanes Brands Inc.,Fruit of The Loom, Russell etc. due to global positioning for supplying of its products.

With the signing of the CAFTA treaty major garment and apparel companies (especially North American Companies) are shifting their manufacturing facilities to Central America resulting in this region becoming a fast growing textile manufacturing hub .The company is also amongst the very few Nylon 6 producers in the country and intend to further expand the value chain.

Market Cap 40.21
* EPS (TTM) 11.98
* P/E 4.83
P/C 3.07
* Book Value 98.51
* Price/Book 0.59
Div(%) 35.00
Div Yield(%) 6.05
Market Lot 1.00
Face Value 10.00
Industry P/E 4.18

Promoters are aggresive and they are commited to make lot of shareholders wealth in the long run.They themselves have taken warrants at 150 odd rs which speaks about their confidence in the company.Valuation wise too its quoting at lower single digit one year forward basis.

A great small cap stock to buy for the long run.

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