Undervalued small cap’s net profit rose to ₹11.4 Crores, stock plunges
2 min read . Updated: 13 Jan 2023, 03:36 PM IST
Premium- With a market valuation of ₹267.71 Cr, Alstone Textiles (India) Ltd. is a small-cap company that operates in the consumer discretionary goods and services (CDGS) sector.
With a market valuation of ₹267.71 Cr, Alstone Textiles (India) Ltd. is a small-cap company that operates in the consumer discretionary goods and services (CDGS) sector. The company deals in textiles such as cotton, woollen, art silk, natural silk, ready-to-wear apparel, hosiery, synthetic fibre and fabric, and mixed fabrics.
Alstone Textiles (India) recorded a net profit of ₹11.40 crore for the quarter that ended in December 2022 as opposed to a net loss of ₹0.01 crore reported in the year-ago quarter. During the quarter that ended in December 2022, the company's revenue from operations was reported to be ₹3.25 crore. During the year-ago quarter, which ended in December 2021, there were no sales recorded. Alstone Textiles (India) is reported an earning per share (EPS) of ₹0.089 compared to a negative earning per share (EPS) of ₹0.008.
The average net profit growth YoY for its sector for the quarter was 173.4%, and the share is trading at x0.2 times book value. The firm's revenue from operations for the six months ended September 30, 2022, the period for FY23, was ₹10.92 crore. The net profit for the period was ₹9.22 crore, maintaining the streak of profits that began in the December 2022 quarter when the company declared a profit of ₹11.3 crores.
The firm has set its course for a successful voyage in the upcoming fiscal year, where it plans to quadruple its textile exports to Europe and Asia. The firm was able to demonstrate a rise in revenue of 45% from the previous quarter, resulting in a 40% growth in quarterly profit, from Rs. 8 crores in the previous quarter to Rs. 11.39 crores in the quarter that ended in December 2022. By increasing production two times over the previous quarter and setting up new machines for the processing of cotton textiles, the firm was able to turn a profit. Alstone Textiles has also gained a number of foreign clients who are bringing in at least three years' worth of retainable revenue for the company.
The fact that the share's book value is Rs. 10.5 and the share is now trading at only Rs. 2—or x0.20 the book value—makes it clear to investors that the share is much undervalued and has the potential to generate significant profits in the future. Price to Earning Ratio is 1.3, below the 246 PE ratio for the sector, and Debt to Equity Ratio is 0.0, which is below 1 and acceptable. This suggests that its assets have significant potential for future expansion and are mostly funded by equity.
The company was able to maintain a respectable 13% profit margin in the December 2022 quarter, which shows that the promoters are managing the company' finances effectively. The highest recovery from its 52-week low was demonstrated by this inexpensive stock in the most recent quarter.
Ravi Singhal, CEO, GCL Securities said “Stock has strong support near 1.5 where on other hand resistance near 3 stock looks to spend some time in this range. Whenever break outcomes on either side then only a big move can be expected."
The shares of Alstone Textiles (India) Ltd closed today at a price of ₹2.10 apiece level, down by 4.98% from the previous close of ₹2.21. The stock recorded a total volume of 1,954,946 shares. In the last 1 year the stock has fallen 86.67% and on a YTD basis it has fallen 25.80% so far in 2023. The stock had touched a 52-week-high of ₹3.48 on (23/11/2022) and a 52-week-low of ₹0.15 on (24/08/2022).
