Synopsis: Textile stocks moved into focus after Pine Oak Global Fund acquired a 5.18% stake in Vardhman Polytex for Rs 10.35 crore and invested Rs 1.49 crore in Candour Techtex Limited, signalling selective FII confidence in turnaround and speciality textile plays.
Two textile stocks started gaining momentum after Pine Oak Global Fund acquired stakes in Vardhman Polytex and Candour Techtex through bulk deals. This is an indication that foreign investors are taking interest in turnaround investments as well as speciality textile companies, despite the cyclical demand pressures faced by the textile industry.
Vardhman Polytex Ltd
VPL is a flagship company of the Oswal Group and manufactures a a range of cotton yarns (carded, combed, organic, and BCI), cotton polyester yarns and value-added yarns (grey and dyed) in variable counts. The company has entered into arrangement with few vendors, from whom company purchases raw materials, processes it and sells the finished output back to them
With the market cap of Rs 330 crore, the shares of Vardhman Polytex Ltd have gained about 8% and reached a high at Rs 7.49 , compared to the previous day’s closing price at Rs 6.91. The shares are trading at a PE of 10.6, whereas its industry PE is at 19.7.
Vardhman Polytex emerged as an investment opportunity after the Pine Oak Global Fund made an investment of 1.5 crore shares (5.18% stake) at Rs 6.9 per share in a secondary transaction, investing Rs 10.35 crore. The arrival of such a large foreign institutional investment indicates that there is growing optimism about the company’s turnaround prospects, particularly in a stressed textile industry.
The purchase of the stake indicates that there is hope for improvement in operations and the balance sheet, as Vardhman Polytex has been facing challenges in terms of cyclical demand in yarn and fabric sales.
Candour Techtex Ltd
Candour Techtex Limited is engaged in the manufacturing and supply of technical and speciality textiles, catering to industrial and functional fabric applications rather than regular apparel textiles.
With the market cap of Rs 280 crore, the shares of Candour Techtex Ltd have gained about 3% and reached a high at Rs 151.95 , compared to the previous day’s closing price at Rs 147.95.
Candour Techtex was also in focus as Pine Oak Global Fund acquired 1 lakh shares at Rs 149.45 per share, which translates into an investment of Rs 1.49 crore. Although relatively smaller in value, it is significant in the sense that it marks selective interest of FIIs in niche textile and technical fabric companies.
The acquisition marks confidence in the speciality textile play of Candour Techtex, where the margins are generally higher than commodity textiles. Execution, order inflows, and cost management will be critical triggers, and the fact that FIIs have shown interest in the stock is a positive factor.
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