Investor interest in Siyaram on the rise

A consistent financial performance of Siyaram Silk Mills, a blended fabric and garment-manufacturer despite

slow economy is attracting heightened investment interest. The company, despite high volatility in raw material prices in the last three years, has maintained its operating profit margin in the range of 12-13 percent and its net profit margin at around 5-6 percent.

Having a strong marketing network of one lakh retailers has positively worked in favour of the company helping it reach out to every corner of the country. The company's stock has been performing well, which has gained 50 percent in last months. The ET Textile Index, a composition of textiles companies across the value chain, has also appreciated 27.5 percent during the same time.

Siyaram’s close to 80 percent of revenues are contributed from sale of fabrics, 16 percent from garments, and 4 percent from yarn. It’s portfolio of brands, consisting of leading names like Siyaram, J Hampstead, Oxemberg and MiStair, are being well-accepted by the target audiences.

In the last three years, Siyaram Silk Mills, carried out capacity expansion at capital expenditure of Rs 220 crores, by adding 200 looms and 110 machines for ready-made garments. This boosted its weaving and garment capacities by 2 crore meters per annum and six lakh pieces per annum, respectively. In the March 2014 quarter, net profit rose by around 55 percent on a year-on-year basis to Rs 20.2 crores. Its net sales grew 40 percent to Rs 405 crores on a year-on-year basis. On the valuation front, the company's stock is trading at a price-to-earnings multiple of 4.1 times on a one-year forward basis.

Recently, the company handed over its digital duties to Cogmat, which will look after its overall online presence, which includes SEO, social media marketing and online media for the group's brands with a strong focus on creating engagement and reaching out to the right audiences via these channels.