Scripscan:TT Ltd
cmp:14
Code:514142
Story:TT, formerly Tirupati Texknit, started off as a manufacturer and exporter of yarn, knitted fabrics and hosiery. Majority of its revenues is derived from exports.A bumper cotton crop in recent years has led to a sharp jump in cotton exports. India has now emerged as the second largest exporter of cotton, replacing the US as the primary supplier to China's spinning mills.TT has been able to capitalise on this trend.Its revenues from cotton exports have expanded in a big way over the last 3-4 years.While the near-term prospects are bright, a growing bias towards the cotton segment could introduce lumpiness in performance over the long term, as revenues would be vulnerable to crop output. TT would have to improve its performance in the knitted fabrics and garments segment, where revenues have stagnated.These value-added segments contributes hardly.The increasing emphasis on low-margin businesses could act as a drag on profitability.While the near-term trend for cotton and yarn exports appears bright, there is not much room for expansion in operating margins,which are low.Investors can consider superior options in the textile space.
Monday, October 5, 2009
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