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Friday, February 26, 2010

Sky Industries Ltd:Buy/sell/hold,growth prospects and recomendation,news and results,target price and analysis,views and outlook

Scripscan:Sky Industries Ltd

Story:SIL is engaged in manufacturing a wide spectrum of narrow fabric items like hook and loop fastener tapes, knitted elastics, woven elastics, webbings etc.With manufacturing plants located at Vashi (New Bombay), Sachin at Surat and at Daman. SIL is the largest manufacturer of hook and loop tape fasteners in India and these hook and loop fastener are marketed under the brand "Sky magic" with a market share of more than 70% in the domestic market.The financial performance of SIL is likely to improve as introduction of new products like Velvet and increasing acceptance of SIL’s main product, hook and loop fastener, as newer applications have been innovated by the creative team of SIL. .SIL is the first few entrants in the manufacture of velvet and will have early entrant advantages in terms of pricing the product. SIL’s thrust area is the export market for its elastics. SIL has added customers in Morocco, Tunisia, Greece and Brazil besides the US, Europe and the Middle East.SIL is planning to expand its hook and loop capacity as there is good demand from garments manufacturers, home furnishing companies, car seat manufacturers, defence and shoes manufacturers as the usage of SIL’s hook and loops are getting acceptance and repeat orders are coming in as the quality of SIL’s products are much superior than the imported ones. SIL has a team of creative personnel, whose job is to invent newer applications of the hook and loop and is helping the marketing staff to increase the sales volumes. Future prospects seem to be bright for SIL. However all the products of SIL are manufactured using Nylon as feed stock and Nylon prices are dependant on the crude oil prices. Though it is not a major concern as Nylon price does not move in the same proportion as crude oil and there is over supply of Nylon internationally as well as domestically. With new products like Satin and Velvet Ribbon, SIL is on its way to become the largest player in the Narrow Woven fabric industry in the country. With the dismantling of the quota regime, there are new opportunities and avenues available to SIL which is expected to take SIL on the fast growth trajectory.With demand picking up for SIL’s products and introduction of new products will help SIL post even better performance in the coming years, market leader in its business with experienced promoters SIL is attractively priced at the CMP of Rs.75. Market capitalization is less than 30crs as it has a very low equity base. Though in the textile segment, SIL is in a niche area of business commanding more than 70% market share. At the current price of Rs.75 SIL is quoting at low single digit valuations.Considering all the above factors it looks worth a look.

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