Bannari Amman Spinning Mills

ANALYSTS' CORNER

ILFS Investsmart recommends a "buy" on Bannari Amman Spinning Mills. The company is currently implementing a Rs 290-crore expansion plan to expand its spinning and weaving capacities.

Besides, it is also venturing into the niche export market for home textiles. The company has reported a turnover of Rs 30 crore and a PAT of Rs 5.4 crore in April-August 2005. The report believes that the fundamentals of the company remain intact.

The report adds that it is an efficient spinning mill with the highest operating margins in the textile industry, translating into high return ratios, historically. The expansion of its windmill capacity would meet 95 per cent of its power requirements by FY07E at average PLF rates.

The expansion of its spinning unit and integration into fabrics and home textiles would enable the company to compete in the export markets with its larger scale of operations. This would enable higher value addition and would insulate it from pricing pressures in the highly commoditised cotton yarn industry.

Piramyd Retail

Edelweiss Securities, initiating coverage on Piramyd Retail, recommends a "value buy". The report states that organised retailing, which currently accounts for only two per cent of the Rs 9.3 lakh crore Indian retail industry, is expected to grow at a CAGR of 45 per cent over FY05-10E.

This growth will be led by rising household incomes, shifts in consumer lifestyle and growth of the available retail infrastructure in India. Retail space is expected to grow at a CAGR of 32 per cent over FY05-10E, primarily in urban centres.

Retailers of food and apparel, constituting 48 per cent of the Indian consumer basket, would be the biggest beneficiaries of this exponential growth. Riding on the boom with full-line department stores and supermarkets, Piramyd Retail has a two-pronged strategy to capitalise on this retail opportunity.

It is targeting the growing fashion-conscious consuming class of urban India through its department stores called Piramyd Megastore. For the value conscious, it has Trumart, a supermarket which offers quality and convenience.

Goldiam International

Motilal Oswal Securities recommends a "buy" on Goldiam International. The report states that the company has a robust business model, which caters to different geographies with distinct designing capabilities. Customers include global retail giants like Wal-Mart, JC Penny, and Zales.

The company has been consistent in generating net positive cash flows from operations even though the working capital requirements of the business have been high. It has consistently paid dividends to its shareholders for more than ten years.

The report adds that the company with its strong fundamentals, is currently valued at a discount to its peer amongst the large players in the diamond & jewellery industry.

Its product line includes around 3500 designs of rings, earrings, pendants, bracelets, bangles and necklaces. It has design teams based out of Hong Kong, China and India, which have a capacity to produce an average of 400 designs a month.