Indo Count Industries extends rally on strong September quarter results

The company reported a consolidated net profit of Rs 81 crore in Q2FY21, against Rs 11 crore in Q2FY20.

Shares of Indo Count Industries were locked in upper circuit for the fourth straight day, up 5 per cent at Rs 163.50 on the BSE on Friday, after the company reported a strong set of July-September quarter (Q2FY21) numbers. The textiles company's stock was trading at its 52-week high level and has rallied 48 per cent in the past two weeks.

Till 12:44 pm, a combined 208,000 equity shares were changing hands and there were pending buy orders for 2.08 million shares on the NSE and BSE, exchange data shows.

Indo Count Industries on Wednesday, October 21, had reported a more than seven-fold jumped in its consolidated net profit at Rs 81 crore in Q2FY21, on back of strong operational performance. The company posted profit of Rs 11 crore in a year ago quarter. Revenue from operations grew 25.7 per cent to Rs 714 crore from Rs 568 crore in the corresponding quarter of previous fiscal.

The higher absorption of fixed costs on the back of increased volumes led to Ebitda (earnings before interest, taxes, depreciation, and amortization) margin at 17.5 per cent in Q2FY21 against 14.0 per cent in Q2FY20, an increase of 349 basis points YoY, the company said.

In the past month, the stock has rallied 70 per cent, as compared to 8 per cent rise in the S&P BSE Sensex. In the last six months, it has zoomed 469 per cent, against 28 per cent surge in the benchmark index.

In September, rating agency CARE Ratings had reaffirmed the long and short term rating on bank facilities of Indo Count Industries. "The reaffirmation in ratings assigned to the bank facilities of the company continues to derive strength from its robust capital structure, comfortable debt coverage metrics, strong business profile – being one of India's leading home textile suppliers and exporters of bed linen, experienced Promoters in home textiles segment and reputed clientele profile," the rating agency said in rationale.

Indian home furnishings comprises of bedspreads, furnishing fabrics, curtains, rugs, durries, carpets, placemats, cushion covers, table covers, linen, kitchen accessories, made-ups, bed spreads, bath linen and other home furnishings accessories. "The demand in the home textile market is governed by the rise in disposable income of the households and improvement in the living standards. United States and Europe are the two major markets in the segment; with India, China, Turkey, Pakistan and Bangladesh being the major suppliers," it said.