Indo Count zooms 43% in 2 months, surpasses Oct 2021 high on robust outlook

The company's management in the Q2FY24 earning conference call said they are seeing positive signs in the US on a YoY basis as major retailers have initiated restocking activities since Q1FY24

Shares of Indo Count Industries gained 4 per cent on the BSE to hit an all-time high of Rs 319.20 in Wednesday’s intra-day trade. The stock surpassed its previous high of Rs 314.80 touched on October 2021. In the past two months, it has zoomed 43 per cent.

Indo Count is among the top three global bed sheet suppliers in the US. The product basket includes bed sheets, fashion bedding, utility bedding and institution bedding.

For the July to September quarter (Q2FY24), Indo Count had reported strong earnings with highest-ever quarterly revenue, volumes and Ebitda (earnings before interest, taxes, depreciation, and amortization).

The company’s Ebitda rose 58 per cent year-on-year (YoY) at Rs 189 crore, margins improved 420 bps to 18.3 per cent from 14.1 per cent in a year ago quarter. Higher volumes and efficient cost management led to operating leverage, the management said.

Indo Count’s total revenue crossed Rs 1,000 mark for the first time in its history, up 22 per cent YoY at Rs 1,033 crore during the quarter.

Volume increased by 23 per cent YoY to 28.7 million meters.  Profit after tax jumped 70 per cent YoY at Rs 114 crore. Indo Count revised FY24 volume guidance to 90-100 million meters with margin guidance of 16 per cent-18 per cent.

The company’s management in Q2FY24 earning conference call said, they are seeing positive signs in the US on a YoY basis as major retailers have initiated restocking activities since Q1FY24.

Additionally, retailers in global markets are expanding; they are sourcing strategically from Indian home textile manufacturers to derisk themselves. In the longer term, the growth prospects of the sector are encouraging.

The Government of India's promotional steps, the China Plus One strategy, our various omni channel marketing strategies, existing free trade agreement (FTA) with Australia and UAE, including the proposed under discussion FTAs with the UK and EU will play a pivotal role in driving growth, the management said.

Domestic cotton prices have stabilized in comparison to international levels. Also, India with adequate raw material availability ensures the security of supply chain, thus providing necessary confidence to our customers, thereby improving our market share, it added.

According to analysts at ICICI Securities, the textile sector has been key outperformer over the past couple of months amid structural improvement led by the export oriented companies.

The share price of Indo Count Industries is at the cusp of recording breakout from multi-year consolidation, indicating structural turnaround that augurs well for sustainable upmove, they said. 

Technical analysts at the brokerage further expect the stock to accelerate its upward momentum and gradually head towards Rs 345, which is price parity of October-November up move (Rs 215-302) projected from November low of Rs 271.