I always endeavour to search a company with track record of
trustworthy promoters, profit making, dividend paying, lower valued by the
market and available at Happy Price Menu. These factors give a chance to small investors
to invest in a lower risk company and get higher returns.
One of the such
company is VTM LTD (BSE CODE: 532893)
Company Profile
VTM LTD was established in the year 1946, by a well
established South India based Thiagarajar group. It has one subsidiary Colour Yarn Ltd.
The company has
installed 270 state of the art looms to produce 10 lacs meters of fabric every
month. Company is related to consumption story, where demand never
ends.
DNV has certified the
company ISO 9002:2000 that endorse various specifications complies with the
internal standard.
The company has got one Gold Award and three Bronze Awards
for outstanding export performance by the Cotton Textile Export Promotion
Council - a body sponsored by Government of India.
Products of VTML – Bed Linen and Shirt Fabric
Company Performance
Financials for the last three years are as under:
Particulars
|
Comparative Figures (Rs. In crores)
|
|||
FY
|
2012-13
|
2013-14
|
2014-15
|
2015-16
6
months
|
Sales
|
143.18
|
169.16
|
167.82
|
76.62
|
Net
Profit
|
12.32
|
11.31
|
7.96
|
7.46
|
Dividend
|
70%
|
70%
|
63%
|
-
|
Bank Loan
|
0.78
|
0.62
|
4.26
|
5.27
|
Finance
Cost
|
0.08
|
0.25
|
0.18
|
0.17
|
Net
Worth
|
104.95
|
112.96
|
118.66
|
126.63
|
Investment
in debt Mutual Funds
|
0.00
|
17.00
|
33.27
|
47.29
|
Cash and
Bank Balance
|
15.99
|
16.26
|
9.37
|
2.09
|
Total
Cash Equivalent
|
15.99
|
33.64
|
43.02
|
49.38
|
Other
Income
|
3.09
|
2.51
|
3.19
|
2.13
|
Face Value
(Rs)
|
1
|
1
|
1
|
1
|
Promoter
Holding
|
75%
|
75%
|
75%
|
75%
|
Shares
pledged
by
Promoters
|
0
|
0
|
0
|
0
|
TEN Reasons for
choosing this company are as under:
1. In first half of this year
profit of the company is around profit of previous full year. Looking to half
year performance we may expect that for full year profit will be around Rs.16
crores, almost double of previous year.
2. As per data available since
2004 it is continues profit making and dividend paying company. Due to higher
profit, this year company will increase dividend payment.
3. VTML is a Cash Rich
company. As on 31.03.2015, it has invested cash surplus of Rs.33.27 crores in
various debt mutual funds, which market value were Rs.34.49 crores as on
31.03.2015. As on 30.09.2015 its investment in debt mutual funds reached to
Rs.47.29 crores (Rs.12.00 per share), which is 37.34% of its net worth and it
will be further increase in year end.
4. During 1994-95,
VTML issued bonus shares in the ratio 5:1. Looking in view of a small capital
of Rs.4.00 crores and cash surplus position of Rs.12.00 per share, it is a
potential bonus candidate.
5. Promoter’s holding is 75% shows their great
interest in the company. Promoters are credit worthy and they have not pledged
any share.
6. The company has own two Wind
Turbines, capacity of 2.1 MW each, established by Suzlon. Market value of these
wind mill generators is Rs.25 crores assuming Rs.6.00 crores per MW. These wind
mills have generated 5314729 Units electricity in FY 2014-15. It is one third of
total unit electricity consumed by the company.
7. Working capital loan to the company is zero and it is
virtually debt free. A small amount of finance cost paid to the banks. To make it more competitive in both International
and Domestic markets, the Company is modernising its plant & machinery
under TUFS at and taken a term loan of Rs.6.00 crores from SBI in FY 2014-15.
The company has received TUFS subsidy of Rs.1.25 crores for this loan.
Therefore, actual cost of this loan is very low.
8. The company has a large
land bank. For further expansion it need not require to buy additional land.
Cash surplus of Rs.47.29 crores is more than sufficient for further expansion
without taking any loan for banks.
9. Market Cap of the company
is Rs.96.00 crores. Looking in Cash
surplus Rs.47.29 crores in books, Value of Wind Turbine of Rs.25.00 crores; present
market value of the company’s textile business is only Rs.23.71 crores.
10. It is trading at very
cheap price 24/- (Closing
price of 04.12.2015) compare to company’s Cash
surplus position, Reserves, Assets Value, Low Equity, Profits, Dividend yield
and Future potential.
Disclaimer: I am not a research analyst. Please take your own decision
after reading the results, annual reports, other informations available about
the company.
