Alok Industries Share Price

Alok Industries Limited fundamental analysis of textile manufacturing company

This article explores Alok Industries Limited in a fundamental way so as to comprehend its business models, and industries and assess whether it is an investment that suits your needs.

Alok Industries Limited

Alok Industries Limited is a textile manufacturing Indian company based in Mumbai. It is owned by Reliance Industries and is one of India’s largest vertically integrated textile companies. The company offers end-to-end solutions through its five core divisions:

• Home Textiles
• Cotton Yarn
• Apparel Fabric
• Garments
• Technical Textiles, Textile Accessories, and Polyester Yarn.

Its main businesses include weaving, knitting, processing, home textiles, ready-made garments, and polyester yarn production.

Alok Industries exports 26% of its products to over 90 countries in the USA, Europe, South America, Asia, and Africa. Its customer base is made up of famous brands such as Levi’s, Walmart, Zara, Calvin Klein, H&M, Tommy Hilfiger, PVH, Tesco, Costco Wholesale, Bestseller, Bershka, Kohl’s, NEXT, Pull&Bear, and Reliance Retail among others.

Additionally, it holds the majority stake in a Czech Republic-incorporated textile company called Mileta manufacturing across the European region.

Is the textile manufacturing sector a goldmine investment?

The textile manufacturing sector in India is showing promising signs of growth and investment potential in 2024. The domestic apparel & textile industry in India contributes approximately 2.3% to the country’s GDP, 13% to industrial production, and 12% to exports.

India is a leading global producer of cotton and jute and ranks 2nd in silk production. The total textile exports are expected to reach $65 billion by FY26 and grow at a 10% CAGR from 2019-20 to reach $190 billion by 2025-26.

The textile sector is anticipated to draw investments of ₹95,000 crore in the next 4-6 years from two schemes – the production-linked incentive (PLI) to the sector, and the proposed seven Prime Minister Mega Integrated Textile Regions and Apparel (PM MITRA) parks. This is expected to generate over 2.25 million additional jobs.

In this promising landscape, Alok Industries Limited stands out as a promising investment choice. With its extensive product range, global presence, and ownership by Reliance Industries, it is well-positioned to capitalize on the growth opportunities in the Indian textile sector.

Who are Alok Industries’ competitors in the textile sector?

Alok Industries Limited operates in a competitive landscape with several key players in the textile sector. Some of its main competitors include:

• Black Rose Industries Ltd.
• BSL Ltd.
• Donear Industries Ltd.
• E-Land Apparel Ltd.
• Flora Textiles Ltd.
• Gravity (India) Ltd.
• Kamadgiri Fashion Ltd.

History of Alok Industries Ltd.

Alok Industries Ltd., a prominent Indian textile company, has a rich history characterised by growth, diversification, and restructuring.

• Incorporation: Alok Industries Limited was incorporated as a private limited company on March 12, 1986. It transitioned into a public limited company in 1993.
• Product range: The company offers end-to-end solutions through its 5 core divisions: Home Textiles, Cotton Yarn, Apparel Fabric, Garments, Technical Textiles, Textile Accessories, and Polyester Yarn. It distributes 26% of its products to over 90 countries.
• Infrastructure: Alok Industries has set up elaborate support infrastructure. Each of their plants is backed by captive power plants and power substations that ensure an uninterrupted power supply.
• Certifications: Alok Industries has received several certifications including ISO 9001, ISO 14001, and ISO 45001. It also holds Global Organic Textiles (GOTS), OEKOTEX, Made In Green, Fairtrade, and Egyptian Cotton certifications.
• Awards and recognition: Alok Industries has won the Texprocil Gold Trophy for the highest exports of Bleached/Dyed/Yarn Dyed/Printed Fabrics and Bed Linen/Bed Sheets/Quilts, and the Silver Trophy for the highest global exports.

Company profile of Alok Industries Ltd.

Pros:

• Share price growth: Alok Industries shares have climbed nearly 650% in the past five months and have rallied a whopping 96% in the last one year.
• Promising forecasts: In 2024, Alok Industries Ltd is expected to experience strong growth, with reaching a mid-year target of ₹38, with further steady growth anticipated to reach ₹45 in 2025.
• Strong backing: Reliance purchased preferential shares in the company, which is likely to witness further growth in the near future.
• Stable promoter holding: Promoter holding remains unchanged at 75.00% in Mar 2024, which indicates the promoters’ confidence in the company.

Cons:

• Financial performance: The company’s net loss narrowed to ₹215.9 crore in Q4, but the revenue declined by 6% year-on-year from ₹1,570.4 crore to ₹1,469.3 crore. For the full fiscal year ended March 31, 2024, the company reported a loss of ₹846.82 crore.
• Sales growth: The company has delivered a poor sales growth of 10.4% over the past five years.
• Interest coverage ratio: The company has a low-interest coverage ratio, which could indicate difficulty in servicing its debt.
• Regulatory issues: The company received an order from the Superintendent, CGST & Central Excise, Daman Commissionerate levying a penalty of Rs.22,508/- on the company for an allegedly erroneous claim for excess refund of input tax credits.

The finances

Here’s a summary of Alok Industries Limited’s financial information as of June 2024:

Shareholding pattern of Alok Industries Ltd.

Here’s a concise summary of Alok Industries Limited’s shareholding pattern as of June 2024 :

• Promoters: Hold 75%
• Foreign Institutional Investors (FII): 2.3%
• Domestic Institutional Investors (DII): 0.4%
• Public: 22.3%

Peer multiple comparison

Let’s compare Alok Industries Limited with its peers that have complete data available. Here’s a concise table: