Ambika Cotton Mills – A Fundamental Analysis

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This post has been written by S. Khaitan for FinMedium Research Desk.

ABOUT AMBIKA COTTON MILLS:

  • Ambika cotton mills ltd.(ACML), incorporated in 1988, is involved in manufacturing superior quality compact and Eli twists cotton yarn for hosiery and weaving, used in making premium shirts and t-shirts.
  • The company manufactures Cotton Yarn and Knitted Fabrics, which are generic products, the main input is raw cotton, agricultural produce.
  • The company has four manufacturing units situated in Dindigul, Tamil Nadu.
  •  It has a total spindle capacity of 108288 of the compacting system.
ambika cotton mills revenue
ambika cotton mills revenue

Export turnover constitute 71% (aprox) of the total revenue as against the 69.05% in the previous year.

276.42 Rs/Kg

Realisation /Kg- COTTON FABRIC

82.85 Rs/Kg

Realisation /Kg- COTTON WASTE

268.85 Rs/Kg

Realisation /Kg- COTTON YARN

INDUSTRY

Indian Textile Industry
  • One of the largest contributor to the India’s export is the textile sector. The Indian textile industry holds the ability to produce a wide variety of products suitable to different market section all around the globe.
  • It is the 2nd largest employment provider, hiring over 115m people.
  • Indian textile industry contributes 2.3% of the country’s GDP accounting for 7% of industrial production and 11.5% of total export and earning 27% of its foreign exchange
  • India textile industry is set for strong growth and is expected to reach US $226 billion by FY 2023.
  • India’s population explosion has been a key driver for the growth of textile industry. Rise in disposable income is also a key factor that has led to the growth of retail sector.  The organized apparel segment is expected to grow at a compound annual growth rate of more than 13% over a ten year period.
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COVID 19 IMPACT ON AMBIKA COTTON MILLS

  • There was a complete shutdown and loss of operation for 10 days in March, 2020.
  • There was a great interruption to the business supply chain.
  • The operation was partially restored in the month of May, 2020.

SWOT ANALYSIS OF AMBIKA COTTON MILLS

SWOT Analysis of Ambika Cotton Mills
SWOT ANALYSIS OF AMBIKA COTTON MILLS LTD.

FINANCIALS (AMBIKA COTTON MILLS)

Ambika Cotton Mills Shareholding
SHARE HOLDING PATTERN OF AMBIKA COTTON MILLS LTD.
ambika cotton mills financials
STATEMENT OF PROFIT AND LOSS OF AMBIKA COTTON MILLS LTD
ASSET SIDE OF AMBIKA COTTON MILLS LTD
EQUITY AND LIABILITY SIDE OF AMBIKA COTTON MILLS LTD
CASH FLOW FROM OPERATING ACTIVITY OF AMBIKA COTTON MILLS LTD

Due to covid 19, the company total income was Rs 623cr representing a decline of 5.04% compared to last year.

Net income was Rs 52.15cr representing a decline of 17.31% compared to last year.

PARTICULARS20162017201820192020
Current ratio2.772.732.722.863.48
Interest coverage ratio11.0417.2615.49.837.97
Debt to equity ratio0.060.020.070.190.14
ROIC13.0414.8213.9814.411.38
Cash conversion cycle90.9989.67100128172
ROE13.2714.8614.2213.2910.31
Inventory turnover ratio2.492.582.041.751.47

Current ratio is currently 3.48 and has been consistently above 2 which states that the current assets are more than sufficient to take care of current liability.

Cash conversion cycle has been increasing due to increase in inventory days.

COMOUNDED SALES GROWTH
10 YEARS             12%
5 YEARS                 5%
3 YEARS                  6%
COMPOUNDED PROFIT GROWTH
10 YEARS                           11%
5 YEARS                              1%
3 YEARS                              -2%

ROAD AHEAD OF AMBIKA COTTON MILLS

The company has sustained its business operations and financial performance, despite the general slowdown in demand across the globe.

Also Read on FinMedium:  INDIA GDP ANNUAL GROWTH RATE OF Q2 2021 SLIPPED BY 7.5%

The Indian textile sector is expected to reach US $226 billion. Urbanization and rise in income in both rural and urban areas are expected to support higher growth in the textile industry as a resulting rise company’s growth.

Also watch: Ambika Cotton Mills ltd 32nd annual general meeting

Read more research report on Indian companies here.

This post has been written by S. Khaitan for FinMedium Research Desk.

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