Salem based Sri Nachchamai Cotton Mills is engaged in the production of Cotton yarn, having installed capacity of
40,000 spindles. Last year, company had made losses due to lower realisation, lower demand and high raw material
prices. However,in current year, situation has changed dramatically wherein selling price of Cotton yarn have spiralled up sharply, leading to good profitability and hence, the recommendation After reporting loss last year, company has bounced back in Current Year with with EPS of Rs. 4/- for Half Year Ending Dec. 09. Cotton yarn prices have gone up further in last 2-3 months and hence, performance of H2 should be much better than H1 Current market cap of Sri Nachchamai is just Rs 10 cr whereas company is likely earn cash profit of 6.60 cr in current year alone. Further, stock is trading at: 1. 2.23xFy10E Eps 2. 1.55xFy10E Cash EPS Although Sri Nachchamai is a small player in cotton
yarn industry, still current valuations are extremely cheap. Investment in Sri Nachchamai at current levels should yield 50% appreciation in less than 9 months. Buying recommended
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