Sarla Performance Fibers - CMP 61 Dated 3April2016

Sarla Performance Fibers

Technical View
Sarla Performance is trading in uptrend channel with support of 71 and Resistance of 75, if it manages to break the channel next targets would be 90 and 101 Respectively based on historical pattern.  RSI is trending above 60

Sarla Performance Daily Chart

Fundamental View
arla Performance Fibers Limited is a leading exporter of Regular as well as High Tenacity Polyester and Nylon Yarns. It started operations 22 years ago as a commodity. SPFL is in the business of manufacturing and distribution of high value added polyester yarn and nylon yarn. SPFL, a 100% export oriented company has multi geographical presence in over 40 countries located in six continents. SPFL has branded clientele in its platter like- Hanes Brands, Gildan, Renfro, American & Efird, Delta Galil, Coats & Jockey. SPFL focuses to expand its global client base. For that they have one marketing centre at Portugal and two distribution centres at Thailand and Vietnam.
SPFL plans to increase its capacity from 9,900 TPA to ~18,000 TPA by End of FY17 and improve utilisation of it plants to 100% from current 30-35%.The company benefits from the duty free exports of goods manufactured inside the US as per NAFTA and CAFTA . CAFTA nullifies all tariffs on over 80 per cent of the US manufactured goods. Due to this, it is in advantageous position as it doesn't have to pay 32 per cent duty vs the other exporters to the US. It is in process to expand the installed Capacity from current 1.5 TPD by four times to 6 TPD for which SPFL will spend around 10 Crores.
In last one year company has invested 3 Crores in Mutual Funds and 5 Crores and Invested 5 Crores in Tata Motor Finance.
It has 1.94 Crore in Reserves and additional 24 Lacs in Share like Arvind Mills, Larson and Turbo , LIC housing, Punjab and National Bank, Hikal and Syngene international. It has cash and Cash Equivalent of 3.3 Crores.

Operations: During the year under review the sales of the Company were Rs. 25,594.13 Lacs as against Rs. 27762.73 Lacs in 2014-15 a slight decline of 7.81 %. The FOB value of exports
Rs. 15,193.24 Lacs compared to Rs 15,693.58 Lacs.
Profitability: The profit before Depreciation, Interest & Tax was Rs. 7,197.69 Lacs as compared to Rs. 5,646.31 Lacs In Previous year, after providing for depreciation of Rs. 1,014.40 Lacs (Previous Year Rs. 913.55 Lacs) & provision for taxation of Rs. 1207.10 Lacs (Previous Year Rs. 1,283.60 Lacs), there was a net profit of Rs. 4,265.83 Lacs as compared to Rs. 2,967.94 Lacs in the Previous Year.

It has an installed capacity of 11,900 tons per annum for manufacturing yarns in Silvassa and 3200 tons per annum for a Dyeing unit at Vapi. Its state of the art 30 tons per day POY plant in Walterboro, South Carolina in the US is now fully stabilized and operating at 30% plus capacity. The company’s emphasis this year will be to focus on increased capacity utilization at its US plant, enhance the proportion of niche end user applications in India, higher value added yarns to leading global apparel brands and companies. The company exports to 45 countries.SPFL also owns Wind Power Capacity of 10.25 MW in totality, out of which 6 MW is located in the state of Maharashtra, 1.25 MW is located in the state of Gujarat and 3 MW is located in the state of Madhya Pradesh. Our plant load factor for the fiscal year 2016 was about 23%. Going forward company plans to increase the load factor to 100% to fully ustilize the capacity which augurs well for company. 

Keeping above factors in mind SPFL will perform well in next 2-3 years, I have personally invested in the stock with Target of 160 rupees in 18-24 months time.