Eastern Silk Industries Ltd. (CMP-Rs 201.5)
The company is foraying into manufacturing of velvet fabrics targeting the home furnishings market. It is investing Rs 40 crore in setting up eight new looms at its Bangalore plant to manufacture velvet fabrics. This foray is in order to company’s idea to get into new lines of businesses by the end of this fiscal. Initially the plant would have a capacity to manufacture 1.2 lakh metres of velvet fabrics per annum. The home furnishings market, at present, is worth over Rs 1,000 crore, mainly unorganized and growing at 25 per cent a year. At current market price, stock is trading at 3.9x of its TTM earnings of Rs 51.4. We recommend “ACCUMULATE” on the stock.
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