Business : Jockey (Page Industries) and VIP (VIP Industries) are known to all! But today I bring you another dark horse in this garment vertical – TT Limited. A 60 year old flagship company of T.T. Group, TT Ltd. is a self contained textile producer and garment manufacturer. TT Brand is a popular innerwear brand in Northern India and a household name for various consumer products as well as Industrial products in India and in more than 30 countries of the world. The Company has recovered smartly from deep recession of 2008-09 and registered a turnover of 353 crores (45% higher than FY2008-09) and a net profit of 10.47 crores for FY2009-10 with an annualized EPS of 4.87. Continuing on the exponential growth track, the company recorded highest ever profit for its June2010 Q - a topline of 113.99 crores (75% growth over June09 Q) and a bottom-line of 4.33 crores (1700% growth over June09 Q). Therefore, with an exponential growth drive and a June Q EPS of 2.02 ,one can easily forecast current FY annualized EPS to be 8 or more. At a price of around 38 /- currently, the stock is available damn cheap at PE of less than 5 and is a MUST BUY !!
Expansion Spree: The Company is expecting to grow its garments business by 100% this FY and other business segments like yarn and fabric at normal 20%. Overall for FY 2011, the Company is projecting a growth of 40% in turnover and profits. The Company launched 51 new products under its innerwear and casual wear segment in March and is aggressively growing its dealer network. Further a 100% increase in advertisement budget has been made to increase the brand equity of its household brand TT. The firm has chalked out a Rs 300 crores expansion plan for over the next 2-3 years. Apart from textiles, the Company plans to increase its presence in the “Clean Energy” segment by expanding its wind power capacity. However the biggest focus of company would be on its garments business under the brand of TT. Further a 100% increase in advertisement budget has been made to increase brand equity of its brand TT. The Company has also made a foray in value added organic products. It has got certification from Control Union, Europe and is exporting organic yarn in a big way. Further it has currently introduced range of organic innerwear - GREEN VESTS & BRIEFS for the first time in India. It also now plans to diversify its knitwear markets to Middle East and Africa where product requirements are similar to India.
Positives : The company has very strong SHP with promoter stake constantly rising from 35% to 53% in last 8 years. I don’t need to say more on the promoter’s trust and confidence in the company.
- In last 2 years company has not increased its paid up equity share capital.
- TT is a "Only cotton" Company and produces its own in-house Cotton yarn and fabrics.
Negatives – I can’t think of any except a healthy competition from Jockey & VIP brands.
Remark : Start accumulating TT Limited between 36-40 range and I can see sure shot FY11 earnings of 8 EPS. That suggests a target of around 80- 100 in another 10 months time. The way this company is expanding its not far when we have another VIP in the making and the stock could be held for 2-3 years timeline for a 3-4 bagger returns. It’s a stock to buy and hold for long term.
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