A REPORT

ON
Research on Indian Textile Industry
Using Fundamental and Technical
Analysis

By
Amey Kulkarni
18BSP0117
A report submitted in partial fulfilment of
the requirements of
PGPM program of
IBS Mumbai
On
Research on Indian Textile Industry
Using Fundamental and Technical
Analysis
By
Amey Kulkarni
18BSP0117

Submitted to:
Faculty Guide Company Guide
Prof. Naisha Sujan Mr. Ketan Bhatia
 Authorization

This project entitled “Research on Indian Textile industry using fundamental and
technical analysis” submitted to IBS Mumbai, is a record of an Original work done during the
period 19th February, 2019 to 17th May, 2019 under the guidance of Mr Ketan Bhatia and
Prof. Naisha Sujan, IBS Mumbai. This project work is submitted in the partial fulfilment of
the requirements for the award of the certificate of Post-Graduate Programme in Management
(PGPM)

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 Acknowledgement

I wish to express my heartfelt gratitude to the following individuals who have played a
crucial role in the research for this project. Without their active cooperation the preparation of
this interim report could not have been completed within the specified time limit.

Firstly, I would like to acknowledge my company guide Mr Ketan Bhatia, who co-
operated with me during the course of the project patiently. He ensured that I was provided
with all the necessary and correct information.

I thank Mr Sunil Gurjar, Referral associate manager and trainer, IIFL Securities for
his valuable guidance. Without him, the project wouldn’t have been possible.

I am very thankful to Prof. Naisha Sujan, our faculty guide who has given me valuable
suggestions and cleared my doubts throughout the project.

Last but not the least, I am very thankful of ICFAI Business School, Mumbai for
providing me the opportunity to do the summer internship program and making it a partial
requirement of the PGPM program.

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 Abstract
14 week internship at IIFL Securities limited started on 19th Feb. 2019. Objective of the
internship was to understand equity, derivatives, currency and commodity market and getting
four clients for the company. Internship started with the training sessions about equity market.
Training sessions involved Fundamental and Technical analysis. After training, interns started
tracking global and Indian market. Daily interns generated calls regarding the stocks and started
trading on their own. Meanwhile interns were also generating leads for Demat accounts which
was a part of internship. I have completed my target for 4 Demat accounts.
To identify investment opportunity it is important to target a sector which has potential
growth in future. To make decision of investment it is important to check fundamental and
technical factors of the companies coming under this sector. Internship project is on Research
on Indian Textile industry using fundamental and technical analysis. Interim report will include
theoretical background on Fundamental and technical analysis, economical background of
industry.

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 Table of Contents
Authorization……………………………………………………………………….i
Acknowledgement…………………………………………………………………ii
Abstract…………………………………………………………………………...iii
1. Introduction .............................................................................................................. 1
2. Company Profile ...................................................................................................... 3
3. Fundamental and Technical analysis ....................................................................... 5
3.1 Fundamental Analysis ........................................................................................... 5
3.1.1 Economic analysis .......................................................................................... 5
3.1.2 Industry analysis ............................................................................................. 6
3.1.3 Company analysis ........................................................................................... 6
3.2 Technical analysis ................................................................................................. 8
3.2.1 Charts .............................................................................................................. 8
3.2.2 Japanese candlestick patterns ....................................................................... 11
3.2.3 Volume.......................................................................................................... 14
3.2.4 Moving average ............................................................................................ 14
3.2.5 Moving Average Convergence Divergence (MACD) .................................. 14
3.2.6 Relative Strength Index (RSI) ...................................................................... 15
4. Economy of India................................................................................................... 16
5. Textile Industry of India ........................................................................................ 17
5.1 Market size .......................................................................................................... 17
5.2 Investment and government policies ................................................................... 17
5.3 Porter’s five forces .............................................................................................. 18
6. Company analysis .................................................................................................. 21
6.1 Vardhman Textiles .............................................................................................. 21
6.2 Sutlej Textile Ltd................................................................................................. 25
6.3 Indo Count Industries Ltd ................................................................................... 29
6.4 Arvind Ltd ........................................................................................................... 33
6.5 Ambika Cotton Mills Ltd .................................................................................... 37
7. Conclusion and Recommendation ......................................................................... 41
8. References .............................................................................................................. 42

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 1. Introduction
1.1 Synopsis
The project report is about research on Indian Textile Sector. Research is done with the
help of fundamental and technical analysis. Research has been done through Top to Bottom
approach i.e. economy, industry and company (EIC) analysis. Interim report will cover the
theoretical background about the fundamental and technical analysis the economy part of the
fundamental research.
Textile industry in India is contributing to the Indian economy for several centuries.
The Indian textiles industry, currently estimated at around US$ 150 billion, It’s exports for
financial year 2017-18 was US$39.2 billion, contributes 2% to GDP and 7% to industry output.
Textile industry provides employment to more than 45 million people of India. Indian textile
industry is extremely varied from hand-spun and hand-woven to sophisticated mills. Textile
industry has a close relation with the agriculture sector (cotton). Ancient culture and traditions
of India in terms of textiles makes Indian textile sector unique. It has capacity to produce a
wide variety of products suitable to different market segments for India as well as the world.

1.2 Purpose of the project

The primary objective of the project is to find whether the stocks in the sector are worth
investing or not. The secondary objectives of the project will be to analyse the Textile industry's
current status, its macro-economic indicators and the impact of this year's budget on the sector.

1.3 Scope of the project

The study will be limited to only the textile sector. No other sectors shall be studied in
the report.
Due to time constraints, listed large cap companies and companies having the highest
market share will only be studied.

1.4 Methodology
The methodology used is a combination of primary and secondary sources. The primary
sources will be the personal observation method through live share trading and interactions
with the mentors. The secondary sources will include relevant textbooks, annual reports,
newspapers, trader terminal and company's official website and other websites like
moneycontrol.com, Investopedia.com.

1.5 Limitations of the study

• The study shall be limited to only a few companies in the telecom industry.
• There are time and monetary constraints for the project due to which the information
provided might not be exhaustive.
• The financial data mentioned in the report is over a year old.

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• The intrinsic value of the stock has not been calculated using discounted cash flows
(DCF).
• The technical analysis might not always be an accurate predictor of future prices.
• There might be a few errors due to misinterpretation or oversight.

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 2. Company Profile

IIFL Securities
IIFL is a financial service which was started by a group of passionate entrepreneurs in
1995. IIFL segments include fund based activity, financial product distribution and capital
market activity. The company is an online broking and advisory services provider to retail and
institutional clients in the cash and derivative segments. The company and its subsidiaries are
engaged in financing, wealth management and agency business as well.
IIFL Holdings Limited is India’s leading financial services group with different operating
businesses and is one of leading broking house of India. Non-Banking and Housing financed,
Wealth and Asset Management, Financial Advisory.
A) IIFL Securities Product Offering

1) Equities (BSE/NSE)
2) Depository Services (CDSL/NSDL)
3) Mutual Fund
4) Currency Trading
5) IPOs
6) Commodities (NCDEX/MCX)
7) Derivatives (NSE F&O & BSE F&O)
8) Portfolio Management Services

B) IIFL Securities Service Offering

1) Financial Planning
2) Wealth Management
3) Investment Banking

Major Competitors

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Market Share as Per Client Acquisition

4
 3. Fundamental and Technical analysis
There are 2 major approach for making investments decision in the markets, those are
Fundamental and technical analysis. Both of this technique mainly focuses on identifying the
best possible time to enter or exit in a financial instrument. These techniques also help in
forecasting the price trend of the various stock. Both of these techniques are explained below
in detail.

3.1 Fundamental Analysis

In this method, one evaluates securities to find out its intrinsic value. By knowing its
actual worth people are able to make out whether financial assets are overpriced or under-
priced. In fundamental analysis, people look for various data points like micro &
macroeconomics factors, financial statements, management transcript, etc. Fundamental
analysis can be done by two methods.
1. Top to Bottom approach: In this type of approach an individual goes from economy
to industry and finally to companies also known as EIC (Economy Industry
Company) approach
2. Bottom to Top approach: In this type of approach an individual first decides
company then industry and then the economy. It is exactly opposite to the EIC
approach.
3.1.1 Economic analysis
Economic conditions of country has a good impact on the investment decision.
It is necessary to analyse macro and micro variables of economy properly. Some of the
parameters to analyse economy are as follows
GDP Growth: GDP is the total value of goods and services produced in the economy.
Inflation: It is the increase in the prices of goods and services. It is very important factor
as if it is directly proportional to the GDP growth it basically nullifies the growth.
Interest Rates: Interest rate plays vital role in the economy as the amount of money that
will flow in the economy depends on them.
Budget: Budget is a statement of proposed revenue and expenditure of government.
Government policies also affect the economy in great ways.
Monsoon and agriculture: For the growth of any economy it is favourable to have good
monsoon which is great for agriculture on which industries depends for raw material.

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3.1.2 Industry analysis
Each industry is different from each other in terms of consumer, market share, industry
growth, competition, regulations and busyness cycles.
Customers: Some companies serve only a handful of customers, while others serve
millions. In general, it's a red flag (a negative) if a business relies on a small number of
customers for a large portion of its sales because the loss of each customer could dramatically
affect revenues.
Market Share: Understanding a company’s present market share can tell volumes about the
company’s business. The fact that a company possesses an 85% market share tells you that it
is the largest player in its market by far.
Industry Growth: One way of examining a company’s growth potential is to first examine
whether the amount of customers in the overall market will grow. This is crucial because
without new customers, a company has to steal market share in order to grow.
Competition: Simply looking at the number of competitors goes a long way in understanding
the competitive landscape for a company. Industries that have limited barriers to entry and a
large number of competing firms create a difficult operating environment for firms.
Regulation: Certain industries are heavily regulated due to the importance or severity of the
industry's products and/or services. As important as some of these regulations are to the public,
they can drastically affect the attractiveness of a company for investment purposes.

3.1.3 Company analysis

It can be done by two approaches Quantitative and Qualitative analysis

Quantitative Analysis: - This focuses on studying company financial statements which

helps one to understand the company's financial health. There are many financial
statements but an important one is -
a) Balance sheet – Shows the company’s assets and liability which helps to know the
solvency of the company.
b) Income statement –Shows Company’s revenue and expense which shows business
profitability.
c) Cash flow statement – Shows how much cash comes in and goes out in the company.
By looking at this statement, cash flows from operations, financial activity and
investing activity of a company is known and can be used for analysis.
From the above three statements, One can perform Ratio analysis. Ratio analysis
measures the financial performance of a company against generally accepted standards.
One can compare company ratios with its peers or with its industry for benchmarking
purposes. From ratios, one can filter out the Weak Company before investing. Some of
the key ratios which mostly used are:-
a) Current Ratio: - Measures the company ability to pay off its short term liability with
current assets
b) Quick Ratio: - Measures the company liquidity i.e. how much liquid assets a firm
has to overcome its current liability.
c) Debt to equity ratio: - Compares company total debt against shareholder equity.
d) Interest coverage ratio: - Shows the company ability to pay interest expense on its
outstanding debt.
e) Return on Equity: - Measures return generated by the company on equity capital.

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f) Dividend pay-out ratio: - Measures dividend paid by the company on its net
earnings.
g) Return on capital employed: - Measures return generated on total capital employed
by the company.
h) Operating profit margin ratio: - Shows business profitability.
i) Price-earnings ratio (P/E): - Shows how many times more one has to pay on
company EPS to get his share. It measures company share price relative to its
earning per share.

j) Price to book value ratio (PBV): - Measure company share price to its book value.

Qualitative Fundamental Analysis: - This focuses on a character or qualitative part of

a company. While researching on a company, apart from looking fundamental factors
one also looks for quality of management, It’s brand recognition, competitive
advantage, corporate governance, political control i.e. Regulation by government etc.
As these factors can't be quantified so every other person will have a different opinion.

Business Model: Even before an investor looks at a company’s financial statements or

does any research, one of the most important questions that should be asked is: What
exactly does the company do? This is referred to as a company’s business model.
Competitive Advantage: A company’s long-term success is driven largely by its ability
to maintain a competitive advantage – and keep it.
Management: It is the most important aspect for investing in a company. It makes sense
– even the best business model is doomed if the leaders of the company fail to properly
execute the plan.
Corporate Governance: Corporate governance describes the policies in place within an
organization denoting the relationships and responsibilities between management,
directors and stakeholders.

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3.2 Technical analysis

Technical analysis is an art as well as science, It is based on the study of past price
movement and demand-supply in a particular stock. Technical analysis can not only be used in
the equity market but also works in commodity, currency and many more financial instruments.
Its main objective is to identify patterns, price movement, change in volumes and signals on
the various indicators to forecast future price levels.

There are three main underlying thought process on which technical analysis stands on that
are:-

a) Price Discounts everything:- In the market there are many participants with different
objective i.e., some looking for long term, some for short term and some of those are
doing intraday trades, So they all try to price the stock at a fair value. All the known
facts, news and even expected news are factored in the price. One can know if the price
of financial instruments goes up then new facts are being discounted.

b) Price movements are not totally random: - This means Price moves in a particular
pattern. In the past it’s been seen that price has always seen moving in trends. If the
price were totally random then it would be very difficult to make money from price
fluctuation.

c) What is more important then why: - It’s been saying that a fundamental analyst
knows the value of a company but the technical analyst knows the price of everything.
In technical analysis one does not focuses on why the price had moved up or down as
they believe if one does research on this then the price may further move on in its
respective direction, So they believe that price shows the end result of the fight between
bulls and bears i.e. Demand and supply. So one focuses on price movements.

There are some very important technical tools and indicators which are mostly used by traders
those are –

3.2.1 Charts

Charts are a pictorial representation of a stock price movement over a certain period
of time. Some commonly used charts in financial markets are –

a) Line chart
The most basic of the four charts is the line chart because it represents only the
closing prices over a set period of time. The line is formed by connecting the
closing prices over the time frame. Line charts do not provide visual information
of the trading range for the individual points such as the high, low and opening
prices. However, the closing price is often considered to be the most important
price in stock data compared to the high and low for the day and this is why it is
the only value used in line charts.

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b) Bar chart
The bar chart expands on the line chart by adding several more key pieces of
information to each data point. The chart is made up of a series of vertical lines
that represent each data point. This vertical line represents the high and low for
the trading period, along with the closing price. The close and open are represented
on the vertical line by a horizontal dash. The opening price on a bar chart is
illustrated by the dash that is located on the left side of the vertical bar. Conversely,
the close is represented by the dash on the right. Generally, if the left dash (open)
is lower than the right dash (close) then the bar will be shaded black, representing
an up period for the stock, which means it has gained value. A bar that is colored
red signals that the stock has gone down in value over that period. When this is
the case, the dash on the right (close) is lower than the dash on the left (open).

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c) Candlestick chart
The candlestick chart is similar to a bar chart, but it differs in the way that it is
visually constructed. Similar to the bar chart, the candlestick also has a thin
vertical line showing the period's trading range. The difference comes in the
formation of a wide bar on the vertical line, which illustrates the difference
between the open and close. And, like bar charts, candlesticks also rely heavily on
the use of colours to explain what has happened during the trading period. A major
problem with the candlestick colour configuration, however, is that different sites
use different standards; therefore, it is important to understand the candlestick
configuration used at the chart site you are working with. There are two colour
constructs for days up and one for days that the price falls. When the price of the
stock is up and closes above the opening trade, the candlestick will usually be
white or clear. If the stock has traded down for the period, then the candlestick
will usually be red or black, depending on the site. If the stock's price has closed
above the previous day's close but below the day's open, the candlestick will be
black or filled with the colour that is used to indicate an up day.

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3.2.2 Japanese candlestick patterns

It is one of the most used charts for technical analysis as it depicts the
psychology of the market participants. In this chart, certain patterns appear many time thus
one who know those do have some advantage, let’s take an example of some of the
candlestick.

a) Hammer:-

This is formed when there is a downtrend and on one day as usual price
goes down but after some time bulls come in and increase the price so a long tail with
a small white body is formed. This gives a bullish reversal signal and indicates one to
create a long position.

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b) Doji:-

This is formed when open and close price is same or very close to each other. It
indicates confusion among bulls and bears.

c) Marubozu:-

This is formed when there is no upper and lower shadow with a strong up or
down price movement. A bullish marubozu indicate strong buying throughout the day
and bearish marubozu indicate strong selling throughout the d

d) Spinning Top:-

This is formed when the upper and lower shadow is the same with somebody in
the middle. This shows that there is indecisiveness among bulls and bears.

e) Morning Star:-

This is a three candlestick pattern, it indicates a reversal in downtrend. This

is formed when the Second candle opens gap down and recover till previous day low
and this is followed by third candle which opens near second day high and pierce first
candle.

f) Engulfing pattern:-

This is a two-candlestick pattern, In Bullish engulfing second white or green

candle will engulf the first candle which is red or black thus indicating control of bulls
over bear as they were successful in closing the stock price above the previous high.

g) Head and Shoulders

This is one of the most popular and reliable chart patterns in technical analysis.
Head and shoulders is a reversal chart pattern that when formed, signals that the security
is likely to move against the previous trend. As you can see in the figure, there are two

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versions of the head and shoulders chart pattern. Head and shoulders top (shown on the
left) is a chart pattern that is formed at the high of an upward movement and signals
that the upward trend is about to end. Head and shoulders bottom, also known as inverse
head and shoulders (shown on the right) is the lesser known of the two, but is used to
signal a reversal in a downtrend.

Both of these head and shoulders patterns are similar in that there are four main
parts: two shoulders, a head and a neckline. Also, each individual head and shoulder is
comprised of a high and a low. For example, in the head and shoulders top image shown
on the left side in the figure, the left shoulder is made up of a high followed by a low.
In this pattern, the neckline is a level of support or resistance. Remember that an upward
trend is a period of successive rising highs and rising lows. The head and shoulders
chart pattern, therefore, illustrates a weakening in a trend by showing the deterioration
in the successive movements of the highs and lows.

h) Cup and Handle

A cup and handle chart is a bullish continuation pattern in which the upward
trend has paused but will continue in an upward direction once the pattern is confirmed.

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 As you can see in the figure, this price pattern forms what looks like a cup,
which is preceded by an upward trend. The handle follows the cup formation and is
formed by a generally downward/sideways movement in the security's price. Once the
price movement pushes above the resistance lines formed in the handle, the upward
trend can continue. There is a wide ranging time frame for this type of pattern, with the
span ranging from several months to more than a year.
3.2.3 Volume

Candlestick pattern can't be validated if the volume is not near its average or more. A
strong trend in a particular stock or any other securities without volume can lead to many
thoughts that can be, is price increase due to short covering? Is someone buying
aggressively? Is some news or fact is only known by someone which is not known by
others? Is someone trying to manipulate the stock? Etc. So volume acts as a validator to
many signals. Volume is the total quantity of tradable financial securities that change hands
in a given timeframe.

3.2.4 Moving average

Moving average is used in the financial market to know the trend of tradable securities.
Often people use 5 days and 20 days moving average for short term trend, 50 days – 150-
day moving average for midterm trend and 200 days or more is used to know long term
trend in particular securities. Moving average also acts as a trading signal when shorter-
term moving average cuts longer-term moving average it indicates strong momentum
which can increase the price further. There are two types of moving average-

a) Simple Moving Average (SMA):- In SMA equal importance is given to all sample
data i.e. In 10 days simple moving average equal weight is given to all the day’s
price data so 10 days SMA will be P1+P2….. P10/10.

b) Exponential Moving Average (EMA):- In EMA more importance is given to recent

data i.e. In 10 day EMA more weights are given to resent data so
P1*W1+P2*W2……..P10*W10/10. EMA is useful for short term trader as lag is
less and one can ride this momentum for a short period.

3.2.5 Moving Average Convergence Divergence (MACD)

MACD is a trend following indicator that shows the relationship between MACD
line and signal line. MACD line is calculated by subtracting 26 days EMA from 12 days
EMA and the signal line is plotted on top of the MACD line which is of 9 days EMA.
Signals generated from this are –
a) Crossovers - When Signal line crosses MACD line it generates crossover signal.
Signal line crossing MACD line from below generates a buy signal and the Signal
line crossing MACD line from above generates a sell signal.

b) Divergences – It occurs when Security’s Price go in one direction but MACD and
signal line is flat or going in other direction over certain time frame, this situation
is opposite of what’s happening in security’s price. So this indicates the presence
of divergences. There can be positive divergence if the price is falling and MACD

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 and signal line are rising or flat, this indicates the price of that security can rise. In
a negative divergence, the price is rising but MACD and signal line are falling or
flat, this indicates the chances of security's price falling in the future.

3.2.6 Relative Strength Index (RSI)

ARSI is an oscillator that measures the magnitude of recent price change in a
securities to evaluate overbought or oversold conditions. As it’s an oscillator it moves
between two extremes, here range is 0% – 100%. When the indicator is above 70% it
indicates an overbought condition in that stock and indicator below 30% it indicates an
oversold condition in that stock. These zones can be used as a signal for buying oversold
stocks and selling overbought stocks.

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 4. Economy of India
India has emerged as the fastest growing major economy in the world as per the Central
Statistics Organisation (CSO) and International Monetary Fund (IMF) and is the 6th largest
economy of world. It is expected to be top 3 economic power in the world over the next 10-
15years. India’s GDP have increased by 7.2% and 7% in 2017-18 and 2018-19 respectively.
India is third largest start up base in the world over 7450 technology start-ups.
Labour force of India is expected to be 16-170 million by 2020 (textiles, 2018), based
on population growth rate, increased labour force participation and higher education enrolment
according to a study by ASSOCHAM and thought Arbitrage Research Institute. India’s foreign
exchange reserves were US$ 405.64 billion until 15 march 2019 according to RBI’s data.
Interim union budget for financial year 2019-20 focused on supporting the needy
farmers, economically less privileged, workers in the unorganised sector and salaried
employees, while continuing the Government of India’s push towards better physical and social
infrastructure.
Various foreign companies are setting up their facilities in India because of government
initiatives like MAKE IN INDIA and DIGITAL INDIA. These initiatives are to help
manufacturing sector of India to contribute more in Indian economy. India is now at 77th rank
in terms of EASE OF DOING BUSINESS in world according to THE WORLD BANK. It has
improved by 23 ranks from previous one which was at 100th. India is at 57th position on Global
Innovation Index (GII) among 130 countries. India's Index of Industrial Production (IIP) rose
4.4 per cent year-on-year in 2018-19 (up to January 2019).

Government of India has successfully managed to keep inflation rate between 2-6% for
last two years. Consumer Price Index (CPI) inflation stood at 2.57 per cent in February 2019.
India’s Annual FDI inflows are expected to rise to US$ 75 billion over the next five years, as
per a report by UBS. The Government of India has set a goal to achieve US$ 100 billion worth
of FDI inflows in the next two years. According to The World Bank, private investments in
India is expected to grow by 8.8 per cent in FY 2018-19 to overtake private consumption
growth of 7.4 per cent. During 2018-19, merchandise exports from India have increased 8.85
per cent to US$ 298.47 billion. Services exports have grown 8.54 per cent to US$ 185.51
billion. Nikkei India Manufacturing Purchasing Managers’ Index (PMI) reached a 14-month
high in February 2019 and stood at 54.3. Direct tax collection for 2018-19 had crossed Rs.10
trillion (US$ 144.57 billion) by March 16, 2019, while goods and services tax (GST) collection
stood at Rs.10.70 trillion (US$ 154.69 billion) as of February 2019. Proceeds through Initial
Public Offers (IPO) in India reached US$ 5.5 billion in 2018. Recently RBI revised Repo rate
and Reverse repo rate to 6% p.a. and 5.75% respectively (India, 2019). CRR and SLR are at
4% and 19.25% p.a. respectively.

According to SKYMET monsoon will arrive in India on time. But it has predicted that
there is 0% chance of excess and above normal rainfall. 30 % chance of normal and 55% chance
of below normal and 15% chance of drought. This may affect the agriculture sector thus the
cotton production

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 5. Textile Industry of India
India’s textile industry is one of the oldest contributor to the Indian economy. India’s
textile industry exports were around US$31.65 billion in financial year 2018-19 and is expected
to increase to US$82 billion by 2021 (Textile Industry, 2019).
Indian textile industry is varied from hand-spun and hand-woven textile to capital
intensive mill sector. It has close linkage to agriculture sector for cotton. India’s culture and
traditions in terms of textiles make Indian textile sector unique in comparison to world. It has
the capacity to produce a wide variety of products suitable for domestic as well as global
markets.
Future for this sector looks great which is supported by strong domestic consumption
and export demand. Increase in disposable income lead to growth of retail sector by entry of
international players like Marks and Spencer, Guess and Next into Indian market.

5.1 Market size

 Indian textile industry is around US$150billion and expected to increase to

US$250 billion.
 It contributed around 7% to the industry output of India in 2017-18
 Textile sector contributed 2% to India’s GDP in 2017-18
 Textile sector employs around 45 million people of India
 Sector contributed 15% to export earning of India in 2018-2018

5.2 Investment and government policies

 Textile industry has got Foreign Direct Investment (FDI) worth US$3.09 billion
during 2000 to 2018 (textiles, 2018)
 In May 2018, textile sector received investment worth Rs27, 000 crore since
June 2017
 Government of India announced a special package to boost exports by US$ 31
billion, create one crore job opportunities.
 Government of India launched Integrated Wool Development Programme
(IWDP) to provide support to the wool sector which aims to enhance the quality

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 and increase the production during 2017-18 and 2019-20 (Textile Industry,
2019).
 Indian government’s Cabinet Committee on Economic Affairs (CCEA) has
approved a new skill development scheme named 'Scheme for Capacity
Building in Textile Sector (SCBTS)' with an outlay of Rs 1,300 crore (US$
202.9 million) from 2017-18 to 2019-20.
 The Directorate General of Foreign Trade (DGFT) has revised rates for
incentives under the Merchandise Exports from India Scheme (MEIS) for
Textiles Industry from 2% to 4%.
 In August 2018, GOI increased custom duty on 501 textile products to 20%
from 10%.

5.3 Porter’s five forces

1. Bargaining power of customers (demand scenario)

Global textile & clothing industry is currently pegged at around US$ 440 bn. US and
European markets dominate the global textile trade accounting for 64% of clothing
and 39% of textile market. With the dismantling of quotas, global textile trade is

18
 expected to grow (as per Mc Kinsey estimates) to US$ 650 bn by 2010 (5 year CAGR
of 10%). Although China is likely to become the 'supplier of choice', other low cost
producers like India would also benefit as the overseas importers would try to
mitigate their risk of sourcing from only one country. The two-fold increase in global
textile trade is also likely to drive India's exports growth. India's textile export (at US$
15 bn in 2005) is expected to grow to US$ 40 bn, capturing a market share of close to
8% by 2010. India, in particular, is likely to benefit from the rising demand in the
home textiles and apparels segment, wherein it has competitive edge against its
neighbour. Nonetheless, a rapid slowdown in the denim cycle poses risks to fabric
players.
2. Bargaining power of suppliers (supply
scenario)
India is the third largest producer
of cotton in the world after China and US
and has the largest area under cultivation.
Cotton, a key raw material in the textile
and garment industry, accounts for about 30% of the fabric cost and 13% of the garment
cost. India has an abundant supply of locally grown long staple cotton, which lends it a
cost advantage in the home textile and apparels segments. Other countries, like China
and Pakistan, have relatively lower supply of locally grown long staple cotton.
Moreover, low cotton prices due to a bumper cotton crop would enable India to lower
its production cost and sustain pricing pressure. Further, efforts on improving the yield
per hectare would ensure higher productivity and production, thereby providing the
much-needed security of raw-material supply to textile producers.
India also enjoys a significant lead in terms of labour cost per hour (US$ 0.6 in 2004),
over developed countries like US (US$ 15.1) and newly industrialised economies like
Hong Kong (US$ 5.1), Taiwan (US$ 7.1), South Korea (US$ 5.7) and China (US$ 0.9).
Also, India is rich in traditional workers adept at value-adding tasks, which could give
Indian companies significant margin advantage.

3. Threat of new entrants

In the quota free regime, capacity expansion is the name of the game in the textile
sector. Resultantly, smaller players who cannot venture into the global markets are
flooding the domestic markets with excess supply, thus weakening the pricing scenario.
Be it denim (Arvind mills), home textiles (Welspun) or branded apparels (Raymond),
new capex and consolidation with international players is also not likely to safeguard

19
 margins for the larger players, unless they can tap a significant pie of the overseas
markets.
4. Threat of substitutes
Low cost producing countries like Pakistan and Bangladesh (labour cost 50%
cheaper) are also posing a threat to India's exports demand. In fact, players like Arvind
Mills have already started feeling the pinch as overseas buyers have started shifting to
'alternative sources', thus impacting their incremental volume off-takes

5. Competitive rivalry
India's logistic disadvantage due to its geographical location can give it a major
thumbs-down in global trade. The country is distant from major markets as compared
to its global competitors like Mexico, Turkey and China, which are located in
relatively close vicinity to major global markets of US, Europe and Japan. As a result,
high cost of shipments and longer lead-time coupled with lack of infrastructure
facility may prove to be major hindrances.
The fragmented structure of the industry has also stood in the way of achieving true
integration between the various links in the supply chain. The sector has one of the
longest and most complex supply chains in the world, which the larger players are
trying to correct by integrating their operations and improving efficiency levels.

Textiles being a fairly regulated sector till the recent past (quota regime),
another indispensable leg of the above analysis is government regulations. Technology
Up gradation Fund Scheme (TUFS) was launched in FY99 for a period of five years
(later extended up to FY07) to promote the up gradation of the textile and jute industry.
The scheme aimed at providing loans to the sector at internationally comparable rates
of interest (5% lower than the domestic interest rates), which enabled the players to
upgrade their technology at lower cost of capital. Establishment of 'Apparel Export
Parks' and fiscal incentives in the recent budgets also indicate the government's resolve
to aid the sector's growth and international competitiveness.

As one can comprehend from the above analysis, the potential for the sector's
growth are ample, but the trick lies in competing effectively against rivals.
Consolidation of the industry and delivery of better quality at effective rates and
minimum lead time would certainly help the players surmount all competitive
pressures.

20
 6. Company analysis

6.1 Vardhman Textiles

Vardhman Group is a textile group based in Ludhiana, Punjab, India. Vardhman Group
was established in 1965 by Lala Rattan Chand Oswal. The company is in to the business of
manufacturing and trading in Yarn and Processed Fabric, Sewing Thread, Acrylic fibre.
Vardhman group was formed in 1962 as Vardhman Spinning & General Mills (VSGML). The
company was initially promoted by VS Oswal and RC Oswal. S. P. Oswal is now heading the
group.

SWOT Analysis

Strengths

 Strong brand recognition

 Market Leadership Position
 First mover advantage in the competitive market place.
 Track record of innovation
 Success of new product mix

Weaknesses

 Niche markets and local monopolies that company’s like Vardhman Textiles able to
exploit are fast disappearing.
 The customer network that Vardhman Textiles has promoted is proving less and less
effective.
 High cost of replacing existing experts within the Vardhman Textiles.
 Loyalty among suppliers is low
 Low investments into Vardhman Textiles's customer oriented services

Opportunities

 Accelerated technological innovations and advances are improving industrial

productivity, allowing suppliers to manufacture vast array of products and services.
This can help Vardhman Textiles to significantly venture into adjacent products.

21
  Local Collaboration - Tie-up with local players can also provide opportunities of
growth for the Vardhman Textiles in international markets.
 Increasing government regulations are making it difficult for un-organized players
to operate in the Apparel/Accessories industry. This can provide Vardhman Textiles
an opportunity to increase the customer base.
 Lower inflation rate

Threats

 Changing political environment with US and China trade war, Brexit impacting
European Union, and overall instability in the Middle East.
Saturation in urban market and stagnation in the rural markets.
 Trade Relation between US and China can affect Vardhman Textiles growth plans -
This can lead to full scale trade war which can hamper the potential of Vardhman
Textiles to expand operations in China.
 Shortage of skilled human resources

Shareholding pattern

VARDHMAN TEXTILES

Mar-18 Mar-17 Mar-16

Promoter's holding 62.15% 61.84% 62.21%

Institutional holdings 25.53% 22.71% 23.27%

Public holdings 12.30% 15.44% 14.52%

*Source: (TRENDLYNE, 2019)

Analysis

Promoter’s holing of the company is in the healthy range. Promoters have kept more
than 50% stake in company which indicates promoters are confident about company’s growth.
Over the three years they have maintained the holdings. For last three years institutional
holding has also increased to 53.27% indicating good confidence among the participants

22
Ratios

VARDHMAN TEXTILES
2018 2017 2016
Current Ratio 2.62 1.72 1.7
Total Debt/Equity (Annual) 0.4 0.4 0.5
Quick ratio 1.4 1 0.8
ROCE (in %) 13.11 26.03 16.87
ROA (in %) 7.04 13.08 8.18
ROE (in %) 11.73 26.03 15.36
EPS (in Rs.) 105.5 163.1 100.9
PBDIT Margin (in %) 17.62 29.23 21.82
Net profit Margin (in %) 13.78 23.5 15.47
BV annual (in Rs. Per share) 897 798 673.5
Annual revenue (in Cr. Rs.) 6439.77 6551.31 6005.76
Average total revenue (5 years) = Rs. 6609.94 Cr.

Analysis

Annual revenues have declined and are below the 5 years average. There is reduction
in ROCE, ROA, ROE, and EPS. Liquidity ratios have improved for last three years and
company has managed to maintain debt to equity ratio.

Stock data

Stock Code NSE VTL

CMP(On 17/05/2019) 1090.10
Market Cap(On 17/05/2019) 6329.36 Cr.
52 Week High 1435.05
52 Week Low 920
1 year change -12.3%
Average Volume (3 months) 18239
P/E ratio 8.59
*Source: (CHARTINK, 2019)

23
Technical Chart

Analysis

Technical chart is not showing any particular pattern. With Fibonacci retracement, it
can be seen that there is a strong support at1064 and strong resistance at 1143. The stock has
stuck between this range from March 2019. There were downtrends between Aug-2018 to Oct-
2018 and in Feb-2019. From mid Feb-2019 to mid-Mar-2019 month an uptrend can be seen.

24
6.2 Sutlej Textile Ltd

Sutlej Textiles was created on 22.06.2005 and was created by demerging the Textiles
Division of Sutlej Industries Ltd. (SIL) and DamanGanga Processors Ltd. Sutlej Textiles has
presence in all stages of textiles productions. Its manufacturing facilities are vertically
integrated, from spinning and weaving to dyeing and finishing to making apparel. It is a leading
textile company of the illustrious K.K Birla Group. STIL is one the India's leading textile
producers with product line extending from yarns to fabrics to garments to home textile.

SWOT analysis

Strength

 Talent management at Sutlej Textiles and skill development of the employees

 Strong brand recognition
 Diverse Revenue models - Over the years Sutlej Textiles has ventured into various
businesses outside the Consumer Cyclical sector.
 Sutlej Textiles provides exhaustive product mix options to its customers.

Weaknesses

 Gross Margins and Operating Margins could be improved and going forward may put
pressure on the Sutlej Textiles financial statement.
 High turnover of employees at the lower levels is also a concern for the Sutlej Textiles.
 Low investments into Sutlej Textile’s customer oriented services
 Loyalty among suppliers is low

Opportunities

 Trend of customers migrating to higher end products

 Lower inflation rate
 Increasing customer base in lower segments
 Accelerated technological innovations and advances
 Rapid expansion of economy

Threats

 Distrust of institutions and increasing threat of legal actions for Sutlej Textiles
 Competitive pressures - As the new product launch cycles are reducing in the Consumer
Cyclical industry
 Growing technological expertise of local players in the export market
 Changing demographics

25
Shareholding pattern

SUTLEJ TEXTILES LTD

Mar-18 Mar-17 Mar-16
Promoter's holding 63.90% 63.90% 63.90%
Institutional holdings 1.65% 1.03% 0.51%
Public holdings 34.45% 35.07% 35.59%

Source: (TRENDLYNE, 2019)

Analysis

Promoter’s holing of the company is in the healthy range. Promoters have kept more
than 50% stake in company which indicates promoters are confident about company’s growth.
Over the three years they have maintained the holdings. For last three years institutional
holding has also increased to 1.65% but is not up to significant level.

Ratios

SUTLEJ TEXTILES LTD

2018 2017 2016
Current Ratio 1.4 1.3 1.4
Total Debt/Equity (Annual) 1 1.2 1
Quick ratio 0.6 0.5 0.6
ROCE (in %) 11.91 17.11 12.63
ROA (in %) 5.18 7.72 8.56
ROE (in %) 12.47 19.35 20.99
EPS (in Rs.) 6.9 9.6 87.6
PBDIT Margin (in %) 11.4 14.08 14.56
Net Profit Margin (in %) 7.07 10.3 10.71
BV annual (in Rs. Per share) 533.5 498.1 417.2
Annual revenue (in Cr. Rs.) 2495.09 2284.6 2107.76
Average total revenue (5 years) = 2,278.94 Cr

26
Analysis

Annual revenue has increased by 9.21% and is well above 5 years average revenue.
ROE, ROCE, ROA, and EPS have declined for the company. Liquidity ratios have increased
but are still below the standard. Debt to Equity ratio is moderately good.

Stock data

Stock Code NSE SUTLEJTEX

CMP(On 17/05/2019) 35
Market Cap(On 17/05/2019) 573.4Cr.
52 Week High 64.45
52 Week Low 34.1
1 year change -43.64%
Average Volume (3 months) 29859
P/E ratio 5.06
Source: (CHARTINK, 2019) (INVESTING.COM, 2019) (moneycontrol.com, 2019)

Technical Chart

27
ANALYSIS

Counter is in downward trend from Mar-2019. Fibonacci retracement shows strong

support at 34.29 and strong resistance at 41.71. Counter has formed Doji type of candlestick.
Most important part is that doji type of candle stick has formed at the support level and near
the bottom of downtrend which suggest potential upside.

28
6.3 Indo Count Industries Ltd

Company was incorporated in Nov- 1988 as Vishnu Aluminium. Indo Count Industries
(ICIL) acquired its present name in Apr- 1990. The company was promoted by A K Jain, S
Jain and associates. ICIL went public in Nov- 1990 to part-finance a 100% EOU (inst. cap.:
26,208 spindles) to manufacture combed yarn at Gokal Shirgaon in Kolhapur, Maharashtra.
The company mainly produces combed cotton yarn. In 1994-95, the capacity was increased to
32,256 spindles with by adding 6048 spindles. ICIL is ISO 9002 certified company. ICIL
further added 18,144 spindles and diversified into grey knitted fabric by installing 8 knitting
machines. The project was assessed by IFCI at a cost of Rs.53.6 Cr. During 1999-2000, the
company has been granted financial assistance under Technical Up gradation Fund Scheme for
modernizing the spinning mill and for expansion in knitting capacity. To improve its quality,
production and productivity the company has initiated modernisation programme for its plant
& machinery under TUF scheme. The installed capacity of Spindle age-Cotton Yarn was
increased up to 56448 during 2001-02.

SWOT analysis

Strengths

 Mastered production strategy of ‘Made to Order’

 Balanced insourcing and out-sourcing approach
 Modern assets less than 10 years old

Weaknesses

 Presence in only the bed linen market

 Less ability to absorb external shock due to less diversification of business

Opportunities

 With the changing lifestyles and greater consumer appreciation of benefits of better
quality bed linen, demand for the Company’s products is likely to increase
 Many untapped markets are the biggest opportunity.
 With the brand strategy of launching home textile brands catering to niche segments,
the Company has increased the addressable market.

29
Threats

 Any withdrawal of the export promotion facilities, such as Interest Equalization

Scheme or Technology Up gradation Fund Scheme or Duty Drawback Scheme, etc.,
currently offered to the sector by the Indian government will impact the Company’s
profitability.

Shareholding pattern

INDO COUNT INDUSTRIES LTD

Mar-18 Mar-17 Mar-16
Promoter's holding 58.94% 58.94% 58.95%
Institutional holdings 9.65% 21.09% 14.98%
Public holdings 31.40% 19.97% 26.07%
*Source: (TRENDLYNE, 2019)

Analysis

Promoter’s holing of the company is in the healthy range. Promoters have kept more
than 50% stake in company which indicates promoters are confident about company’s growth.
Over the three years they have maintained the holdings. Institutional holding has declined by
54.24% from last year indicating less confidence on the company.

Ratios

INDO COUNT INDUSTRIES LTD

2018 2017 2016
Current Ratio 2 1.9 1.5
Total Debt/Equity (Annual) 0.4 0.3 0.5
Quick ratio 1.1 1.2 0.9
ROCE (in %) 21.14 40.17 31.39
ROA (in %) 7.97 15.83 18.52
ROE (in %) 13.96 27.58 38.71
EPS (in Rs.) 6.9 9.6 87.6
BV annual (in Rs. Per share) 47.6 41.9 155.5
PBDIT Margin (in %) 15.52 21.04 22.17
Net Profit Margin (in %) 11.46 11.87 8.6
Annual revenue (in Cr. Rs.) 1808.3 2084.74 2048.63

30
Average total revenue (5 years) = Rs. 1812.42 Cr

Analysis

Annual total revenue has declined and has fallen below the 5 years average. ROE,
ROCE, ROA, and EPS has declined from last year. Liquidity ratios are in the acceptable range
whereas debt to equity is also good.

Stock data

Stock Code NSE ICIL

CMP(On 17/05/2019) 38.20
Market Cap(On 17/05/2019) 738.27Cr.
52 Week High 89.6
52 Week Low 30.35
1 year change -53.07%
Average Volume (3 months) 471773
P/E ratio 8.97
Source: (CHARTINK, 2019) (INVESTING.COM, 2019) (moneycontrol.com, 2019)

Technical Chart

31
Analysis

Counter is near support level. It has support at 35.85 and a resistance at 47.15 as shown
by Fibonacci retracement. Indicators like RSI and MACD is indicating uptrend. Last 3 months
average volume is also above 4 lakhs. Last week the counter has given a doji candlestick and
then it touched support level and is giving white candlesticks.

32
6.4 Arvind Ltd

Arvind Limited (formerly Arvind Mills) is a textile manufacturer and

the flagship company of the Lalbhai Group. Its headquarters are
in Naroda, Ahmedabad, Gujarat, India, and it has units at Santej (near Kalol). The company
manufactures cotton shirting, denim, knits and bottom weight (khaki) fabrics. It has also
recently ventured into technical textiles when it started Advanced Materials Division in 2011.
It is India's largest denim manufacturer and is the world's fourth-largest producer and exporter
of denim.
Sanjaybhai Lalbhai is the Chairman and Managing Director of Arvind and Lalbhai
Group. In the early 1980s, he led the 'Reno-vision' whereby the company brought denim into
the domestic market, thus starting the jeans revolution in India. Today it retails its own brands
like Flying Machine, Newport and Excalibur and licensed international brands like
Arrow, Tommy Hilfiger, through its nationwide retail network. Arvind also runs three clothing
and accessories retail chains, the Arvind Store, Unlimited and Megamart, which stocks
company brands.

SWOT Analysis
Strengths
 One of the largest manufacturers of Denims in India and the world.
 Strong portfolio of domestic and International brands
 Economies of scale through complete integration
 Arvind runs India's largest Value Retail Chain - Megamart with over 200 stores
 Latest Manufacturing tools in production of denims and clothing
 Over 26000 employees form the workforce for Arvind Mills
 CSR activities like education (Sharda Trust), upgrading slums etc. have enhance brand
image
Weaknesses
 Global penetration is limited as compared to a few other international brands
 Presence of Indian and international brands offers more offering to customers therefore
high brand switching
Opportunities
 Growth in the garment industry

 Rapid growth in target group as well as higher incomes

 Global expansion and reach of brands to increase sales

33
Threats
 Increasing competition from Indian as well as international brands
 Cheaper imports from other countries, and pirated/fake products

Shareholding pattern

ARVIND LTD

Mar-18 Mar-17 Mar-16

Promoter's holding 58.94% 58.94% 43.78%

Institutional holdings 9.65% 21.09% 38.98%

Public holdings 31.40% 19.97% 17.24%

Source: (TRENDLYNE, 2019)

Analysis

Promoter’s holing of the company is in the healthy range. Promoters have kept more
than 50% stake in company which indicates promoters are confident about company’s growth.
Over the three years they have increased the holdings. Institutional holding has declined by
54.24% from last year indicating less confidence on the company.

34
Ratios

ARVIND LTD
2018 2017 2016
Current Ratio 1.1 1 1
Total Debt/Equity (Annual) 0.8 0.8 1.3
Quick ratio 0.6 0.4 0.5
ROCE (in %) 12.96 15.28 7.2
ROA (in %) 3.01 3.62 3.82
ROE (in %) 8.18 8.82 11.87
EPS (in Rs.) 11.9 12.2 12.2
PBDIT Margin (in %) 9.49 11.04 12.89
Net Profit Margin (in %) 2.89 3.45 3.87
BV annual (in Rs. Per share) 158.1 143.8 104.6
Annual revenue (in Cr. Rs.) 10883.9 9302.96 8092.62
Average total revenue (5 years) = 8631.12 Cr

Analysis

Total revenue has increased by 17% and are above 5 years average. ROCE, ROA, ROE,
EPS have declined but to the significant extent. Liquidity ratios and debt to equity are
improving. Overall good fundamental condition.

Stock data

Stock Code NSE ARVIND

CMP(On 17/05/2019) 74.05
Market Cap(On 17/05/2019) 1865.92Cr.
52 Week High 149.17
52 Week Low 70.15
1 year change -51.48%
Average Volume (3 months) 3335342
P/E ratio 8.08
Source: (CHARTINK, 2019) (INVESTING.COM, 2019) (moneycontrol.com, 2019)

35
Technical Chart

Analysis

Counter has a good support at 72.8 and resistance at 88.64. Currently it is around 74.2
which is very near to support. It has given white candlesticks after touching the support. RSI
is also indicating the uptrend in the stock.

36
6.5 Ambika Cotton Mills Ltd

Ambika Cotton Mills Limited (ACML) based out of Coimbatore in Southern India, is
engaged in the manufacture of premium quality Compact and Elitwist cotton yarn for hosiery
and weaving. It’s an established player in the international and domestic yarn market with
exports constituting roughly sixty percent of its revenues. The company was incorporated in
1988 and its 4 manufacturing units are situated in Dindigul, Tamil Nadu with a total spindle
capacity of 1, 08,288 of Compacting System. Ambika Cotton Mills has the unique distinction
of being the number one in the shirting segment and is the preferred client of all top quality
shirt manufacturers around the world. It holds a very niche segment in the industry, thanks to
our impeccable track record of product quality and delivery fulfilment. It produces over 110%
of its power requirement by clean wind power with installed capacity of 27.4 MW.

SWOT analysis
Strengths
 Diverse Revenue models
 Brands catering to different customers segments within Textiles - Non Apparel
segment
 Wide geographic presence

Weaknesses
 Extra cost of building new supply chain and logistics network
 Business Model of Ambika Cotton Mills Ltd can be easily imitated by the competitors
 Declining market share

Opportunities
 Customer preferences are fast changing
 Opportunities in Online Space
 Increasing government regulations are making it difficult for un-organized players to
operate in the Textiles - Non Apparel industry.

Threats
 Shortage of skilled human resources
 Trade Relation between US and China can affect Ambika Cotton Mills Ltd growth
plans
 Competitors catching up with the product development
 Competitive pressures

37
Shareholding pattern

Share holding pattern (AMBIKA COTTON)

Mar-18 Mar-17 Mar-16
Promoter's holding 50.00% 49.91% 48.63%
Institutional holdings 4.79% 4.42% 4.03%
Public holdings 45.21% 45.67% 47.34%
Source: (TRENDLYNE, 2019)

Analysis

Promoters holding has increased to 50 % from previous years which indicates

promoter’s confidence in company’s growth. Institutional holdings have also increased to
4.79% indicating a positive sign.

Ratios

AMBIKA COTTON MILLS LTD

2018 2017 2016
Current Ratio 2.9 3.1 3.2
Total Debt/Equity (Annual) 0.1 0 0.1
Quick ratio 0.6 0.9 0.8
ROCE (in %) 18.41 18.64 11.94
ROA (in %) 10.8 11.7 10.48
ROE (in %) 14.24 14.87 13.26
EPS (in Rs.) 106.7 95.5 75.7
PBDIT Margin (in %) 19.4 19.91 19.11
Net Profit Margin (in %) 10.44 10.54 9.02
BV annual (in Rs. Per share) 749 654.5 570.3
Annual revenue (in Cr. Rs.) 585.7 529.45 494.08
Average total revenue (5 years) = 516.43 Cr

38
Analysis

Annual revenues increased by 10.62% from previous year and are well above the 5
years average. Liquidity ratios have declined slightly. Debt to equity is minimal. ROE, ROCE,
ROA have slightly declined and EPS has improved by 11.72%

Stock data

Stock Code NSE AMBIKCO

CMP(On 17/05/2019) 1090.8
Market Cap(On 17/05/2019) 624.48Cr.
52 Week High 1379
52 Week Low 1070
1 year change -19.38%
Average Volume (3 months) 2589
P/E ratio 9.6
Source: (CHARTINK, 2019) (INVESTING.COM, 2019) (moneycontrol.com, 2019)

Technical Chart

39
Analysis

Counter is downward channel. It has support level at 1085 and resistance at 1152. RSI
and MACD are also indicating downward movement.

40
 7. Conclusion and Recommendation
 According to SKYMET monsoon will arrive in India on time. But it has predicted that
there is 0% chance of excess and above normal rainfall. 30 % chance of normal and
55% chance of below normal and 15% chance of drought. This may affect the
agriculture sector thus the cotton production.
 Vardhman Textiles Ltd looks good with respect to shareholding pattern, liquidity ratio.
But Decline in ROCE, ROE, ROA, and Total revenue raises some concern. Technically
one would not recommend to take any position and observe the stock until it hits the
support or resistance level
 Sutlej Textiles Ltd looks good with respect to promoter’s shareholding, and revenue
growth. Technically speaking the counter is at good position for buying as it is almost
at the support level. Buying levels would be at Rs. 34 to 35.
 Indo Count Mills Ltd has healthy promoter’s shareholding, liquidity ratios, debt to
equity. There is decline in ROCE, ROE, and ROA. Reduction in revenues and
institutional holding raises concern. When one looks at the technical chart counter has
good uptrend possibilities. RSI and MACD indicators confirms that. Buying range
would be from 34 to 36.
 Arvind Ltd has good promoter’s shareholding, financial ratios are also at good range.
If one looks at the technical chart, the counter is at support level and will recommend
buying position with first target of Rs. 85 to 88.
 Ambika Cotton Mills Ltd. promoters have increased their holdings to 50%, institutional
holdings have also increased. Financial ratios are also up to the mark. Technical chart
shows downward trend. There is good chance of uptrend when it hits the support level
of 1085. Until then there is no call for buy or investment.

41
8. References

 CHARTINK. (2019, may 17). Retrieved from CHARTINK:

https://chartink.com/stocks/vtl.html

 India, R. b. (2019). Ratios and Rates. RBI.

 INVESTING.COM. (2019, MAY 17). Retrieved from INVESTING.COM: investing.com

 moneycontrol.com. (2019, MAY 17). Retrieved from moneycontrol.com: moneycontrol.com

 (2019). Textile Industry. INDIA BRAND EQUITY FOUNDATION.

 textiles, M. o. (2018). Annual Report 2017-18. Ministry of textiles.

 TRENDLYNE. (2019, MAY 17). Retrieved from trendlyne.com:

https://trendlyne.com/fundamentals/financials/1504/VTL/vardhman-textiles-
ltd/#financialratios

 TRENDLYNE. (2019, MAY 17). Retrieved from trendlyne.com:

https://trendlyne.com/fundamentals/financials/1335/SUTLEJTEX/sutlej-textiles-industries-
ltd/

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