Sangam's Q4FY15 Net Profit up by 43.75% and stood at Rs. 144.90 million as against Rs. 100.80 million; Firstcall recommends for a target of Rs.90

1. CMP 78.20
Target Price 90.00
ISIN: INE495C01010
MAY 9th
2015
SANGAM (INDIA) LIMITED
Result Update (PARENT BASIS): Q4 FY15
BUYBUYBUYBUY
Index Details
Stock Data
Sector Textiles
BSE Code 514234
Face Value 10.00
52wk. High / Low (Rs.) 107.50/36.10
Volume (2wk. Avg. Q.) 3045
Market Cap (Rs. in mn.) 3082.64
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS FY15A FY16E FY17E
Net Sales 14769.40 15507.87 16190.22
EBITDA 2201.30 2395.09 2582.93
Net Profit 515.70 603.39 677.04
EPS 13.08 15.31 17.18
P/E 5.98 5.11 4.55
Shareholding Pattern (%)
1 Year Comparative Graph
SANGAM (INDIA) LTD BSE SENSEX
SYNOPSIS
Sangam (India) Ltd. is one of the largest
manufacturers of polyester viscose dyed yarn in
Asia at a single location with 25% market share in
the country.
For the 4th quarter of FY15, Net profit grew by
43.75% and stood at Rs. 144.90 million as against
Rs. 100.80 million over the corresponding quarter
last year.
In Q4 FY 15, Net sales stood at Rs. 3621.00 million
from Rs. 3693.80 million over the corresponding
quarter last year.
During the quarter, operating profit stood at Rs.
609.50 million in Q4 FY15 as against Rs. 497.20
million in Q4 FY14.
The company has reported an EPS of Rs. 3.68 for the
4th quarter of financial year against an EPS of Rs.
2.56 for the corresponding quarter of the previous
year.
During Q4 FY15, Profit before Tax increased by
43.85% to Rs. 200.10 million from Rs. 139.10
million over the corresponding quarter of the
previous year.
The company has recommended dividend of Rs.
2.00 (20%) per equity share of Rs. 10/- each for the
financial year 2014-15.
Operating Profit and PAT of the company are
expected to grow at a CAGR of 9% and 19% over
2014 to 2017E respectively.
PEER GROUPS CMP MARKET CAP EPS P/E (X) P/BV(X) DIVIDEND
Company Name (Rs.) Rs. in mn. (Rs.) Ratio Ratio (%)
Sangam India Ltd 78.20 3082.64 13.08 5.98 0.83 20.00
Arvind Ltd 248.65 64212.10 15.67 15.87 2.72 23.50
RSWM Ltd 261.90 6062.60 42.29 6.19 1.54 100.00
Banswara Syntex Ltd 72.80 1197.30 10.82 6.73 0.56 30.00

2. QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results updates- Q4 FY15,
Months MAR-15 MAR-14 % Change
Net Sales 3621.00 3693.80 (1.97)
PAT 144.90 100.80 43.75
EPS 3.68 2.56 43.75
EBITDA 609.50 497.20 22.59
The company’s Net sales stood at Rs. 3621.00 million for the 4th quarter of the financial year 2014-15 as against
Rs. 3693.80 million in the corresponding quarter of the previous year. The company has reported an EBITDA of
Rs. 609.50 million in Q4 FY15. During the quarter, net profit stood at Rs. 144.90 million against Rs. 100.80 million
in the corresponding quarter of the previous year. The company has reported an EPS of Rs. 3.68 for the 4th
quarter of financial year against an EPS of Rs. 2.56 for the corresponding quarter of the previous year.
Break up of Expenditure
Break up of
Expenditure
(Values in Million)
Q4 FY15 Q4 FY14 % CHNG
Cost of Materials
Consumed
2007.20 2165.40 -7%
Depreciation &
Amortization
228.70 179.50 27%
Employees Benefit
Expenses
312.40 259.60 20%
Other Expenditure 370.00 345.70 7%
Power & Fuel 370.50 362.10 2%
Toll Contract fee 0.00 35.20 -100%

3. COMPANY PROFILE
Sangam (India) Ltd is flagship Company of the SANGAM GROUP and one of the largest player in the dyed poly
viscose (PV) yarn market in India started operations in 1985 and promoted under the name and style of Arun
Synthetics Pvt. Ltd. At Bhilwara in Rajasthan, the company operates its facilities to produce synthetic and
blended dyed/grey spun yarn, cotton yarn and fabrics (synthetics blended denim and knitted fabrics). It also has
facilities for fabric processing.
At present, Sangam India has 162720 spindles of polyester- viscose dyed yarn and 31,200 spindles for cotton
yarn installed in Bhilwara along with 257 weaving machines and a 31 MW thermal power plant. The company
also has strong presence in the Indian synthetic blended fabric segment with brands like Sangam and Anmol. The
company has an established client base like Reliance, Reid & Taylor, Siyaram and Grasim. Its fabric is marketed
through a network of 200 plus dealers and thousands of retailers.
Business Area
Sangam is a preferred PV dyed yarn supplier to top textile companies across the world, Sangam (India) has
emerged as a preferred supplier of fabrics on account of its colours, blends, textures and finishes. It has a
colour bank of more than 5,000 shades and produces 6-50 counts of yarns. It offers single ply, double ply,
grindle, roving grindle, core spun, slub and other fancy yarns, making it a one-stop shop for fabric
manufacturers. The company has also partnered various brands to introduce new varieties of man-made fi
bres, adding considerable value to its products.
Products portfolio
• Yarns: PV and Cotton
• Woven fabrics
• Branded suiting
• Denim fabric
• Texturised yarn
• Wind power
Capacities:
Division & Production Capacity
• Spinning (Ring Spinning) 201216 Spindles / 55000 MT p.a.
• Spinning (Open End) 4096 Rotors / 18000 MT p.a.
• Synthetic Fabric 18 Million Meter p.a.
• Denim Fabric 32 Million Meter p.a.

4. • Fabric Processing 53 Million Meter p.a.
• Knitted Fabric 18 Machines / 3000 MT p.a.
• Texturised Yarn 7200 MT p.a.
• Thermal & Wind Power 36 MW
Plants Locations
• Biliya Kalan, Bhilwara, Rajasthan.
• Sareri, Bhilwara, Rajasthan.
• Atun, Bhilwara, Rajasthan.

5. FINANCIAL HIGHLIGHT (PARENT BASIS) (A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March31, 2014A-2017E
FY14A FY15A FY16E FY17E
I. EQUITY AND LIABILITIES:
A. Shareholders’ Funds:
a) Share Capital 394.20 394.20 394.20 394.20
b) Reserves and Surplus 2920.10 3322.80 3768.06 4276.74
Sub-Total-Net worth 3314.30 3717.00 4162.26 4670.94
B. Non-Current Liabilities:
a) Long-term borrowings 2758.60 2577.80 2423.13 2292.28
b) Deferred Tax Liabilities [Net] 449.60 403.50 367.19 336.34
Sub-Total-Long term liabilities 3208.20 2981.30 2790.32 2628.62
C. Current Liabilities:
a) Short-term borrowings 2217.80 2769.30 3129.31 3348.36
b) Trade Payables 707.00 750.50 803.04 846.40
c) Other Current Liabilities 1429.70 1428.30 1471.15 1500.57
d) Short Term Provisions 94.30 119.70 136.46 150.10
Sub-Total-Current Liabilities 4448.80 5067.80 5539.95 5845.43
TOTAL -EQUITY AND LIABILITIES (A+B+C) 10971.30 11766.10 12492.52 13145.00
II. ASSETS:
D. Non-Current Assets:
a) Fixed Assets 5513.80 5656.90 5770.04 5943.14
b) Non Current Investments 78.50 58.50 52.65 49.49
c) Long Term Loans and Advances 170.10 145.10 130.59 120.14
Sub-Total-Non-Current Assets 5762.40 5860.50 5953.28 6112.77
E. Current Assets:
a) Inventories 2337.30 2650.90 2915.99 3149.27
b) Trade Receivables 2008.50 2517.10 2940.15 3226.45
c) Cash and Bank Balances 32.80 39.10 43.79 47.30
d) Short Term Loans and Advances 626.80 577.20 548.34 531.89
e) Other Current Assets 203.50 121.30 90.97 77.32
Sub-Total-Current Assets 5208.90 5905.60 6539.24 7032.23
TOTAL -ASSETS (D+E) 10971.30 11766.10 12492.52 13145.00

6. Annual Profit & Loss Statement for the period of 2014 to 2017E
Value(Rs.in.mn) FY14A FY15A FY16E FY17E
Description 12m 12m 12m 12m
Net Sales 14396.20 14769.40 15507.87 16190.22
Other Income 60.90 27.40 30.14 32.97
Total Income 14457.10 14796.80 15538.01 16223.19
Expenditure -12438.80 -12595.50 -13142.92 -13640.26
Operating Profit 2018.30 2201.30 2395.09 2582.93
Interest -660.60 -672.20 -699.09 -741.03
Gross profit 1357.70 1529.10 1696.00 1841.90
Depreciation -743.20 -804.00 -860.28 -911.90
Exceptional Items -3.00 -3.50 0.00 0.00
Profit Before Tax 611.50 721.60 835.72 930.00
Tax -206.50 -205.90 -232.33 -252.96
Net Profit 405.00 515.70 603.39 677.04
Equity capital 394.20 394.20 394.20 394.20
Reserves 2920.10 3322.80 3768.06 4276.74
Face value 10.00 10.00 10.00 10.00
EPS 10.27 13.08 15.31 17.18
Quarterly Profit & Loss Statement for the period of 30 Sep, 2014 to 30 Jun, 2015E
Value(Rs.in.mn) 30-Sep-14 31-Dec-14 31-Mar-15 30-Jun-15E
Description 3m 3m 3m 3m
Net sales 3707.90 3690.20 3621.00 3780.32
Other income 4.90 -7.10 13.40 15.54
Total Income 3712.80 3683.10 3634.40 3795.87
Expenditure -3171.10 -3158.10 -3024.90 -3164.13
Operating profit 541.70 525.00 609.50 631.74
Interest -162.90 -164.50 -177.20 -171.18
Gross profit 378.80 360.50 432.30 460.56
Depreciation -191.50 -194.40 -228.70 -237.85
Exceptional Items 0.00 0.00 -3.50 0.00
Profit Before Tax 187.30 166.10 200.10 222.71
Tax -67.60 -28.40 -55.20 -63.03
Net Profit 119.70 137.70 144.90 159.69
Equity capital 394.20 394.20 394.20 394.20
Face value 10.00 10.00 10.00 10.00
EPS 3.04 3.49 3.68 4.05

7. Ratio Analysis
Particulars FY14A FY15A FY16E FY17E
EPS (Rs.) 10.27 13.08 15.31 17.18
EBITDA Margin (%) 14.02 14.90 15.44 15.95
PBT Margin (%) 4.25 4.89 5.39 5.74
PAT Margin (%) 2.81 3.49 3.89 4.18
P/E Ratio (x) 7.61 5.98 5.11 4.55
ROE (%) 12.22 13.87 14.50 14.49
ROCE (%) 33.31 33.16 33.51 33.89
Debt Equity Ratio 1.50 1.44 1.33 1.21
EV/EBITDA (x) 3.98 3.81 3.59 3.36
Book Value (Rs.) 84.08 94.29 105.59 118.49
P/BV 0.93 0.83 0.74 0.66
Charts

8. OUTLOOK AND CONCLUSION
At the current market price of Rs. 78.20, the stock P/E ratio is at 5.11 x FY16E and 4.55 x FY17E respectively.
Earning per share (EPS) of the company for the earnings for FY16E and FY17E is seen at Rs.15.31 and
Rs.17.18 respectively.
Operating Profit and PAT of the company are expected to grow at a CAGR of 9% and 19% over 2014 to 2017E
respectively.
On the basis of EV/EBITDA, the stock trades at 3.59 x for FY16E and 3.36 x for FY17E.
Price to Book Value of the stock is expected to be at 0.74 x and 0.66 x for FY16E and FY17E respectively.
We recommend ‘BUY’ in this particular scrip with a target price of Rs.90.00 for Medium term investment.
INDUSTRY OVERVIEW
India’s textiles sector is one of the mainstays of the national economy. It is also one of the largest contributing
sectors of India’s exports contributing 11 per cent to the country’s total exports basket. The textiles industry is
labour intensive and is one of the largest employers. The industry realised export earnings worth US$ 41.57
billion in 2013-14.
The textile industry has two broad segments, namely handloom, handicrafts, sericulture, power looms in the
unorganised sector and spinning, apparel, garmenting, made ups in the organised sector.
The Indian textiles industry is extremely varied, with a hand-spun and handwoven sector at one end of the
spectrum, and the capital intensive sophisticated mill sector at the other. The decentralised power looms/
hosiery and knitting sector form the largest and knitting sector form the largest section of the Textiles Sector.

9. The close linkage of the Industry to agriculture and the ancient culture, the traditions of the country make the
Indian textiles sector unique in comparison to the textiles industry of other countries. This also provides the
industry with the capacity to produce a variety of products suitable to the different market segments, both within
and outside the country.
The Indian textiles industry, currently estimated at around US $108 billion, is expected to reach US $ 141 billion
by 2021. The industry is the second largest employer after agriculture, providing direct employment to over 45
million and 60 million people indirectly. The Indian Textile Industry contributes approximately 5 per cent to
GDP, and 14 per cent to overall Index of Industrial Production (IIP).
The Indian textile industry has the potential to grow five-fold over the next ten years to touch US$ 500 billion
mark on the back of growing demand for polyester fabric, according to a study by Wazir Advisors and PCI
Xylenes and Polyester. The US$ 500 billion market figure consists of domestic sales of US$ 315 billion and
exports of US$ 185 billion. The current industry size comprises domestic market of US$ 68 billion and exports of
US$ 40 billion, according to Mr Prashat Agarwal, Managing Director, Wazir Advisors.
Outllok
The future for the Indian textile industry looks promising, buoyed by both strong domestic consumption as well
as export demand. With consumerism and disposable income on the rise, the retail sector has experienced a
rapid growth in the past decade with the entry of several international players like Marks & Spencer, Guess and
Next into the Indian market. The organised apparel segment is expected to grow at a compound annual growth
rate (CAGR) of more than 13 per cent over a 10-year period.
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the recipients’ investment decision based on this document.

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