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Dolat Capital
Orbit Exports (Buy)
CMP: ₹398.70
Target: ₹518
Orbit Exports is a niche textile player (Jacquard, Christmas crafts and Faux Silk) with a strong clientele and presence in 32 countries. Its focus on high margin segments coupled with better utilisation and in-house manufacturing is likely to result in improvement in return ratios.
In-house production and focus on value-added products has enabled the company to improve its operating profit margins to 27.6 per cent in FY15 from 10.8 per cent in FY10. Share of value-added products has increased to 45 per cent in FY15 from 34 per cent in FY13. The company has expanded its capacity in value added segments which will enable it further improve its margins.
Orbit has been successful in convincing large retailers/fashion houses to buy fabric as against finished garment. Customer (retail stores) focus is more on design and quality as against the price, thereby providing sufficient headroom for improvement in realisation.
Orbit Exports increased its overall capacity by 4x to 8.5 million metres in FY15 from 2 million meters in FY11. Going forward the company plans to add 5.4 million metres entailing a capex of ₹47 crore.
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