Top Textile Penny Stocks: Small textile companies are present in the early stage of the value chain producing yarns & fabric, engaged in contract manufacturing, or more. Their valuations trail behind larger companies because of business size and derived demand.
However, these textile penny stocks can be lucrative investments for risk-taking investors who think larger companies are overvalued. In this article, we present a list of top textile penny stocks for such risk-loving investors.
But before we rush to the list, for starters, let us know what a penny stock is.
What is a Penny Stock?
Penny stocks are the shares of small-cap companies, usually having a market capitalization of less than Rs. 500 crores. The companies have low share prices of less than Rs. 85 or so. The stock can trade for as rock-bottom as Rs 1 or even 50 paise a piece.
A penny stock has relatively lesser liquidity. In addition to this, it can come with restrictions of delivery only, no margin trading, and more.
Risk-loving investors are always searching for penny stocks in the hope of earning multi-bagger gains. However, penny stocks often implode as often as they go up. Retail investors should exercise extreme caution while putting their money in penny stocks.
Top Textile Penny Stocks in India
So without further ado, let us quickly jump to know about the top textile penny stocks in india on BSE and NSE.
Top Textile Penny Stocks #1 – Swasti Vinayaka Synthetics
| CMP | ₹7.4 | Market Cap (Cr.) | ₹66.9 |
| EPS | ₹0.20 | Stock P/E | 38.0 |
| RoCE | 14.8% | RoE | 11.1% |
| Face Value | ₹1.0 | Book Value | ₹1.96 |
| Promoter Holding | 51.0% | Price to Book Value | 3.80 |
| Debt to Equity | 0.04 | Dividend Yield | 0.00% |
| Net Profit Margin | 8.6% | Operating Profit Margin | 13.5% |
Founded in 1981, Swasti Vinayaka Synthetics is involved in the manufacturing of suiting, shirting and other apparel products. It is a small-cap textile penny stock with a market capitalization of Rs 66.9 crore.
The company has two manufacturing plants at Palghar and Tarapur in Maharashtra. It has a well-established design studio with the most recent CAD technology. Its key focus and expertise lie in producing high-end cotton, cotton-blended and linen designer shirting.
Swasti Vinayaka Synthetics supplies its merchandise to large retail chains, the readymade garments sector, garment exporters and large corporate houses.
Its list of customers includes some well-established names such as Bombay Dyeing, Arvind Lifestyle Brands, Pantaloons, Trent, ITC, LIC of India, Coca Cola and more.
Its net profit has remained consistent over the last three years despite registering a decline in income in FY21. For the financial year ending 2022, the textile manufacturer posted a net profit of Rs 1.75 crore on revenues of Rs 20.35 crore. As a feather in its cap, it is a debt-free stock with an insignificant debt-to-equity ratio of 0.04 only.
Top Textile Penny Stocks #2 – R&B Denims
| CMP | ₹42.4 | Market Cap (Cr.) | ₹297 |
| EPS | ₹3.61 | Stock P/E | 13.2 |
| RoCE | 25.80% | RoE | 37.40% |
| Face Value | ₹2.00 | Book Value | ₹10.8 |
| Promoter Holding | 73.8% | Price to Book Value | 3.91 |
| Debt to Equity | 0.61 | Dividend Yield | 0.00% |
| Net Profit Margin | 7.0% | Operating Profit Margin | 14.4% |
R&B Denims was promoted by the RawatKhedia Group and the Borana Group in 2012. With over a business history of 30 years, both groups are well-known business families in Surat, Gujarat.
The company is one of the largest vertically integrated denim manufacturers globally with an annual capacity of 30 million meters. Its advanced facilities can produce high-width denim of up to 76 inches.
Additionally, its finishing facility is well-equipped to churn out a broad range of denim finishes: wet chemical application, foam application, over-dyeing, coating, resin application and more.
Barring 2021, its revenues have consistently grown over the years. For the financial year ended 2022, the denim producer clocked a net profit of Rs 22 crore on sales of Rs 293 crore.
It is a profitable business with high return ratios. RoCE and RoE stood at 25.80% and 37.40% respectively. As a vote of confidence, promoters have a high shareholding in the business at 73.8%.
Top Textile Penny Stocks #3 – Sarla Performance Fibers
| CMP | ₹44.0 | Market Cap (Cr.) | ₹370 |
| EPS | ₹4.75 | Stock P/E | 9.36 |
| RoCE | 13.60% | RoE | 12.70% |
| Face Value | ₹1.00 | Book Value | ₹49.5 |
| Promoter Holding | 55.9% | Price to Book Value | 0.89 |
| Debt to Equity | 0.32 | Dividend Yield | 4.54% |
| Net Profit Margin | 11.0% | Operating Profit Margin | 18.6% |
Formerly known as Sarla Polyester Ltd., Sarla Performance Fibers is involved in the production and export of polyester & nylon textured, twisted & dyed yarns, covered yarns, high tenacity yarns and sewing thread.
The company manufactures over 250 varieties of value-added yarns and threads. In addition to its manufacturing plants outside Mumbai in Silvassa, Dadra and Vapi, Sarla has a global presence with its operations in Portugal, and Europe.
On a yearly basis, its sales rose by 65.12% to Rs 426 crore in FY22 from Rs 258 crore a year earlier. Along the same lines, the bottom line grew by 74.07% to Rs 47 crore from Rs 27 crore.
The stock presently trades at an attractive P/E ratio of 9.31 and a price-to-book value ratio of 0.89. Additionally, it is a low-debt stock with a debt-to-equity ratio of 0.32.
Top Textile Penny Stocks #4 – APM Industries
| CMP | ₹60.0 | Market Cap (Cr.) | ₹130 |
| EPS | ₹10.70 | Stock P/E | 5.6 |
| RoCE | 14.50% | RoE | 10.20% |
| Face Value | ₹2.00 | Book Value | ₹75 |
| Promoter Holding | 64.4% | Price to Book Value | 0.79 |
| Debt to Equity | 0.01 | Dividend Yield | 1.67% |
| Net Profit Margin | 4.6% | Operating Profit Margin | 9.8% |
APM Industries established its textile spinning facility in 1979-80 under the trade name of Orient Sintex. Fast forward to today, the company has a broad product line which is at par with international quality standards.
It is involved in the manufacturing of high-quality blended spun yarn, Polyester yarns, Acrylic yarns, 100% fancy yarns and fibre-dyed yarns. It’s textile spinning unit has 55,584 spindles capacity to manufacture 18 million kg of yarn every year.
APM Industries is a turnaround textile penny stock that delivered stellar sales and profit figures in FY22. The company generated a net profit of Rs 15 crore on an income of Rs 317 crore in FY22. This was accompanied by an expansion in operating profit margins.
Its earnings had been on a decline since 2017. For instance, the company’s profit and sales were only Rs 5 crore and Rs 237 crore in FY21.
The promoter holding in the textile penny stock stood at 64.4% as of September 30, 2022. It presently trades at an attractive P/E ratio of 5.6 and price to book value of 0.79.
Top Textile Penny Stocks #5 – VTM
| CMP | ₹50.4 | Market Cap (Cr.) | ₹203 |
| EPS | ₹3.33 | Stock P/E | 15.1 |
| RoCE | 7.58% | RoE | 6.14% |
| Face Value | ₹1.00 | Book Value | ₹59.3 |
| Promoter Holding | 75.0% | Price to Book Value | 0.85 |
| Debt to Equity | 0.02 | Dividend Yield | 1.79% |
| Net Profit Margin | 7.19% | Operating Profit Margin | 12.0% |
VTM Ltd. traces its origins back to 1946 when the Indian textile industry was in a nascent stage. Fast forward to today, it is a well-established player fulfilling requirements for both the domestic markets and exports.
It has state-of-the art production facility with 258 looms, 80 Sulzer machines, 163 air jets, 9 Jacquards and 6 Rapier Dobby looms. It manufactures different types of fabrics including square-inch drills, twills, sateens, piques, jacquards, and a range of complex dobbies.
VTM earned a net profit of Rs 15 crore on sales of Rs 194 crore in FY22. Its income and net profit rose 35.66% and 50% on a YoY basis respectively.
The textile penny stock has a high promoter holding of 75%. It currently trades at a price-to-earnings ratio of 15.1 and an impressive price-to-book value ratio of 0.85.
The Madurai-based company is almost debt-free with a nil debt-to-equity ratio of 0.02.
List of Top Textile Penny Stocks in India
We read bout 5 top textile penny stocks in detail above. The list below highlights more such penny stocks.
| Company Name | CMP (Rs) | Market Cap (Rs Cr) |
|---|---|---|
| SPL Industries | 75.8 | 220 |
| M K Exim (India) | 87.8 | 236 |
| Mafatlal Industries | 62.8 | 443 |
| APM Industries | 60.0 | 130 |
| Vardhman Acrylics | 59.0 | 475 |
| VTM | 50.4 | 203 |
| Sarla Performance Fibers | 44.0 | 370 |
| R&B Denims | 42.4 | 297 |
| Pasupati Acrylon | 34.6 | 309 |
| Libas Consumer Products | 20.3 | 53.7 |
| Swasti Vinayaka Synthetics | 7.43 | 66.9 |
A short section below highlights the research methodology used for this article.
Research Methodology
We used the stock screener of the Trade Brains Portal for writing this article. The research has been restricted to textiles, textile-manmade fibers, textile-spinning, and textile-weaving; the three sub-sectors of the textile industry.
As for the market capitalization and current share price, we kept the upper limit of Rs 500 crore and Rs 85 respectively. In addition to this, the debt-to-equity ratio was kept below 1 to avoid any overly-leveraged stocks.
Lastly, the price-to-earnings ratio range was kept between 1 and 50. This helped to filter out moderately profitable companies.
All these parameters left some 48 stocks. We exercised subjective judgement for sales and net profit growth for these stocks.
The image below shows a section of the Trade Brains Stock Screener.
In Conclusion
We are now at the end of our study of top textile penny stocks in India. We saw how the companies differ in their products across different stages of the value chain. As an investor eying penny stocks, one should pick companies that one understands intuitively. As the amount of available information is less, a good understanding of the stock’s business reduces the downside.
In your opinion, what parameters should investors keep in mind while analyzing penny stocks? How about you let us know in the comments below?
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Vikalp Mishra is a commerce graduate from the University of Delhi. He likes to write on finance, money and business. He is a voracious reader with a genuine interest in investing. Drop him a mail at [email protected].
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