A company which makes dhurries and more home textile and other stuff along with a stores which sell wine and other alcoholic items. With a large part of the expansion in home textiles and knits operational, we see these businesses (31% of sales in FY08E) growing at 38% and 43% respectively and driving total revenues by 22% CAGR over FY07-10E.
Revenue growth in apparel fabric (31% of sales) is likely to be muted at 5% pa, largely due to pressure on overall garment exports from India – as a result of an appreciating rupee. Alok’s initiatives to focus on value addition through entry in Organic cotton products and high-end products like comforters in bed-linen (targeting to have this as 25% of bed-linen business) would help counter the rupee pressure and improve overall profitability.
Despite higher interest cost and depreciation due to its large expansion, factoring its efforts to backward integrate and benefits of higher operating leverage, we forecast healthy earnings CAGR of 18% over FY07-10E.
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