Siyaram Silk Mills Ltd share Price Today

The share price of Siyaram Silk logged a resolute breakout from falling wedge formation post Q4 result, indicating resumption of primary uptrend. Thus, it offers a fresh entry opportunity to ride the next leg of the up move 

Strong base formation bodes well for next leg of up move: Structurally, the stock has undergone strong base formation in the vicinity of 52 week’s EMA, highlighting a robust price structure

Breakout on the back of rising volume: The current breakout from falling wedge is backed by 2x volume of 10 week’s average volume, indicating larger participation in the direction of the trend

On oscillator front: Weekly MACD surpassed zero line post witnessing bullish crossover, indicating acceleration of upward momentum
 
We expect the stock to accelerate upward momentum and gradually head towards ₹ 640 in coming months as it is 80% retracement of CY22-23 decline (₹ 699-399)

Siyaram Silk Mills (SSML) is of India’s leading fabric manufacturer and retailer largely catering to Tier II and Tier III towns. Company has a total fabric capacity of more than 8 crore metre per annum. We believe SSML is a key beneficiary from the demand revival owing to its strong brand portfolio and Pan India distribution network. Siyaram’s brand portfolio consists of reputed brands like Siyaram (flagship brand), Oxemberg, MSD and J Hampstead. Over the last decade, the company has gradually expanded its fabric and garment capacities and simultaneously managed to reduce the debt/equity from 1.0x in FY12 to 0.2x in FY23

The company has implemented changes in its business model and reduced the consignment sales to negligible level. The number of EBOs with sale or return (SoR) has reduced from 83 in FY19 to only four in FY23. With focus on becoming asset light, the company has reduced company owned company operated (COCO) exclusive brand outlets (EBO) from 31 in FY19 to nil in FY23

SSML is planning to continue with the sharp SKU assortment strategy. The company continues to be selective with its product strategy and has increased focus on fast running stock keeping units (SKUs) with a target to maintain lower inventory level and reduce working capital cycle. Also, SSML has discontinued SKUs that were not performing well and is focusing on premiumisation of the product portfolio with introduction of newer and innovative products. The share of premium products increased from 20% in Q1FY22 to 25%+ in Q4FY23

 We expect the company to report revenue and earning CAGR of 13% and 15%, respectively, over FY23-25E. Enhanced capital efficiency (low leverage, controlled working capital cycle) and better profitability are expected to result in SSML maintaining healthy RoCE of ~23% by FY25E 

Textiles company Siyaram Silk Mills announced Q3FY24 & 9MFY24 results:

Standalone Q3FY24:

• Revenue from Operations: Rs 502 crore, showing a marginal increase of 0.1% compared to Q3FY23.
• EBITDA: Rs 69 crore, decreased by 9.7% compared to Q3FY23.
• EBITDA Margin: 13.6%, decreased from 15.1% in Q3FY23.
• PAT: Rs 44 crore, decreased by 14.9% compared to Q3FY23.
• PAT Margin: 8.8%, decreased from 10.4% in Q3FY23.

Standalone 9MFY24:

• Revenue from Operations: Rs 1,441 crore, decreased by 6.1% compared to 9MFY23.
• EBITDA: Rs 179 crore, decreased by 27.7% compared to 9MFY23.
• EBITDA Margin: 12.4%, decreased from 16.1% in 9MFY23.
• PAT: Rs 116 crore, decreased by 29.2% compared to 9MFY23.
• PAT Margin: 8.0%, decreased from 10.7% in 9MFY23.

Commenting on the results Gaurav Poddar, Executive Director, Siyaram Silk Mills said: “Despite facing subdued consumer demand and challenging market conditions, our company has showcased resilient performance.

In terms of financial performance, our Revenue from Operations for Q3FY24 stood at Rs 5,019 million, a slight increase from Rs 5,011 million in Q3FY23. Our revenue mix comprised Fabric at 85%, Garments at 10%, and Yarn & Others at 5% in Q3FY24. We are pleased to report an EBITDA of Rs 685 million with an EBITDA Margin of 13.6% for the quarter. Furthermore, our Profit After Tax (PAT) for the quarter amounted to Rs 443 million, with a PAT Margin of 8.8%.

Additionally, we have expanded our retail footprint to a total of 239 stores as of December 31, 2023, demonstrating our commitment to growth and market presence. In accordance with our strategic decision made at the beginning of the fiscal year, our investment in advertising and sales promotion remains elevated, aimed at bolstering brand presence and stimulating sales growth.

While the current quarter's profitability has been temporarily affected by these factors, our financial foundation remains strong. We are delighted to announce that the board of directors has approved a dividend of Rs 3/- (150%) per share, based on the face value of Rs 2/- each. Notably, in the past quarter, we have strategically increased our advertising and sales promotion spend to Rs 17.5 crore, compared to Rs 7.8 crore in the corresponding quarter of the previous year, to enhance brand visibility and drive sales momentum.

With a sound balance sheet and disciplined capital management, we are well-equipped for the next phase of growth. We also would like to extend our gratitude to stakeholders for their continued trust and support.”

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