Buy Filatex India, target price Rs 85: ICICI Direct

ICICI Direct has buy call on Filatex India with a target price of Rs 85. The current market price of Filatex India Ltd. is Rs 63.15.

Filatex India Ltd., incorporated in the year 1990, is a Small Cap company (having a market cap of Rs 1404.40 Crore) operating in Textiles sector.

Financials
For the quarter ended 31-12-2020, the company reported a Standalone sales of Rs 721.59 Crore, up 42.10 % from last quarter Sales of Rs 507.79 Crore and down -2.19 % from last year same quarter Sales of Rs 737.73 Crore Company reported net profit after tax of Rs 66.04 Crore in latest quarter.

Investment Rationale
The outlook for the polyester industry appears to be better owing to enhanced government focus on the sector with support for the sector through production linked incentive (PLI) scheme. Also, withdrawal of antidumping duty on PTA (key raw material for polyester) from February 2020 is positive for the sector as yarn manufacturers are now able to procure PTA at international price parity that is expected to improve their margin profile. The enhanced demand for polyester based products would improve FIL’s utilisation levels and will further augment the margin profile. Factoring in better-than-expected performance in Q3FY21 and positive industry outlook with improved product margins, we revise upwards our revenue, earnings estimates for FY21E, FY22E, respectively. Hence, it expects RoCE to get enhanced by 1000 bps to 24% in FY20-22E. The brokerage reiterates BUY rating on the stock with a revised target price of Rs 85.