Introduction

In the dynamic landscape of the textile industry, where threads of innovation weave the fabric of progress, Banswara Syntex Ltd. emerges as a key player, quietly but significantly contributing to the sector's growth. As an undervalued gem, this company offers a compelling narrative, marked by a rich history, global reach, and a comprehensive product portfolio.

Company Overview

Established as a manufacturing powerhouse, Banswara Syntex Ltd. has positioned itself as a prominent player in the textile arena. The company's focus extends across the entire value chain, from synthetic blended yarn to wool and wool-mixed yarn, and further to fabrics and readymade garments. With a commanding 70% market share in specialized formal suits, jackets, and trousers within India, Banswara Syntex is more than just a textile manufacturer – it is a fashion enabler.

Global Presence and Collaborations

The company's global footprint is a testament to its prowess, exporting its products to over 65 countries worldwide. Noteworthy is its strategic collaboration with the French company TESCA (Treves SA) for Automotive Textiles, showcasing its commitment to innovation and diversification.

Manufacturing Prowess

Banswara Syntex's manufacturing capabilities are spread across three strategic locations – Banswara in Rajasthan, Daman, and Surat. These facilities encompass a spectrum of production, from garment manufacturing to looms, yarn production, and stenters.

Garment Manufacturing
The company boasts a robust garment manufacturing capacity, producing 410,000 pieces per month. This signifies not only scale but also efficiency in catering to diverse fashion needs.

Looms
With 397 shuttleless looms and 32 air jet jacquard looms, Banswara Syntex combines traditional craftsmanship with cutting-edge technology to deliver high-quality fabrics.

Yarn Production
The heart of the textile process lies in yarn production, where Banswara Syntex shines with 149,208 ring spindles, 14,880 worsted yarn spinning spindles, and 160 air jet spindles.

Stenters
The stentering process, a crucial step in textile finishing, is executed with precision by Banswara Syntex. With 9 stenters and a processing capacity of 4.5 million meters per month, the company ensures the quality and durability of its fabrics.

Clientele

A testament to its quality and reliability, Banswara Syntex boasts a prestigious clientele. Domestically, it serves renowned brands like Arrow, Van Heusen, Allen Solly, and international giants such as JCPenney, GAP, Tesco, Marks and Spencers, and Kohls. Embracing the digital age, the company is also a supplier for e-commerce platforms like Myntra and Flipkart.

Financial Snapshot

- Revenue: ₹315.90 Cr (QOQ ⬆️4.37%, YOY ⬇️22%)
- PAT: ₹8.76 Cr (QOQ ⬇️8.9%, YOY ⬇️75%)
- Operating Profit Margin: 8.80%
- TTM EPS: ₹22.10

In last 10 Years, profit of the company increased with 25% CAGR, Sales of the company grew 26% in last year and profit doubled. Company is incroporating capex to expand and mordenise the capacities that will help the company in increase its margin and profits.

Huge Opportunity for Indian Textile Industry

Increasing exports -India Textiles exports expected to grow at ~11% CAGR to reach $ 65 bn by 2026 from pre-covid level of $ 36 bn in 2019 

Redistribution of global trade- Covid-19 has led to redistribution of global trade shares and recalibration of sourcing Partners

Increasing exports- India Textiles exports expected to grow at ~11% CAGR to reach $ 65 bn by 2026 from pre-covid level of $ 36 bn in 2019

Increased Domestic Production- With the improvement in domestic economy and increase in exports, Domestic Production is expected to increase substantially to meet the demand

Increasing Capex and Investments- Capex and Investments to pick-up in the sector; productivity and industry competitiveness to improve

Favourable Industry Dynamics- With favorable India Demographics and Industry Dynamics, India is capable to position itself as a Global Textiles hub

Industry Outlook

Looking at the broader industry perspective, the future appears promising for textile and apparel exports. The Indian textile and apparel industry is expected to reach USD 65 billion by FY26, with an estimated 11% CAGR. On the domestic front, the market is set to touch USD 190 billion by FY26, indicating a robust 10% CAGR. Furthermore, China's +1 strategy presents a golden opportunity for the Indian textiles industry to reclaim its position as a leading exporter.

Growth Drivers

Banswara Syntex identifies key drivers for its future growth:

1. Diversification: The company has intelligently divided its business into Yarn, Fabric, and Garment divisions. Each division operates with dedicated unit heads, ensuring enhanced performance and scalability.

2. Global Opportunities: By expanding its global reach, Banswara Syntex taps into the vast potential of the international textile market.

3. Repeat Orders: Boasting an impressive 80% repeat order rate from reputed customers worldwide, the company has solidified its position as a reliable partner in the global fashion industry.

Risk Mitigation

Recognizing the importance of risk management, Banswara Syntex has taken steps to reduce revenue concentration risk by diversifying its customer base. The top 10 customers accounted for 25% in FY23, 15% in FY22, and 35% in FY21.

Future Outlook and Guidance

Looking ahead, Banswara Syntex presents a positive outlook:

- Revenue Guidance (FY24): ₹1,400 to 1,450 crores.
- EBITDA Margin Improvement: Expected

 through forward integration and efficiency enhancements.
- Capex Plans: ₹1,984 mn from FY23 to FY25, with 31% used by August 2023. This investment is primarily directed towards increasing weaving and jacket manufacturing capacity by 20-25% by Q1FY25.

Shareholding Pattern

- Promoters: 56.11%
- FIIs: 8.40%
- 3 Years Sales Growth: 35.50%

Business Outlook

Garment Segment

>Expect garment vertical to perform well H2FY24 as compared to H1FY24. The performance will be attributed
towards de-stocking in western markets.
>The sales of the trouser as a product category will rise as the trend casual clothing has increased in the industry
>Rs. 5 crores invested in modernization for H1FY24
>Setting up a product development centre in Daman to collaborate with the marketing team and drive business
growth from existing and potential customers

Fabric Segment

>Targeting steady state revenue growth in FY24
> Rs. 18 crores invested in modernization and capacity increase for H1FY24, with an expected Rs. 24 crores capex
for FY24 to boost production and efficiency
> Expect second half of the fiscal to perform better as compared to H1FY24
> Banswara will set its foothold in the worsted fabric market and will cater to domestic and export regions 

Yarn Segment

>Expect company to clock stable topline for H2FY24
>Rs. 28 crores invested in modernization and capacity increase in H1FY24, with an expected Rs. 71 crores capex for
FY24 to boost production and efficiency
> Exploring newer markets in Europe and Southern India
> Targeting the opportunity in core spun, value added and knit based yarn in Southern India as a new domestic
market opportunity

Vision

Banswara Syntex articulates its vision with clarity: "To become a global market leader that offers integrated textile solutions for our customers, servicing the fashion industry with speed, design, and innovation, all at an affordable value."

Conclusion

In conclusion, Banswara Syntex Ltd. emerges as not just a textile company but a beacon of resilience and growth in the dynamic world of fashion and textiles. With a robust foundation, global partnerships, and strategic vision, it is poised to unlock new potentials and weave a brighter future in the textile sector.