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Stovec Industries Ltd.

Let's try and understand why this company can be a good passive bet in our portfolio.…

Stovec is part of Netherlands based SPG Prints, a leader in integrated printing solutions

SPG Corporate video at a glance

SPG group is a leading provider of integrated solutions for rotary screen printing in the textile, label and industrial markets across the globe.
Stovec has evolved into a global leader in the rotary screen-printing technology.

Stovec's business is broadly segregated into two segments in the textile printing industry:
Capital goods & Consumable
Capital goods: Rotary printing machines, laser engraving machines and digital printers.
Consumable goods: Rotary textile screens, Anilox rollers, Rota plate, digital inks, lacquers and engraving chemicals.

Company is mainly engaged into supply, installation and after sales
support of printing machines and development and production of consumables for their use in textile and graphic printing industry.

In the non-textile segment, the Company manufactures electroformed products for sugar industry, packaging and graphic printing industry.
Besides India, Stovec also caters to clients in other textile manufacturing countries for rotary printing equipment including Korea, Taiwan, Colombia, USA, Bangladesh, Mexico, China and Brazil.

The Company offers wide range of products like Pegasus Evo rotary screen-printing
machine, RD8 Rotary screen-printing machine, Rotary screen consumable for textile printing, Anilox and screen for graphics printing.

The Company also offers digital ink, lacquers and chemicals that enables highest quality results in textile printing.
Stovec also provides products for conventional and digital engraving in the printing domain.

The Company’s state-of-art manufacturing and R&D facilities are located in Ahmedabad.

High quality Nickel, which is the principal raw material for the Company is imported regularly,
as per Purchase guidelines of the Company. The Company’s performance may get impacted in case of substantial change in prices of Nickel or Foreign Exchange rate fluctuations.

Total number of employees : 233

Average percentage increase made in the salaries of employees
other than the managerial personnel in the last financial year was 13.57 % whereas the increase in the managerial remuneration was 7%.

India’s textile sector is one of the mainstays of the economy.
The country continues to be the only country other than China to have a full textile value chain, i.e. from fibre to clothing.

The Government has come up with a number of announcements for the textiles sector in the Union Budget FY 2020-21. These include:
(a) Allotted 3,514.79 crore for the development of textile sector
(b) Allotted 762 crore for Amended Technology Upgradation Fund Scheme (ATUFS)
(c) Abolished the anti-dumping duty on Purified Terephthalic Acid (PTA), a critical input for textile fibres and yarns.
Its easy availability at competitive prices is desirable to unlock immense potential in the textile sector. It would also boost growth of manmade fibre (MMF) industry and the entire textiles value chain.
(d) Launched National Technical Textiles mission with a four year
implementation period from FY 2020-21 to FY 2023-24 at an estimated outlay of 1480 crore. Much-needed thrust to the technical textiles segment.
(e) Scheme for Reversion of duties and taxes on exported products will help in making textiles and apparel exports competitive.
Three key products/services of the Company:
(i) Perforated Rotary Screens, Lacquer & Auxiliary Chemicals, Rotary Printing Machines, Engraving Equipment, Components and Spares, Digital Ink
(ii) Anilox Rollers, Rota mesh screens and Rota Plate
(iii) Galvano consumables
All the business activities contributing 10 % or more of the total turnover of the company shall be stated:

Perforated Rotary Screens: 42.42%
Rotary Screen-Printing Machine: 23.90%

The Company derives revenue in excess of 10% from one major customer,
viz; Atul Sugar Screens Private Limited- `228,400,331 (December 31, 2018 ` 194,623,966). The same contributes to the Galvanic business segment.…
Summary: As observed from above, company is a major beneficiary with the growth of the textile industry in India. As major revenue comes from perforated rotary screens, company's main focus is not towards industrial applicants & digital where there is more scope of growth.
Market Cap: 446 cr
Reserves: 139 cr
ROCE: 32%
ROE: 21%
ROIC: 20%
Days Payable Outstanding: 55.95
Days Inventory Outstanding: 92.87
Days Receivable Outstanding: 51.41
EPS: 133.86(FY 2019-January to December calendar)

FY20: Ratios are impacted due to Covid-19 situation.
Attached Technical Chart gives a perspective of stock outlook based on it's trend and patterns.

Chart is for educational purpose.

Request to consult expert advise in case required.
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