Going strong on its capex In line with our expectations, Alok Industries posted strong results for Q3FY08, supported by capacity expansions completed in the past few quarters. During the quarter, the company’s PAT grew by 31% due to moderate topline growth and improving margins. Operating margins, at 24.5%, were significantly higher than our expectations. With its phase III and the phase IV expansion underway, Alok Industries has completed a large part of its planned capex. As a result, we expect the company to continue recording exponential growth
in revenues and profits over the next two years. The fabric, home textile, and garment divisions would continue to be the key growth drivers.
Alok Industries continues to be one of the cheapest pick in the textile sector, trading at 6.5X our FY08 EPS estimates. The valuations do not factor in the company’s recent foray into the real estate space through Alok Infrastructure, its 100% subsidiary. We continue to maintain a ‘BUY’ on the stock.
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