Despite net profit of Loyal Textile Mills Ltd nearly getting wiped out, the company’s share price rose ₹25.20 or 3.98 percent to close at ₹659 on the National Stock Exchange on Wednesday.
The Chennai-based textiles company reported a 97-percent drop in net profit to ₹2.84 crore for the fiscal ended March 31, 2023, as against ₹97.05 crore for FY22. Total revenue was down 18 percent to ₹1,438 crore (₹1,771 crore), while total expenses was much more than revenue to ₹1,440 crore (₹1,639 crore).
In the fourth quarter, net profit dropped to ₹39 lakh (₹18 crores) on revenue of ₹355 crore (₹481 crore). The company said that some of the investments in overseas joint ventures have been impaired fully amounting to ₹20 lakh. The insurance amount of ₹13.75 crores received during the period has been shown under other income. In view of the adverse market conditions, the company’s board has not recommended a dividend for FY23.
Analyst call
CareEdge Ratings in a release in August 2022 said that the ratings assigned to the bank facilities of Loyal Textile Mills (LTM) continue to derive strength from the long track record of LTM spanning more than seven decades, vertically-integrated nature of operations, benefits derived from diverse and niche offerings within each product category and a geographically-widespread clientele. The ratings, however, continue to be constrained by LTM’s moderate capital structure, working-capital intensive nature of operations marked by high utilization on working capital debt and moderate current ratio, susceptibility of profit margins to the volatile raw material prices, and cyclical nature of the textile industry.
Founded in the year 1956, LTM is one of the oldest integrated textile mills in south India, with three ginning factories integrated; four spinning mills located in Kovilpatti, Satur, Arasanur, and Naidupet having a combined capacity to produce 85,000 kg of yarn. Around 75 percent of the yarn produced is used for captive purposes and the remaining is exported, the release said.
