According to Investment Consultant Sanjay Chabria, one should wait for some more time to get a return of 40-50% from current levels in RSWM. The company has good business model, and once the value of this stock starts moving up, it will cross Rs 130 without any problem.

Chabria stated, “Rajasthan Spinning new name is RSWM. It is part of the LNJ Bhilwara Group, it’s the leading manufacturer of synthetic yarn and fabrics in the country. The company has a well-established fabric brand Mayur Suiting in the domestic market. The company is undergoing a capacity expansion plan under which it will be investing Rs 900 crore for all its capex plans till FY2009.”

“The investment plan includes setting up of 46-megawatt thermo power plant, a denim production unit, garment initiative and various expansion and modernization plan for the yarn business. Once these plants are commissioned RSWM total spindles will increase from 3,80,000 to about 5,00,000 spindles in the next 12-15 months. The target of around 40-50% upside from the current levels because the company’s operating margins will get a good boost after the thermal power plant goes on stream in the next 2 months. This target will achieve in the next 6-8 months because the current valuations are very cheap,” he added.

RSWM is one of the larger domestic textiles companies in the country. Besides garments, the company makes specialty yarns of different types including synthetic, blended, grey, dyed yarns and fabrics. The company also has a key presence in high value-added and specialty yarn sections in the foreign market.