Despite high promoter pledge, this textile stock zoomed 100% in two months

Shares of Suryalata Spinning Mills have surged 100% outperforming the broader market in the last two months. The microcap stock, which closed at Rs 300 on February 3 this year was trading at Rs 607 on BSE today, clocking 102% gains in a year. The 30-stock Sensex slipped 3% during the same period. An amount of Rs 1 lakh invested in the shares of Suryalata Spinning Mills two months ago would have turned into Rs 2.02 lakh today. In comparison, Sensex has risen 93.94 per cent during the period.

In the current trading session, the stock hit upper circuit of 5% to Rs 607.05 on BSE today. The stock opened higher at Rs 596 today against the previous close of Rs 578.15 on BSE. 

The stock has risen 79.15% in one year and gained 13.18% in a month. Total 9902 shares of the firm changed hands amounting to a turnover of Rs 59.15 lakh on BSE. Market cap of the firm rose to Rs 259 crore on BSE.  

Abhijeet from Tips2trades said , “Suryalata Spinning Mills stock looks very bullish with strong support at 550 on the Daily charts. A daily close above resistance of 615 could lead to targets of 650-738 in the near term."

In terms of technicals, the relative strength index (RSI) of the stock stands at 55.8, signaling it's trading neither in overbought nor in oversold zone. Suryalata Spinning Mills shares have a beta of 0.4, indicating low volatility in a year. Suryalata Spinning Mills shares are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages. 

Interestingly, promoters of the firm have pledged 35.98% or 10.80 lakh shares in the firm at the end of December quarter.

Four promoters held 70.36 per cent stake in the firm and 3326 public shareholders owned 29.64 per cent for the quarter ended December 2022. Of these, 3120 public shareholders held 6.33 lakh shares or 14.85% stake with capital up to Rs 2 lakh. Only nine shareholders with 7.29% stake held capital above Rs 2 lakh for the quarter ended December 2022.

Suryalata Spinning Mills has outperformed its peers in terms of market returns in the last two months. Shares of Loyal Textiles have lost 17% and stock of Bannari Amman Spinning Mills Ltd has fallen 15% since February 3. Stock of another competitor Lakshmi Mills Company has declined 7.43% during the period.

Financial Performance

The stellar rally in the Suryalata Spinning Mills stock does not reflect the financial performance of the firm. In the December quarter, the firm reported a profit of Rs 6.88 crore against Rs 10.70 crore in the corresponding quarter of previous fiscal. Sales fell 3.29% to Rs 123.59 crore in the December quarter against Rs 127.80 crore in the December quarter of 2021.

Operating profit crashed 35.01% to Rs 12.81 crore for the quarter ended December against Rs 19.71 crore in the corresponding quarter of the previous fiscal.

On a quarter-on-quarter basis, the firm reported a 25.05% fall in profit from Rs 9.18 crore in the September 2022 quarter. Sales rose 6.68% from Rs 115.85 crore in Q2 of the last fiscal.

However, on an annual basis, net profit zoomed 154.40% to Rs 47.75 crore for the fiscal ended March 2022 against a profit of Rs 18.77 crore for the fiscal ended March 2021.

Sales climbed 73.70% to Rs 480.34 crore in the last fiscal against Rs 276.53 crore for the fiscal ended March 2021.

About the Company

Suryalata Spinning Mills Limited is an India-based company engaged in the manufacture of synthetic yarns. The company produces yarns, such as 100% Polyester (PSF) Yarns, 100% Viscose (VSF) Yarns, PSF and VSF Blended Yarns and Value-Added Yarns suitable for suitings, shirtings and knittings. It manufactures a product range of synthetic ring spun yarns for knitting, weaving and technical applications in the count range of English Number (Ne) 10s to Ne 60s in single, two-ply and multifold varieties.  

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