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Shri Lakshmi Cotsyn – SBI Caps

February 19, 2008

SBI caps has initiated coverage on Shri Lakshmi Cotsyn Ltd [SLCL] with a BUY rating.

SLCL is a multiproduct company involved in the manufacturing of denim, terry towel, bottom weight, home furnishing, nylon and wearable apparels. SLCL is aggressively building capacity in the textile industry with a committed capex of Rs 457 crore in two phases in the last two years. SLCL has planned a CAPEX of Rs 310 crore in the current year.

SLCL is planning to enter into retailing through by opening around 500 retail outlets in 3 years through dealers and distribution network, franchise outlets and exclusive brand outlets.

SLCL is expected to benefit immensely from newer capacity foray into retail in JV with Armet Armoured vehicles UK. SBICaps expects the company to grow at 34% CAGR over the next 2 years. SLCL is trading at P/E of 5.4 and 3.5 for FY08 and FY09 earnings of Rs 26.04 and Rs 40.34. SBI Caps recommends a BUY on Shri Lakshmi Cotsyn with a Rs 242target price in 12 month trading at 5x FY09 earnings.

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