Alok Industries up 13% in muted market as 116 million shares change hands

Alok Industries Witnesses Impressive 12.5% Surge Near 52-Week High Amid Active Trading

During the intraday session on Thursday, Alok Industries\’ shares showcased a noteworthy surge of 12.5%, reaching Rs 20.11 per share, a value closely approaching its 52-week high of Rs 21.7. This surge coincided with significant trading volumes.

By around 12:05 PM, the textile company\’s shares were trading at Rs 19.83 per share, marking an 11% increase. This positive movement stood in contrast to a slight dip of 0.11% observed in the benchmark S&P BSE Sensex. Notably, a substantial total of 116.46 million shares were exchanged in numerous block deals across both the BSE and NSE.

Over the course of the past month, the stock\’s performance has witnessed an impressive rally of 22%, a stark contrast to the 2% decline observed in the benchmark indices.

A significant development took place on August 14, when Reliance Industries, owned by billionaire Mukesh Ambani, revealed plans for a potential investment of approximately Rs 14,200 crore in its subsidiaries during the current financial year. Out of this substantial sum, a noteworthy portion of Rs 7,000 crore was allocated for Alok Industries.

The company\’s official report regarding material related party transactions stated, \”RIL proposes to provide support to Alok Industries through investment in securities, loans & advances, and guarantees from time to time to enable AIL to meet its funding requirement.\”

Alok Industries benefits from the backing of Reliance Industries and JM Financial Asset Reconstruction Company, following a resolution plan sanctioned by the National Company Law Tribunal\’s Ahmedabad Bench. Reliance Industries holds a substantial stake of 40.01% in Alok Industries, while JM ARC maintains a stake of 34.99%.

Alok Industries boasts the distinction of being India\’s largest fully integrated textile company, with a dominant presence in both the cotton and polyester segments. The company\’s comprehensive operations span global territories, encompassing weaving, knitting, processing, home textiles, ready-made garments, and polyester yarns. Approximately 26% of its product exports are directed to over 90 countries, spanning regions such as the US, Europe, South America, Asia, and Africa.

For the April-June quarter, the textile manufacturer reported a year-on-year decline of 28.93% in total income, amounting to Rs 1,415.66 crore compared to Rs 1,992.02 crore in the corresponding quarter of the previous year. The net loss for Q1-FY24 witnessed an expansion of 59.73%, reaching Rs 226.14 crore, in contrast to Rs 141.58 crore in the previous year.

As of June 30, 2023, the company reported an earnings per share (EPS) of Rs -0.46, in comparison to Rs -0.29 for the period ending June 30, 2022.

Against this backdrop, Indian home textile industry players anticipate an enhancement in demand commencing from Q2-FY24, with the upcoming festive season likely to act as a driving force for growth. Moreover, discussions surrounding free trade agreements (FTA) are gaining traction, with India gearing up to engage in FTA negotiations with the UK, Canada, and the EU on the sidelines of the G20 summit.

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