Siyaram Silk Mills (SSM) is one of the leading textile manufacturers in India. The
company enjoys a strong brand presence across the country, with brands such as
Siyaram, Mistair, J Hamstead and Oxemberg in its kitty. SSM’s yarn segment is
expected to achieve 60% capacity utilisation in FY2011, compared to 41.9% in
FY2009, which is further expected to improve to 80% in FY2012E. In the fabric
segment, the company plans to add 286 looms (479 current looms) in a phased
manner over FY2011–13. SSM will also be adding 400 machines in its
readymade garment (RMG) segment by September 2011. Consequently, the
company is expected to report a 17.5% CAGR in revenue over FY2011–13.We Initiate Coverage on SSM with an Accumulate
recommendation and a target price of Rs414, valuing the stock at 6x FY2013E

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