BSL Ltd – A Rock Solid Textiles Major

Background: During these turbulent times, it pays handsomely to be in the sector which is leading the present bull market, in a stock within the sector which is fundamentally very strong and technically brilliant, which would give it strong downside protection and humongous upside potential. Hopefully the fear psychosis of the markets would work and this should give genuine investors a great entry point. Today, I’ll discuss about BSL Ltd, which I think is an extremely safe bet and can give multi-fold returns in the coming future. Those who are oldies on the blog must know that I am always inclined to suggest stocks during market mayhem as it provides genuine investors a good entry point.

The Company: BSL is a part of LNJ Bhilwara group and owner of brands such as Geoffrey Hammonds, La-Italia and BSL Suitings. BSL is one of the major textile companies in India with presence in the entire value chain of the Textiles Industry. BSL is engaged in the manufacturing of wide range of yarns and fabrics including woolen/worsted yarn, synthetics yarn, blended viscose fabrics, silk fabrics, furnishing and fashion fabrics. BSL is one of the few companies in the industry that is an integrated textiles player with diverse product portfolio and low client concentration. The top five clients just contribute around 19% of its revenues and even geographically the client base is well spread. Being in high end fabrics, the China threat is very less and being fully hedged, the company normally does not suffer earnings shocks because of forex fluctuations. BSL is a dividend paying company with excellent cash flows. The company some time back, increased its focus on bottom line led growth and strategized its entire operations from that perspective. Cost streamlining across all its operations was introduced, focus on outsourcing introduced as it improves capital allocation, et.

Significant Developments:

  1. BSL bagged a new client in Ikea Home furnishing last year. From Ikea this year (Dec 15) the company has bagged a huge order which alone would significantly add to the company’s growth in the coming quarters (apart from the usual growth ofcourse).
  2. BSL launched its own e-commerce site in last FY and interestingly within first two quarters were able to become EBITA positive and would become net positive this FY. This is in addition to selling their merchandize on Amazon,Snapdeal,Flipkart, Jabong etc.
  3. The company in order to move away from capex led growth and improve the bottomline has started outsourcing some of its manufacturing. Currently the company outsources around 10%, which should be increased significantly going forward.
  4. BSL in last CY added new clients in geographies like Peru, Mexico and Bolivia.
  5. BSL is completing a 20% capacity expansion this month, funds for which was mobilized mostly from internal accruals and partly from debt. This is in stark difference to other textile companies which mostly rely on debt funding and it highlights BSL’s superb cash profile.
  6. Lowering of input costs, along with reduced interest burden will add to the bottom line and combined with the impending growth, the absolute improvement in the bottom line is expected to be significant.
  7. The company is dividend paying and company believes that they would like to share the bottomline growth with investors and is likely to increase dividend payout this year.

Valuations: BSL is a dividend paying, high cash flow company available at a PE of just 9 whereas the other branded apparel companies like Donear and Raymond are quoting at high double digits PE of 25-35. Promoter’s stake is at 56.44% without any pledge. BSL is available at a market cap of around 89cr with market cap to sales of just 0.25 times and a very attractive dividend yield of around 1.5% which is only going to improve this year. Although for the first half of this year, the topline is almost flat with negative bias, the bottomline has grown 73% and the same growth is expected to be maintained in bottomline for the rest half of this year and topline is expected to improve, especially in this quarter due to start of the Ikea’s order and export to new clients in the new countries mentioned before. More importantly, the growth is expected to continue for the next few quarters as well and in the coming years.

Technicals: The stock has given a 14 yr breakout in this market mayhem and is firmly trading above that level (and is maintaining that for last couple of weeks) and I think this says it all. The stock gave this massive breakout, created a new high and gave a bit of retracement and after testing the channel support has again started a new upmove. Doing all this in such market mayhem is truly special and marks significant strength in the stock.

BSL is a company with strong brands and is available at juicy valuations. It is a dividend paying company that is generating very good cash flows. The company is at a cusp of strong growth in profitability along with decent topline growth. Given the key significant developments as suggested above, I think this is a safe stock that is fundamentally very strong and technically very sound.

God Bless !!!

Disclaimer: It is safe to assume that I may have some vested interests in the stock. Also, the above stock view is my personal view in individual capacity. For rest, please look at the About page.

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145 Responses to BSL Ltd – A Rock Solid Textiles Major

  1. Jay says:

    Excellent pick Ace.

    What’s your view on RSWM and Sutlej. Same industry same area and similar rich performance and valuations.


  2. shreeux says:

    Good Pick..Thanks.,

  3. Niranjan says:

    Hi Ace,

    Nice post. Will definitely research this company further. One interesting line you wrote was that “it pays handsomely to be in the sector which is leading the present bull market”

    Do you think Textile is THE sector of this bull run just like real estate was in 2008 and IT in 2000? (my top holdings are textile hence the keen interest in the view)


  4. bk says:

    Ace sir,thanks for this gem we hope it will give mutifold returns in near future..

  5. Akshay says:

    Excellent pick Ace

  6. Jawed says:

    Thanks sir

  7. Sid says:

    Hi Ace, how do you compare this with Donear Industries, both are in same space. Donear looks like less downside risk compared to BSL.

    • On the contrary, BSL has lower downside risk on the charts. Secondly, valuation wise BSL is about to be re-rated whereas donear is already at around 25 PE so with BSL we get double benefit (this is not to suggest that i am against donear – pls understand this)

  8. Abir says:

    Dont you think that the the debt to equity is too high to be comfortable ?

    • yes very comfortable.there are a couple of things that one needs to understand.first, this is the nature of industry as it is working capital intensive. Secondly the interest coverage ratio is very good especially given the H1 results and expected results, so the debt is really not a problem. Also, one should not blindly see the interest coverage ratio from a website but would do well to calculate it and understand it because on websites you will get a figure based on historical earnings and that is always useless.

  9. Singh says:

    Thanks and Godbless !


    A very good pick.Thanks a lot .

  11. Jyothi says:

    What is your view on Allied Digital Services and jai balaji industries.. Digital is the theme of ADSL and jai balaji is going to be a turn around story..? Please share your views

  12. Venu says:

    Hi ACE, Thanks for the new pick.

  13. Ashutosh Sharma says:


    Very good find but they are branded but in unstitched segment. They are not selling stitched brands. Donear is also going for garment manufacturing. Any news that BSL also intend to go in garment manufacturing in near future.


    • yes, BSL has already started it. That’s why i included apparel in the stock story. Also, BSL is very cheaply valued viz-a-viz donear and also much better placed technically. Also, let’s not make it BSL Vs Donear. Look at my answer to sid

  14. Prasant says:

    Hi Ace,

    Your inputs on SKM at current levels. Is it a value buy for long term?


  15. gopaljee says:

    dear ace sir, recently on bse site promotor % holding update, i.e, blank what is the meaning of that? pl, describe it.

  16. gopaljee says:

    dear sir, in recent update of holding on bse site , promotor holding of bsl is( blank), i.e, no holding. what is the meanings of that.pls describe it. thanks

  17. vishnu says:

    Ace Sir,

    Excellent pic…May god bless all of us with super returns in near future…

  18. mnr says:

    Thank for new pick. Your view on PTL ENTERPRISE?

  19. Senthil says:

    Dear Ace,

    Waterbase trading @ 84 levels .. do you think that it is a good time for people to average who entered this stock @ higher levels say 100+ .. or do you feel we should wait till quarterly results.
    Just seeking your advice / thoughts on this …


  20. PS says:

    I appreciate your courage to recommend a stock on this turbulence time

    • times are not so turbulent if you do not look at the screen… in any case i expect the rebound to start from monday

      • Ra Da says:

        Ace bro lot of the already proven quality counters previously recommended have significantly corrected thereby once again providing opportunities for investors.. Prices definitely are extremely attractive and buying stocks with conviction in my case ( prima,wb,vidhi,cybertech,katwa) would lead to significant profits in 3-6 months time. No point in waiting for Nifty to settle down and all other macro factors improving as all bargains would be exhausted by then..I saw capitulation in 90% counters today and this was a perfect buying opportunity..Buying in 3 lots is probably a good way is what I feel..Though my gut feel is 1 more crash of 500-600 points might be present.. Ace any basis on which you feel as to why a rebound will happen on Monday? is it because the markets are in oversold territory or do you see this as a dead cat bounce.

  21. Venu says:

    Hi ACE, looks like solar and wind power based companies will have a bright future as most of the countries are pushing for clean energy due to environmental issues. Your take on this and in particular on solar power. Do you track any companies related to these sectors. Thank You.

  22. Guys, I am a little occupied since yesterday. I have tried to accommodate some comments, but rest of the comment’s I’ll focus from tomorrow night….

  23. Manthan Shah says:

    Sir, why shareholding pattern of Dec Quarter in detail not visible on bse/nse site?

  24. vivek says:

    BSL net profit margine is only 2%, do you think is it too low?

    • donear has 1.6%..raymond also has around 2% ..which has one of the best brands…i think you are missing that industry headwinds also matters… you cannot company margins of a textile company with software company and say, its just 2%…context matters

  25. Sudheer Raja says:

    Excellent pick. but sir. through some light on the markets . is it really something to worry… Being so experienced this is the time small investors like us expects a nice post on the current market situation . Hope you understand each investor;s intention.


    • markets keep going up and down, there’s nothing new to it. keep a vigil on the stocks you own and the underlying businesses and stop watching tv. This is not new ..a few months back markets were expecting china to fall down…now its crude selling hurting sentiments… last time who took advantage of situation made big money… nothing new this time

  26. Singh says:

    Sir, I read great artice on Sanjivani Parenteral in Business India Magazine dated 4-17th Jan Edition.

  27. Nayan says:

    Hey Ace, any thoughts on Tinplate mate?

  28. hafizul09 says:

    Hello Ace ji—-As u are occupied with ur work, sent u one email regarding Lincoln Pharma issue. Please read the same and also the attached PDF document when u get some time and let me know ur view—-Thanks in advance!!!!

    • i beleive there is some news of the company, pls go through it as there’s enough literature on that available on different financial news websites

      • hafizul09 says:

        Hello Ace ji—-yes, I have read all those news and company’s filing to BSE(attached in the email as well)—-however I wanted to know something from ur previous experience regarding the promoters overstating the matter by putting ultra negative language—-from the export amounts and calculation we, investors think the impact should not be that much but was trying to think why promoters have put so negative language without mentioning any rough figure(may be to create panic investors and bring down price for vested interest)—–ur view and experience if you have got to know this kind of things in ur long stock market experience—Thanks in advance!!!!

  29. sudershan nathani says:

    sir, how do u see the impact of crude oil price in the paint sector in particular for longterm and which is better fundamentally and technically out of berger paints and kansai nerolac if u track.

  30. Suneetha says:

    Aceji, in a response to a query by prasanth, you said you are more interested in Waterbase instead of SKM Egg, why not in Low hanging fruit, Freshtrop ??!!! Thanks in advance

  31. SP says:

    Dear ace sir.. Sanjivani has come down by 25%.. As an oldie in the blog, I remember u saying that averaging should be done at 30% fall.. So is the time ripe for averaging or should we wait for the market to achieve stability..

  32. Dear Sir, Just wanted to know if you had reviewed Deccan Cements during your research of Panyam Cements . .

  33. yum says:

    sir, what’s your take on the broader markets..?

    • i think we should be nearing the end of this capitulation in the short term now.

      • sparsh says:

        short term? i assume by that you mean atleast a year or two.. i dont mean to ask that we would never go down this level, but hope this bottom stays for the bull market to go much higher.

        • short term becomes medium term and then long term if its not violated. first things first..we should get a sustainable bottom….let’s not forget that they way media is hyping markets loosing modi premium, 7100-7200 will be defended not just by the bulls, but by other entities as well… also there’s cluster of let’s see…also if we get a short term bottom, then suddenly you will see a lot of stocks doubling or tripling just like we saw the last time 7600 panic bottom was made and then a consolidation happens….that’s the nature of markets..

          • sparsh says:

            thanks,other entities defending the bottom sounds logical too.
            i am sure you would recommend a 100% allocation at this point?

            • depends on investor’s own portfolio management sense. Every one has their own strategy…

              • sparsh says:

                Ace, if you say and agree that we are in a bull market, then where do you see this bull market with respect to the previous bull mkts in India – 1992-93, 2000, 2007.
                In your opinion how long could this one go in terms of time or would you place a level or valuations when the investor needs to be cautious.

              • dont worry about the duration…take advantage of any consolidation and make money….the bull market is not going anywhere for next 30 yrs…..a bit of corrections would always come….

              • sparsh says:

                Ace, thank you for the response. If you get time,please do write a post as to what you think about the future of the Indian Markets. Thanks.

  34. Mayur says:

    Ace sir – would you prefer Kitex as this valuation cmp – 540?

  35. niravkaria says:

    Dear Ace are you on FB……Also pls provide your views on Haryana leather Chemicals. thanks

  36. hardyboy says:

    what about averaging liberty it safe for three yrs point of view.will their restructuring ever be complete and bring about results mentioned in your original story.even topline not moving.should we wait for qtr result or at cmp it is safe cmp

  37. Vipul says:

    Ace, Your views on Sintex after the recent results?

  38. Dear Ace, how do you view Avanti Feeds as a business? It has corrected to 350 odd levels from highs of 600+, while the business is doing quite well. Exports will also benefit from the weakening rupee.

  39. Singh says:

    Sir, What is your view on Orient Beverages as it is launching new drinks/products !

  40. himanshu says:

    sir can wanbury do the magic in 2016 as mangalam drugs done in 2015. sir pls pls comment on this .

  41. Manthan Shah says:

    Sir, now themes will changed from IT/Pharma/FMCG to Infra/Reliance Group/Real Estate?

  42. sudershan nathani says:

    sir, do u track gsfc and chambal fert, any view on them and their results.

  43. afzal says:

    panyam cements last quarter eps 0.92 and its eps before was 4.75
    why its eps is reduced so much

  44. yum says:

    sir what’s your take on todays writing…?

  45. nirajcdo says:

    Dear Ace, am writing to convey my deep appreciation for the wonderful blog. The contents are truly incisive and powerful. Just went through went through some old posts written post difficult times, notably the one in Nov 14, and must say the words are most relevant today also. The post is most reassuring to those who tend to loose sight of the bigger picture and get agitated by uncertainty. It would be most appropriate for you to give an blog update, on how you see the developments unfolding and how to prepare for it. One question that most stout hearted investors would be wrestling with is , when and to what extent must one start buying. This query is related to guidance on cash management to make the best of opportunities coming our way. regards and God Speed.

  46. vivek says:

    sir, do you track crude?

  47. bingo says:

    sir between spicejet and jet which one you prefer…

  48. bingo says:

    sir between jet airways and spice jet which one you prefer?

  49. sher says:

    what’s your take on HFCL? good results..

  50. vijaya says:

    sir, what’s your take on MIC electronics?

  51. Venu says:

    Hi ACE, Your views on Damodar Industries.

  52. tejas says:

    sir, today is the first time i saw your blog. i must admit i am impressed with your hit rate.

  53. vimal says:

    Hi, ur view on Spice island apparels and Valson industries?

  54. sridhar says:

    Hi Sir , Didn’t pass the 1st week Coursera exam because of multiple answers in multiple choice . Will keep trying . Thanks for sharing such great site.

  55. Manish says:

    Happy republic day to all🙂

  56. vijay44 says:

    sir, what’s your take on HUL?

  57. avinash_tripathi232_12 says:

    any views on RIL?

  58. techiechartist says:

    ace, prima is firing all cylinders🙂

  59. R K Sinha says:

    Ace sir your views on vtm ltd.

  60. narayan says:

    hey ace sorry out of box question, can you guys take a long at lycos internet

  61. Roshan says:

    How big the order is with IKEA??

  62. acefan says:

    Govt levied 6% on branded retail garments..I think it can impact BSL’s earnings…your thoughts?

  63. naveenagp81 says:

    BSL bounced back last trading 15% and today 9% …..

  64. Puru Ji says:

    It seems BSL has made technical bottom at 44.

  65. Bhavdip says:

    I couldn’t find any link for ikea order . Can you please share . Thanks

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