Shares of Indo Count Industries advanced 12 per cent to Rs 128 on the BSE on Friday after the textile company announced expansion and modernisation projects of existing capacities with capital expenditure (capex) of Rs 200 crore. The total capex will be funded by a mix of internal accruals and debt and is expected to be operational in H2 (October-March) of FY2022.
“The Project Management Committee of the board of directors of the Company has approved expansion of its bed linen capacity by around 20 per cent from its existing annual capacity of 90 million meters to 108 million meters by debottlenecking and balancing its facilities. Further, it proposes to make a brownfield investment for adding commensurate cut & sew facilities and for enhancing the capacity for Top of the Bed (TOB) products. This will entail a capex of around Rs 150 crore,” Indo Count Industries said in a press release.
The existing spinning unit of the company will also be modernized with compact spinning technology. This will entail a capex of around Rs 50 crore. Post modernization, this capacity will also be used for captive consumption in the home textiles unit, it said.
The company further said the home textiles plant is operating almost at its full capacity. Considering the increasing demand and growing business volume, it was decided to undertake expansion and modernization. These investments are expected to increase the revenue by – Rs 600 crore over the next 2 years, post commissioning, it said.
Despite the run-up today, in the past three months, the stock has underperformed the market by falling 17 per cent against 5 per cent rise in the S&P BSE Sensex. At 11:31 am, it was trading 11 per cent higher at Rs 126, as compared to 0.18 per cent gain in the benchmark index. A combined 585,000 equity shares have changed hands on the counter on the NSE and BSE, so far.