Sky Industries & Ample Opportunities

Firstly congratulations to all the blog followers who got  10x returns in Prima plastics recommended @28rs vs current price of 280rs (Original Post). This teaches me that stock market also works like Karma, one will be truly eligible for great returns only after holding enough period in any good company. Stock market is not a place where one can invest with greed and expect great returns overnight or short term. For shareholders it is easy to expect multi-bagger returns, but the companies will take time in crossing the hurdles to reach the growth path. Anyone if invests with this realization and conviction, surely & truely eligible for enjoying the success fruits in the form of multi-bagger returns.

Before reading the story, Let us see how many of us can answer below Generic questions

  1. How many of us know the manufactures  of fasteners when wearing Bata, Relaxo or  Liberty footwear (chappals or shoes) ?
  2. How many of us know seat belt manufactures of Indigo or Jet airways ?
  3. Who is doing the private labeling business of textiles companies such as Leefong?
  4. Have you ever tried to identify the manufactures of Hook & Loop fasteners for our Army dresses or orthopedic  neck wear band?

 Let us try to answer for some of the Investor questions now
  1. Do we have any company whose products are used across the industries,  yet the valuation is very much reachable in this bull market ?
  2. Is there any such company  + partnership with world No1 player in its operations so as to drive the future growth ?
  3. Can i identify such company  when its market cap is 1/5th of sales ?
  4. Can i get such a company in single digit forward PE of 6-7 ?
Answer for both the Generic & Investor questions is Sky Industries Limited.

Sky Industries Ltd (SIL) has been in the business of narrow fabrics for more than 20 years specifically in Hook & Loop manufacturing, in fact SIL is the largest player of Premium Hook and Loop Tape Fastener (Velcro) in India. Company enjoys its leadership position by Velcro brand association with Bata, Relaxo & Liberty footwear manufactures currently. These technical textile products are used mostly in all the industries such as Footwear, Orthopaedic, Aviation, Home furnishing, Food packaging, Automobile, engineering, Medical accessories and sports etc.

One of the main reasons which attracted me to this company other than its leadership position in India is its recent association with APLIX. APLIX is a world leader providing hook and loop fastening solutions for over 50 years and operates six plants in the U.S, France, Brazil and China and sales offices around the world with revenues of 205million euros. One can access here ( to see the Aplix global network.

Manufacturing Units & Capacity: SIL is having three plants located at Pawne, Bhiwandi and Daman as follows. The Company started with 11 Needle Looms with a capacity of 1 million mtrs per month. Today, the Company has a capacity of nearly 10 million mtrs per month spread over three locations & current capacity utilization stands at 60-70% across these 3 plants.

Product portfolio: SIL is nicely establishing several brands across its products which can be used in several industries such as Footwear, Garments, Food packaging, Housing applications, Engineering and Medical applications as listed below.

Company Brands
Sky Magic: Sky Magic FR is our fire retardant hooks and loop tape fastener. It is nylon hook and loop which is chemically treated to slow the material burn speed.

Sky SAT is that it provides an alternative to nails, screws and staples and the adhesion is strong and reliable. Easy to use and saves time during application.

Sky Printee is a unique product offered to fulfill your branding need. It comes with customized print options on hook tape to avoid any duplication of your product in the market.

Sky Net: A noted use of hook & loop tape fasteners is to secure anti-mosquito netting or insect screens to window frames. SIL proactively built on this idea and pioneered a top quality, premium fibre glass insect screen – SkyNet Insect Shield.  It is the best of world class technology brought to secure from all kind of diseases caused by mosquitoes and other insects.

Velvet: SIL manufacture premium quality velvet ribbons under the brand name Skelvet. Skelvet is largely preferred in upholstery, home furnishings, garments, home décor, gifting material, soft toys etc. Skelvet touches the lives of people as a fashion and comfort statement and is already gaining symbol in the fashion industry.

EASY-LOCK by APLIX® is a hook-to-hook closure made from food-grade, heat-sealable polyethylene material. Hooks engage on multiple levels making it easy to open and re-close. Unlike other systems, precise alignment is not required for sealing and its resistance to particulates keeps freshness locked in.


Growth Trigger:
Sky Industries Limited is the official marketing partner for Aplix Inc. In partnership with automotive OEM’s and tier one suppliers, APLIX develops and produces specific hook & loop fastening systems to meet the performance requirements of automotive interiors as well, which can cover huge untapped market potential in Indian auto sector. This alone can boost the sales, profits to greater heights for Sky Industries.

Clients List:  Sky caters to more than 800 customers across the country and various industry segments viz Footwear, Defence, Garments, Orthopedic, Automobiles, etc.


Reason for bullishness
  • Operating in a sector where company products are used across multiple industries.
  • Association with world major Aplix.
  • Establishment of brands (Sky Net, Sky Printee, Easy Lock, Sky Magic etc…) to capture the market share.
  • Good financial ratios , ROE of 10, ROCE of 15, Expected EPS of 5 in 2018
  • Reduction in Debt-Equity ratio from 1.5 to less than 0.5 in current year.
  • Good client base across industries.
  • Promoter self-allotment of 6, 30,000 warrants in December 2016.
  • Market capitalization at 11 cr is 1/5th of current annual sales of 51cr.
  • Capacity Expansion : The Company’s new proposed plant is expected to be a state of art plant with latest and more efficient technology, and catering to a market of nearly 20 million mtrs per month by next year.
Conclusion: The Aplix-Sky partnership in Automobile, engineering segments will provide ample opportunities for the company further to increase the sales & profit. Sky industries currently trades @31 rs with a conservative EPS of 5rs for 2018, available at 6PE leaving huge upside potential. The current market capitalization of 11cr is not the true value of company on any parameter either by current sales of 51cr (or) considering future growth on association with Aplix  (or) management target of doubling sales in next 2 years  (or) monetizing it’s 3 plants asset worth and their locational advantage.

Disclosure: I hold investment in this stock.

Note: This stock is currently trading in PCA(Periodic-call-auction) segment, where trade cycle will happen as follows.
Order Placement : 9.30 to 10, 10.30 to 11, 11.30 to 12, 12.30 to 1, 1.30 to 2, 2.30 to 3
Trade Matching & Order Execution : 10.15, 11.15, 12.15, 1.15, 2.15, 3.15

Registration Status with SEBI: I am not registered with SEBI under SEBI (Research Analysts) Regulations, 2014. As per the clarifications provided by SEBI: “Any person who makes recommendation or offers an opinion concerning securities or public offers only through public media is not required to obtain registration as research analyst under RA Regulations”.

May 14, 2017 at 11:53AM

from smallcapvaluefind

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s