This Small Cap Textiles Scrip Is Soon To Be A Multibagger In Last 1-Year; Offers Decent Dividend

Shares of Monte Carlo Fashions in trade on June 27, 2022 have zoomed by 10.5% to day's high price of Rs. 678.8 per share. The stock is on a gaining run and in the last 1-week has bagged close to 22% return. Likewise, its 1-month return is over 34 percent. Further, the stock in last 1-year time-frame has given a return of over 97% and hence on its path to become a multibagger.

As we write the stock at around 1:15 pm trades higher by 8.9% at Rs. 669 i.e. close to its all time high of Rs. 729 per share, with a difference of just over 8%.

Reason for gains in the stock

Probably, the gains in the stock are triggered today on the back of positive news for the textile industry. As per media reports, Union Minister for Commerce and Industry and Textiles Piyush Goyal has said India is soon expected to
finalise free trade agreements (FTAs) with Israel, Canada, the UK and the European Union. ICICI Direct Research views the development as positive and states "India has finalised FTAs with the UAE and Australia and is now in talks with Canada, UK, Israel and the EU for FTAs. The signing of FTAs will provide Indian textile and clothing exporters a level playing field compared to Bangladesh, Pakistan and Vietnam who enjoy duty free access to these countries. The removal/reduction of import duty in the above regions for textile products from India would make the Indian textile industry more competitive to global textile and clothing exporters".

Financials

In the March ended quarter of Fy22, the company logged an increase in sales from Rs. 108.76 crore in Q4Fy21 to Rs. 162.47 crore in Q4fy22. Though there was a significant decline sequentially. Importantly, the branded apparel company in the Q3 period registered highest ever sale of Rs. 461.87 crore. Also, the company from being a loss-making entity a year ago has now turned profitable with net profit in Q4Fy22 period at Rs. 12.85 crore.

Dividend

The company has been consistently paying dividend since 2015 and has announced final dividend year on year except for 2019. For the year ending March 2022 Monte Carlo Fashions has declared an equity dividend of 200.00% amounting to Rs 20 per share. At the current share price of Rs 668 this results in a dividend yield of 2.99%.