Stock Idea

ARIHANT capital markets ltd.

Maxwell Industries
Current Market Price: Rs. 20 Industry: Textile
Shareholding Pattern BSE Group B Stock Info
(As on 31st March , 2008) BSE Code 532613 Market Capital Rs.123cr
Promoters 63.56 % NSE Symbol MAXWELL Rs.11.15 cr
Equity Capital
Domestic Institutions Bloomberg MXWI IN Avg Trading Vol. 2793(Qtly)
Foreign Institutions 0.33 % Reuters MAWL.BO 50/13
52 WK High/Low
Corporate 19.96 % BSE Sensex 17125 Face Value Rs. 2
Public & Others 16.15% NSE Nifty 5111

Maxwell Industries is the flagship company of the VIP group. The company is one of largest innerwear manufacturers
and marketers in the world. Maxwell has brands in its portfolio with huge brand recall. The group is also into apparels
(Live-in jeans)

The company has in its product portfolio brands with huge brand recall
Men Frenchie Bonus Designer Advanta Leader
Rosso Punch Brat Bonus Junior
Women Feelings Socks Excel Winterwear Thermals

The Indian innerwear market valued at Rs 5160 cr and has been growing at 14% CAGR over the past few years, with
branded innerwear growing at 20% CAGR during the same period.

Unorganized sector commanding 70% of the Indian innerwear market, this presents huge opportunity for the organised
sector players like Maxwell

The company is setting up retail outlets under the Green Room brand in tier II and III cities. The first has been set up
in Kolhapur and the second one would come up soon in Kalyan

Company is looking to aggressively expand its footprint overseas, it has already introduced its flagship brand VIP in
West-Asia. It is also looking at acquiring International brands with higher brand recall and strong distribution network.

Margins are expected to be stable with cotton prices expected to be stable.

Reliance Capital currently holds 14.55 % and Videocon Industries 2.24 % in Maxwell Ltd.(BSE-31/12/07)

Financial Highlights Rs Cr Maxwell Vs Sensex

FY05 FY06 FY07
INCOME :

Net Sales 180.27 169.22 195.9

Y-O-Y 13.7 -6.1 15.8

EBIDTA 11.61 24.92 21.55

Net Profit 1.58 8.97 9.07

EPS(Adj)-Unit Curr 0.28 1.59 0.9

Source: Capitaline
Industry- SWOT Analysis

Strengths Weaknesses
 A market with large hidden strength.  A large segment of the market is in the unorganized
 Current growth rate of 14%. sector.
 Industry with never declining demand.  Low degree of brand loyalty.
 Migration from unbranded to branded  High degree of price-sensitiveness.
segment with growing disposable income  Poor perception of quality of Indian innerwear.(For
 Product has un-substitutable demand. export market)

Opportunities Threats
Changing perceptions about the product from a marginal  More and more players entering the market competing
item of clothing it is now slowly being perceived as a part severely with each other but sharing the same small pie
of one’s wardrobe. instead of battling against the unorganized sector
 Projected growth rate of about 15% -20 %
 Potential for the organized sector to grow by making
inroads into the share of the unorganized sector.
 The impacts of better advertisements are making the
consumers, look at factors like comfort, quality and
brand name and not only price.

Peer Review

We have compared VIP with Page industries below and while Page is has leadership in the premium segment through
its ‘Jockey’ brand .While Page surely deserves a premium in valuations due its better margins , the thing to note is that
Maxwell owns its brands while Page is a licensee of Jockey U.S.A

Net Sales
COMPANY FY07 Op Profit FY07 OP Margins % Net Profit FY07 CMP Rs PE TTM
Maxwell Inds. 195.9 22.72 11.59 9.03 20 12.2
Page Industries 135.94 29.81 21.92 17.03 474 27.18
Source: Capitaline

Quarterly Numbers

Rs Cr
Q4 0703 Q10706 Q20709 Q30712 9 M0712 FY07
Net Sales 48.54 50.38 51.38 52.45 154.21 195
PBIDT 7.59 5.39 7.33 6.33 19.05 22.72
PBDT 6.93 4.66 5.27 5 14.93 18.2
PAT 2.2 2.66 2.82 2.51 7.99 9.03
Source: Capitaline

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Head Institutions

Anita Gandhi Head Institutional Equity (91-22) 56205753 anita.gandhi@arihantcapital.com

Equity Research

Arpit Agrawal Research Head (91-22) 67664836 arpit.agrawal@arihantcapital.com

Satish Kannav Economist (91-22) 67664828 satish.kannav@arihantcapital.com
Divyata Dalal Senior analyst (91-22) 67664834 divyata.dalal@arihantcapital.com
Shruti Jain Research Analyst (91-22)67664837 shruti.jain@arihnatcapital.com
Tejvinder Singh Research Analyst (91-22) 67664830 tejvinder.singh@arihantcapital.com
Manisha Porwal Research Analyst (91-22) 67664834 manisha.porwal@arihantcapital.com
Paresh Nautiyal Research Analyst (91-22) 67664827 paresh.n@arihantcapital.com
Suneel Rao Research Associate (91-22) 67664830 suneel.rao@arihantcapital.com
Rajesh Palviya Head- Technical 91-22)67664800 rajesh.palviya@arihantcapital.com
Sumit Ajmera Editor (91-22)64664800 sumit.ajmera@arihantcapital.com

Institutional Dealing Desk

Archana Kathe Dealer (91-22) 67664849 instdealing@arihantcapital.com

Sadhana Mishra Dealer (91-22) 67664800 instdealing@arihantcapital.com
Vidit Gupta Dealer (91-22) 67664850 instdealing@arihantcapital.com
Jigar Tanna Dealer (91-22) 67664852 instdealing@arihantcapital.com
Shailesh Jathar Dealer (91-22) 67664852 instdealing@arihantcapital.com

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Opp. Green House Restaurant,
67,Nehru Road, Vile Parle (East),
Mumbai-400057.
Tel: (91-22) 67664800
Fax: (91-22) 67664880

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