Bombay Dyeing - Multibagger

The Bombay Dyeing and Manufacturing Company is an India-based company. The Company operates in three segments: textile, polyester and real estate. The Company's products include bed linen, towels, furnishings, fabrics for suits, shirts, dresses and saris in cotton and polyester blends. It has a range of industrial fabrics that include microdot interlining, and fabrics for shoe uppers, adhesives, abrasives, leather cloth, and filters. White Horse Real Estate Private Ltd. is a wholly owned subsidiary of the Company. Its operating facilities are located in India. In textile, they have a good network; they have close to 200 retail shops.

Bombay Dyeing is all set to develop residential and commercial projects. It has a land-bank of nearly 90 acre in Dadar and Worli. If we translate this to per lakh square feet, it comes upto 60 lakh square feet taking FSI of nearly 1.33. The average land rate in Dadar and Worli is 10,000 per square feet. The land value is seen around Rs.6,000 Cr whereas the company’s current market capital is Rs.1,900 Cr with CMP of Rs.498. So on a conservative estimates, we can keep the target of around Rs.1400. In the coming four-five years, the realty arm could be de-merged and be listed separately.

Bombay Dyeing had awarded Larsen & Toubro an order valued at Rs.2,000 Cr for developments at the textile mills and spring mills at Worli and Wadala respectively. The project will be completed in 46 months by the end of December 2011. The turnkey construction project involved construction of mixed-use developments on 4 million sq ft for the textile mills at Worli and 5 million sq ft for the Spring mills development at Wadala. The value of these properties can get valued close to about Rs.7000-8000 Cr. The activity has started day before when they released a full page ad in the media for sale of the premises. So I think the effect of that can come in a very big way maybe in FY11 or any of the quarters and they will start selling the premises.

The equity capital of the company is around Rs. 38 Cr out of which the promoter holding is around 47%. The Company’s bleeding balance sheet is a major concern. It had total Debt / equity ratio of around 10 as on Mar-09.

Also the polyester & Textile business, which forms almost 70% of total revenues, are making losses. They earned profits of around Rs.78 Cr from realty business in the Q2Sep-09, but whatever realty profits the company have been booking on part development of the property at Wadala or Dadar has been getting used or utilized for financing their losses of other businesses.