Ambika Cotton Mills: Quality Exporter ( Good potential multibagger)

Cotton offers the most comfortable wear, ensuring continued demand for clothes, more so for specialty cotton yarn. The demand from top-end clients engaged in manufacturing premium shirts and t-shirts is on a growth path; such demand ensures an expanding market. This is the niche that Ambika Cotton Mills addresses and it has been doing so over the years.




Ambika Cotton Mills Ltd. (ACML) was established in 1988 to produce high quality cotton yarn, both carded and combed, for knitting and weaving. The company was incorporated in 1988 in Coimbatore. Its four manufacturing units are situated in Dindigul (Tamil Nadu) with a total spindle capacity of 110,000; of which 100,000 spindles are for the compacting system. Thanks to its track-record of ensuring product quality and meeting delivery schedules, it has a reputation in the niche industry. It also prides itself on zero complaints from clients, shippers and raw material suppliers.





Ambika holds the Supima certificate from Supima Association (USA), GOTS Certificate from Control Union for organic yarn, and Oeko-Tex Certificate of Standard 100 Product Class I, making the company a good bet for high-quality exports.


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Ambika is focused on manufacturing high-quality specialty yarn and it has substantially strengthened its operational base, in India and abroad, ensuring constant demand for its products. Although the company is performing well, there are concerns about government policy of controlling free exports, high interest cost, volatility in cotton prices and lack of low-cost and uninterrupted power.

The shareholding pattern of the company includes 48.63% with the promoters, 7% with domestic institutional investors and 44.26% with retail investors. Over the past five quarters, the company saw sales growth of 19% and operating profit growth of 25%. Its average operating margin is a high 21%. The market-capitalisation of the company is just 0.32 times sales and 1.40 times operating profit. The return on net worth is 14%. It has debt; the debt-equity ratio is 0.43, leading to a return on capital employed of 19%. The cash earnings per share are Rs 99.42.

The share is trading at around Rs 490 levels and is an attractive buy at the current market price.