Pioneer Embroideries rallies 18.79 per cent! Heres why?

Pioneer Embroideries Limited (PEL), one of the key players and owners of brand 'Silkolite' in Specialty Polyester Filament Yarn (SPFY), is moving ahead with its expansion project in SPFY as per schedule. The SPFY business contributes close to 90 per cent of PEL’s turnover, and in the first half of the current year, the business clocked revenues of approximately Rs 12,740 lakh, up from about Rs 6,970 lakh in the previous corresponding period. As the average capacity utilization is high, the proposed increase in capacity should result in enhanced turnover without a major time lag.

The company has already placed the order for major equipment with a Germany-based manufacturer of quality textile extrusion equipment, along with advance payments, which would enable it to secure delivery by Q3 FY23. The equipment is being primarily financed through a German Bank. Construction work on the land adjoining the company’s existing manufacturing plant at Kala Amb, Himachal Pradesh, is progressing well, with the foundation work already completed.

With this expansion, PEL plans to improve its presence in newer segments like home textiles and technical textiles and would be primarily manufacturing POY (Partially Oriented Yarn) and DTY (Draw Textured Yarn)-based speciality textile products. These products, non-apparel in nature, have buoyant demand in both domestic and international markets. The company has till date incurred capital expenditure of over Rs 750 lakh, presently funded through internal accruals, and is negotiating financial closure with its lenders.

Established in 1991, Pioneer Embroideries Limited ("PEL") is one of India's notable manufacturers and exporters of value-added specialized polyester filament yarn and embroidery and laces. Within a few years, the company has carved a permanent niche for itself in the SPFY business worldwide, with best-in-class quality under the Silkolite brand. PEL has a yarn capacity of about 18,000 MT per annum. PEL’s products find application mainly in the non-apparel segment, used in carpets, bath mats, upholstery fabrics, and curtains. PEL is one of the first textile companies to create a brand in a highly commoditized yarn business.

Shares of Pioneer Embroideries opened at Rs 68.75 on NSE on Thursday, (December 30) and rallied 19 per cent to record an intra-day high of Rs 78.70.

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