Rs 2,000 crore capex: Company plans to enhance and modernize existing capacity, along with venturing into green power generation!

The company's shares have rewarded their shareholders with an impressive return of over 500 per cent.

In its meeting held on May 9, 2024, the Board of Directors of Vardhman Textiles Ltd approved a significant initiative aimed at enhancing and modernizing the company's existing Spinning and Fabric Business capacity, along with venturing into Green Power generation. This ambitious project entails a total capital outlay of approximately Rs 2,000 crore. Here are the key aspects:

Capacity Enhancement: Vardhman Textiles Ltd plans to augment its existing capacity by installing 5,520 rotors and 17,000 spindles, equivalent to about 50,000 additional spindles. This expansion is expected to further bolster the company's position in the market.

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Modernization Efforts: Alongside capacity enhancement, the company aims to modernize its operations, ensuring improved efficiency and productivity. This modernization drive underscores Vardhman's commitment to staying abreast of technological advancements in the industry.

Diversification into Technical Textiles: In line with market trends and demands, Vardhman Textiles Ltd is set to venture into Technical Textiles production, with a capacity to produce 15 lakh meters of fabric per month. This diversification strategy aims to tap into new market segments and capitalize on emerging opportunities.

Green Power Generation: Embracing sustainability, the company intends to invest in renewable energy projects, including Solar, Wind, or Hybrid power generation. This initiative aligns with Vardhman's commitment to environmental stewardship and reducing its carbon footprint.

IT System Upgradation: Recognizing the importance of technology in today's business landscape, Vardhman Textiles Ltd plans to upgrade its existing IT systems. This move is expected to streamline operations, enhance data management capabilities, and facilitate better decision-making processes.

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The proposed timeline for capacity addition is approximately 2 years, with an estimated investment requirement of Rs 2,000 crore. The financing for these initiatives will primarily be sourced from internal accruals and debt financing.

The rationale behind these strategic moves is multifaceted. Firstly, it aims to foster better business synergies and secure a competitive advantage in the market. Secondly, the capacity expansion is a response to the increasing demand for Vardhman's products. Lastly, the modernization efforts are geared towards enhancing overall productivity and operational efficiency.

Share Performance:

Today the company’s stocks closed the day at Rs 437.15 per share representing a gain of 2.58 per cent. The current market capitalisation of this company stands at Rs 12,641 crore. Shares of this Mid-Cap company have delivered impressive returns of around 35 per cent in the past year and a multibagger return of around 568 per cent in the past decade.

Investors must keep this stock on their radar.

Disclaimer: The article is for informational purposes only and not investment advice.