Hanung Toys & Textiles Ltd, India’s largest manufacturer and exporter of soft toys, decorative cushions and children’s room furnishings has said that it has signed an export order tie-up with a leading US buyer, for exporting home furnishing. The deal is valued at $60 million (about Rs280 crore) which is to be completed by December 2012.
The size of the deal underlines the fact that order flows from the US have started in full swing. It is a significant pointer for companies exporting garments (Nahar Spinning & RSWM) and furnishing (Welspun & Himatsingka Siede). We expect a series of order flows in the coming year which is starting on a bullish note. For the September 2009 quarter, Hanung posted an operating profit of Rs31.48 crore and sales of Rs182.61 crore, higher than the sales of Rs168.29 crore and an operating profit of Rs27.65 crore in the year-ago period. Its operating profit margin has averaged 16% over the past three quarters. The current valuation of textiles and other export companies is depressed because the US economy is seen to be in a weak recovery mode. Hanung’s market cap is 0.38 times its sales and 2.22 times its operating profit of the September quarter. This latest US order deal has helped the stock regain its momentum which it lost since October 2009 after hitting a high of Rs132. On Thursday, the stock shot up 5%, ending the day at Rs116. — Swapnil Suvarna