Interloop: A Global Powerhouse
Updated: Dec 26, 2021
Name: Interloop Ltd (ILP)
Market Capitalization: PKR 41.29 Billion
Price: PKR 47.50/share (July 7, 2020)
52 Week Range: 32.00 - 61.40
P/E: 9.88
Div. Yield: -
Company Profile
The Company has emerged as one of the largest Hosiery Manufacturer globally with customer base of top global brands including the likes of Nike, Adidas, Puma and Reebok to name a few. Besides Hosiery, Interloop is also a reputed manufacturer of quality yarn. The Company is a complete vertically integrated organization and offers a wide range of socks and tights with various quality levels and price points in line with all types of customers including brands, retailers, and specialty stores etc. besides quality yarns for denim, hosiery & weaving industry. Approximately 90% of the revenue generated by the Company is through exports and it is the 7th largest exporter of Pakistan.
Strengths
As of Sep-Oct 2019, heavy open market purchase of shares by insiders
A global leader in hosiery catering to a world class customer base
IPO in 2019 provided a cash injection of PKR 5 Billion. These funds have been earmarked to expand hosiery manufacturing capacity as well as introduce new product offerings such as denim & apparel
Recent PKR devaluation relative to USD should provide tailwinds to this company due to its export heavy operations
As of June 30, 2019, the company reported revenue and earnings per share growth (YoY) of 19% and 34% respectively. This is during a recessionary period in the local economy where overall market experienced declining trends
The company has leading net profit margins (12%) compared to peers Gul Ahmed (4.5%) and Nishat Mills (9.5%)
Risks
Covid-19 pandemic has resulted in Western brands reconsidering their global supply chains. There is an ongoing review of bringing manufacturing closer to home. Interloop could be adversely impacted due to its global customer base
In the garments segment, this company currently has the highest market capitalization on PSX. It does not have the highest revenue nor the highest profit. A high growth in future cash flows is baked into the valuation