Jute industry overview
Jute is known as Golden Fiber. It is one of the oldest industry in India employing approx lakhs of people. It is agricultural product which is used to create different type of products. The most important aspect of this fiber is strength. It is environment friendly, bio degradable and renewable source of fiber which can be thought as alternative to Plastics treat world is currently witnessing.
Government has special focus on promoting Jute industry. It is trying to revive the sector which has faced tailwinds over the years with introduction of Plastics as packaging material on scale. Government has made mandatory to use Jute packaging bags for agricultural products like Sugar etc.
Below are some key data related to the industry
- Jute production – 95.6 lakh tonne
- Jute exports – 495.5 million dollar
- Major export destinations – US, UK, Belgium, Germany, Australia and other countries
Major production capacity is domestically consumed and approx 10% of the production is exported. India is major producer and manufacturer of the Jute and Jute products. Major competitor of India in international market is Bangladesh.
Jute investment rationale
There are multiple reasons for having interest in this sector as mentioned below
- The fiber is bio degradable and environment friendly. So it is natural choice for Go Green Earth and environment protection movements. This is one of the most important points in favor of this fiber. Everyone is trying to have renewable and earth friendly solution which this fiber provides
- It can be regarded as one of the most strong fiber which can be used for Packaging across industries. This has been one major application area of it which is also protected by Government
- Lot of innovation happening to promote Jute powered products and make it more of consumer fiber. This push if gains momentum can be great push for the companies manufacturing it.
- With India having commanding position in the fiber it will have to cater the demand generating from other countries. The increase in exports will help companies get foreign exchequer.
- There are not many players listed in the space which will cause huge trigger if there is any positive movement in the industry demand and outlook.
Listed Jute Companies
Now that we have discussed the industry outlook along with positives which may get triggered for the industry lets look at some of the players in the space.The companies are not listed in any order of preference. They are listed based on the market cap as of this writing. The market cap may change with stock price so the order may not be correct going forward.
Gloster Limited
Below is the quick snap shot of the company which will give you an initial idea about it. You can use it as staring point for analysis.
- Market Capitalization – 771 Cr
- Book value – 998
- Net profit for year – 65 Cr
- Promoter holding – 72.63
- LIC has 12.85% holding in this company
- The dividend yield for it is more than 3%
Cheviot Limited
Cheviot limited is flagship company of Group Cheviot which has interest in Tea garden and Leathers along with Jute.
- Market Capitalization – 664 Cr
- Book value – 907
- Net profit for year – 79 Cr
- Promoter holding – 74.83
- Vijay kedia the ace investor has more than 1% share holding till last year.
- The dividend yield for it is more than 5%
Ludlow Jute and specialties
Below are the details about the company
- Market Capitalization – 92 Cr
- Book value – 163
- Net profit for year – 12 Cr
- Promoter holding – 67.2
- The dividend yield for it is more than 2%
AI Champdany industries
Below are the details about the company
- Market Capitalization – 70 Cr
- Book value – 21
- Net profit for year – -3.25 Cr
- Promoter holding – 58.9
- The dividend yield for it is more than 2%
Conclusion
If you closely see all of the Jute manufacturing companies are trading below book value. So there is value in these stocks. The first two are big ones based on market cap and last two are smaller ones. The dividend yield of these companies are also good. In case we have any major news flow or industry outlook change which will bring focus to Jute sector companies then these companies (importantly the bigger ones) will have more chances of making most of them and getting benefited.
But the sudden change in the outlook is important which depends on the sector impacting news or views which I have listed. Note as of this writing I do have position in one of the stocks mentioned above. I may sell it without notifying to the readers of the website. You can do your own research based on the information provided to make informed investment decision.