Alok Industries share price surges 20% after Reliance Industries invests ₹3,300 crore

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Alok Industries share price, a textile manufacturer, saw its shares jump 20% after Reliance Industries invested ₹3,300 crore in the company.

Alok Industries Share price

In an unexpected turn of events, Alok Industries, a well-known textiles manufacturer based in Mumbai, experienced a substantial 20% surge in its share price, reaching ₹25.9. This notable increase was triggered by a substantial investment of ₹3,300 crore made by Reliance Industries. The investment was made through the subscription of preferential shares, as disclosed in the company’s recent regulatory filing.

The decision to issue preference shares to Reliance Industries, approved by Alok Industries’ board in November, involves a dividend rate of 9% on a private placement basis. These preference shares are redeemable at par at the company’s discretion within a period not exceeding 20 years from the date of allotment.

Alok Industries History

Alok Industries, established in 1986, stands out as an integrated textile manufacturer with its headquarters in Mumbai. The company boasts a robust presence in both the cotton and polyester segments, covering the entire value chain. In the cotton segment, Alok Industries is involved in spinning, weaving, processing, and the production of finished fabrics, bedsheets, towels, and garments. Similarly, in the polyester segment, the company is fully integrated, ranging from a continuous polymerization plant to the production of various polyester products.

A key highlight of Alok Industries’ customer base includes domestic and international retailers, brands, and garment exporters in India, as well as converter countries like Bangladesh, Vietnam, and Sri Lanka. These converter countries primarily engage in garment manufacturing and serve as vendors to major global labels.

RIL Buy Stake in Alok Industries

Reliance Industries, in collaboration with JM Financial Asset Reconstruction, successfully acquired Alok Industrie in 2020 through the insolvency and bankruptcy law auction conducted by lenders aiming to recover unpaid loans. As of September 30, 2023, Reliance Industries held a substantial 40% stake in the company, while JM Financial ARC possessed a 34.99% stake.

Alok Industrie’s Performance

Examining Alok Industrie’s recent financial performance, the company reported a net loss of ₹175 crore for the September quarter. Although it reflects an improvement over the previous quarter’s loss of ₹192 crore and the ₹226 crore loss in Q1FY24, it’s essential to note that the company is still navigating challenges. However, the operating profit showed a significant improvement, witnessing a 200% quarter-on-quarter increase to ₹36 crore in Q2FY24.

One of the contributing factors to this surge is the favorable position of Indian textile manufacturers in the global market. Textile and apparel exports from India have experienced rapid growth in recent years, with global buyers seeking alternatives to China. This trend has created a lucrative opportunity for Indian textile companies like Alok Industries to capitalize on the growing demand.

Investors should exercise caution and seek advice from certified financial experts before making any investment decisions. While the recent developments suggest positive momentum for Alok Industrie, the stock market can be unpredictable, and individual financial situations vary. It’s crucial to conduct thorough research and consider all factors before making any investment choices.

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