Dec 5, 2006

Indian Textile

Alok Industries (ALOK.BO, Rs.71.2, 1M)
Our 12-month target price of Rs100 is based on 10x Sept'07E PE - on par withsector. The stock is trading at 7.6x Sept'07E PE toward the lower end of itshistorical P/E band of 8-10x of last two years and at a 28% discount to sector –we see this trend breaking out and expect valuations to catch up with theindustry.

Welspun India (WLSP.BO, Rs.93.2, 2M)

Our target price of Rs110 is based on 12x P/E for Sept 07E earnings. We believeWelspun will trade at a premium to Citigroup’s textile universe (which includekey players like Raymond, Arvind Mills, Gokaldas Exports, Alok Industries,Vardhman Textiles) valuations of 10.5x Sept 07E P/E.

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