Is it a good time to invest in Alok Industries when the price is already booming?

Alok Industries is an Indian Textile manufacturing company based in Mumbai (Link)

It has India’s largest vertically integrated textile company offering end-to-end solutions through its five core divisions:

When it was taken over – the original promoters owed INR 30000 Crores

Subsequently, it was listed at a price of INR 14 on Feb 27th, 2020

Since then, the stock has come a long way with price more than doubling.

Another booster that led to the share prices rising further – Capital infusion by the promoter company. (Link)

Despite all the positive info mentioned above, there are points of concern regarding Alok industries:

As of March 2023, Long term debt was INR 21,830.28 Crores (Link). This shows that in the past 4years, debt is yet to come down substantially
Net Income was INR -879.95 Crores (LOSS)
The funds infused is being used to retire debt and not for capex
The company has been operationally weak as compared to its current promoter (RIL) and despite having synergies (Link)
The company is susceptible to fluctuating crude oil and commodity prices

Considering these points – any investor should invest with caution and have an appetite for capital erosion.

Hope this helps

Happy Investing!

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