I studied Premco Global Ltd today. It is a manufacturer "of Woven and Knitted Elastic and non-Elastic Narrow Fabric and Webbing (4mm-250mm), and caters to the apparel, lingerie, sports-related, medical, footwear, luggage, furnishing, and automotive industries."
This is a hyper competitive market with slow growth and low margins. But the company has posted phenomenal profits during the last few quarters. The current market capitalization of the company is 8.20 crores, providing a dividend yield of 7% (the company has been consistent with the dividends) and trading at around 1 time its trailing-12-months profits.
I went through the company's annual reports of last few years, but it don't provide much business details. The annual report of 2013 is awaited. Couldn't find the annual reports of Sky Industries Ltd too, which (claims to be the largest manufacturer in this field).
Keypoints from notes and other reports: The company has 4 plants and the book value is around 3 times the market price. Around 50% of the company's revenues are from exports. The promoters did a small preferential allotment at Rs.28 per share in 2012-13.
The interesting thing is that though the high profits have repeated and continued in last 4 quarters, the price has dropped by 20%. Don't know if this was because the stock came under the call-auction mechanism, or because the markets are not expecting the margins to sustain. Either way, even if the margins do not sustain, the company will still be at a PE of 3 with a good dividend track record.
Annual report of 2013 will be something to look forward. How the company utilizes the new profit funds (over 6 crores in last 3 quarters) and how long the margins sustain will be worth digging into.
This detailed blogpost provides some more details.