Kitex Garments and 4 other stocks with CWIP twice their total assets to keep under radar

Synopsis: Companies with CWIP far exceeding their fixed assets may be signalling major expansion. This article highlights five small and microcap stocks where ongoing capex is 2–7x their asset base.

In this article, we will dive into some of the small and microcap companies whose Capital Work in Progress (CWIP) has increased to more than double their existing fixed assets, which is basically one of the earliest signs of a heavy ongoing capex and a potential future scale-up. 

These firms, typically, are profoundly involved in significant expansion cycles and still have large projects that are yet to be capitalised on the balance sheet. A very high CWIP, however, is not a sure growth driver, but it may indicate getting new capacity, fresh business lines, or relevant strategic investments that may be of ​‍​‌‍​‍‌​‍​‌‍​‍‌interest.

Kitex Garments

Kitex​‍​‌‍​‍‌​‍​‌‍​‍‌ Garments Ltd, established in 1992, located in Ernakulam, is a company that manufactures and exports infant and kids apparel. The firm makes knitted fabrics and a wide variety of baby products such as bodysuits, sleepwear, rompers, burp cloths, bibs, and training pants, and it serves consumers in the domestic market, the United States, and the rest of the ​‍​‌‍​‍‌​‍​‌‍​‍‌world.

With a market capitalisation of Rs 3,883 crore, Kitex Garments has a CWIP of Rs 1,283 crore against fixed assets of Rs 635 crore, meaning its ongoing capital work in progress is over two times larger than its existing asset base. 

Dollex Agrotech

Dollex Agrotech Ltd is a sugar manufacturing and trading company with​‍​‌‍​‍‌​‍​‌‍​‍‌ a 2500 TCD sugar factory in Datia, Madhya Pradesh, and a 3 MW captive power plant. It was formed in 2013 and went public in 2022. Besides sugar, the company produces and sells such by-products as molasses and bagasse. The firm has received clearance for a 200 KLPD distillery and is willing to start ethanol production as per the EBP ​‍​‌‍​‍‌​‍​‌‍​‍‌programme.

With a market capitalisation of Rs 155 crore, Dollex Agrotech has a CWIP of Rs 79 crore against fixed assets of only Rs 27 crore, meaning its ongoing capital work in progress is almost three times larger than its existing asset base.

Supreme Power Equipment

Supreme​‍​‌‍​‍‌​‍​‌‍​‍‌ Power Equipment is a developing transformer manufacturer who mainly focuses on distribution, power, and inverter-duty solar transformers. They are scaling their business at a fast rate due to the combination of a strong order book, expanded capacity, and increased demand from utilities and renewable projects. The company is quite well-positioned in the Indian power sector, which is going through a transition, as a result of its emphasis on quality, diversification, and prompt ​‍​‌‍​‍‌​‍​‌‍​‍‌execution.

With a market capitalisation of Rs 510 crore, Supreme Power Equipment has a CWIP of Rs 74 crore against fixed assets of Rs 11 crore, meaning its ongoing capital work in progress is nearly seven times larger than its existing asset base.

Tembo Global Industries

Tembo Global Industries Limited is a dynamic player in the industrial solutions arena, focusing on engineering design, load calculations, manufacturing, supply, and project execution. They cater to a variety of sectors, including oil & gas, chemicals, construction, power, shipbuilding, nuclear power, HVAC, anti-vibration systems, and a range of industrial, commercial, utility, and OEM installations.

With a market capitalisation of Rs 1,155 crore, Tembo Global Industries has a CWIP of Rs 177 crore against fixed assets of Rs 32 crore, meaning its ongoing capital work in progress is over 5.5 times larger than its existing asset base.

Z-Tech (India)

Z-Tech​‍​‌‍​‍‌​‍​‌‍​‍‌ (India) Limited is an engineering company (established in 1994) which mainly provides advanced geo-technical solutions (such as slope stabilisation and soil reinforcement), revolutionary industrial wastewater management with the help of an environmentally friendly GEIST technology, and inventive theme park development in the term of reusable waste turned into artistic landscapes and ​‍​‌‍​‍‌​‍​‌‍​‍‌structures.

With a market capitalisation of Rs 794 crore, Z-Tech (India) has a CWIP of Rs 34 crore against fixed assets of Rs 10 crore, meaning its ongoing capital work in progress is over 3.4 times larger than its existing asset base.

Written by Satyajeet Mukherjee

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