Buy S Kumars Nation; target of Rs 45: Angel Broking

“S. Kumars Nationwide Ltd. (SKNL) is one of the leading textile and apparel companies in India catering to various segments ranging from economy to premium. The company has also extended its presence globally by acquiring Leggiuno in Italy and Hart Schaffner Marx (HMX) in the U.S. In addition, it has entered an 80:20 JV with Louis Vuitton (LVMH) in U.K., thereby creating a strong portfolio with 45 owned and licensed brands. SKNL has a 74.4% stake in its subsidiary, Reid & Taylor (valued at Rs3,514cr in 2008 by GIC), whose IPO, if hits the market, may prove to be a re-rating trigger for the stock. We initiate coverage on SKNL with a Buy recommendation.”

“Over the past five years (FY2008-12), SKNL (consolidated) reported a revenue CAGR of 38.1%, substantially higher than its peers. This was mainly on the back of changing consumer preferences from the unorganized market towards the branded market and from textile to ready-to-wear. Further, we expect the company’s revenue to normalize and post a CAGR of 14.2% over FY2012-14E to Rs8,290cr. SKNL follows a strong brand ambassador-led strategy, as part of which its major domestic brands are endorsed by big celebrities such as Amitabh Bachchan (Reid & Taylor), Shahrukh Khan (Belmonte) and Sachin Tendulkar (World Player). In FY2011, the company spent Rs110cr on advertisement (including conferences, publicity and business promotion activities). This rigorous spending has helped the company in positioning itself as a strong brand."

"We expect the company’s advertising spend to increase to Rs176cr by FY2014E. We expect SKNL’s consolidated revenue to post a 14.2% CAGR to Rs8,290cr and profit to post a 15.2% CAGR to Rs524cr over FY2012-14E. We initiate coverage on SKNL with a Buy rating and an SOTP target price of Rs45,” says Angel Broking research report.  

Bodies Corporate holding more than 50% in Indian cos

Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.