Buy Kewal Kiran Clothing; target of Rs 580: ICICI Direct

ICICI Direct's research report on Kewal Kiran Clothing

KKCL is a branded apparel player with a strong bouquet of brands (owned brands ‘Killer’, ‘Lawman Pg 3’, ‘Integriti’ and ‘Easies‘) across various price points. The company’s product portfolio is primarily focused on men’s casual wear and it has also entered the women’s and kids wear. On the financial front, KKCL has exhibited consistent double digit margins with a healthy balance sheet and strong return ratios, though revenue growth has been constrained owing to the company’s policy of not resorting to excessive discounting like many of its peers. KKCL has exhibited a strong margin profile over the last decade with average margin in excess of 20%, better than most peers in the branded apparel space.

Outlook

We have a BUY rating on the stock. We value KKCL at Rs 580 i.e. 26x FY24E earnings.

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