Anand Rathi's research report on Kewal Kiran Clothing
Kewal Kiran’s H1 revenue grew 4.2% y/y, led by Kraus’ acquisition, though standalone sales fell 8.3% y/y on weak demand. Q2 standalone sales fell 3.5% y/y on manufacturing hurdles, for which corrective actions (stocking for future demand) were taken. Excl. this, sales would have risen 10% y/y. Meanwhile, Kraus’ Q2 sales were Rs550m, and the EBITDA margin was 19.3%. The company’s strategy entails growing Lawman through retail expansion and positioning Integriti as a value brand. It also plans to monetise its current office space. In Q2, 29 net stores were added (incl. 8 of Kraus) with 55 more in the pipeline. With better consumer sentiment, the company expects growth to be in double digits for its standalone business in H2 and 10% y/y for Kraus in FY25. It guided to 15-18% consolidated revenue growth for FY25 and 18-20% EBITDA margin. Our revised estimates include Kraus and, hence, are not comparable to previous ones.
Outlook
We introduce FY27e and retain a Buy, with a lower 12-mth Rs 803 TP (Rs811 earlier), 16x FY27e EV/EBITDA (18x FY26e EV/EBITDA).
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