Moneycontrol PRO
Open App

Buy Kewal Kiran Clothing; target of Rs 820: ICICI Direct

ICICI Direct is bullish on Kewal Kiran Clothing has recommended buy rating on the stock with a target price of Rs 820 in its research report dated May 29, 2020.

May 29, 2020 / 05:50 PM IST
  • bselive
  • nselive
Todays L/H

ICICI Direct's research report on Kewal Kiran Clothing

Kewal Kiran Clothing (KKCL) reported a moderate set of Q4FY20 numbers. Revenue de-grew 4.9% YoY (flat sequentially) to Rs 126.6 crore, mainly owing to volumes declining 6% to 13.0 lakh pieces. Jeans category (59% of sales) declined 10% YoY to Rs 73.4 crore whereas revenue from shirt segment (21% of sales) grew 15% YoY to Rs 25.8 crore. Owing to an unfavourable product mix, gross margins declined 510 bps YoY to 47.4%. However, controlled operating expenses and lower selling expense led EBITDA margins to decline 370 bps YoY to 17.0%. EBITDA de-grew 22% to Rs 21.5 crore. Subsequently, PBT de-grew 28% to Rs 21.7 crore while PAT de-grew 22% to Rs 15.8 crore owing to a lower tax rate (27% vs. 33%).


EBITDA margins for FY20 have dipped to 18% (vs. 22.4 in FY19). In a bid to sustain double digit topline growth, the management has alluded at a possibility of dilution in margin profile to a range of 18-19%. Despite the same, KKCL remains one of the most profitable branded apparel players with a robust balance sheet with cash & investments worth ~Rs 275 crore. Owing to Covid-19 impact, we revise our earnings estimates downwards. However, we maintain BUY rating on the stock with a revised target price of Rs 820 (13.0x FY22E EPS).


For all recommendations report, click here

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

Broker Research
first published: May 29, 2020 05:50 pm
ISO 27001 - BSI Assurance Mark