ICICI Securities research report on Kewal Kiran Clothing
Kewal Kiran Clothing (KKC) delivered an impressive all-around performance. Volume growth outperformance (9% YoY) is likely to be one of the best in the sector. While revenue growth in jeans/trouser/t-shirts was healthy (12-15% YoY), muted performance in shirts (1% YoY) was due to winter-mix impact; higher offtake of winter-wear lead top-wear. Retail expansion rate (12%YoY) was healthy and operating profit margins (highest-ever margin since last 20+ quarters) were impressive. Foray into kidswear (Junior Killer – 4-16 years’ segment) is positive (higher TAM; ~20% of the total apparel market) and could potentially provide a fast-growing opportunity for KKC. Maintain BUY.
Outlook
We increase our earnings estimates by ~4-2% for FY24E-25E; modelling revenue/ EBITDA/ PAT CAGRs of 16%, 19% and 20% respectively over FY23-FY25E. We maintain our BUY rating with a DCF-based revised target price of INR 850 (vs INR 830 previously).
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