Anand Rathi is bullish on Kewal Kiran Clothing has recommended buy rating on the stock with a target price of Rs 968 in its research report dated October 26, 2020.
Anand Rathi 's research report on Kewal Kiran Clothing
In line with our estimate, Kewal Kiran’s Q2 revenue slid 59.5% y/y to Rs675m. At Rs112m, EBITDA was higher than we estimated on the better gross margin and more-than-anticipated reduced costs. Cash and equivalents of Rs2,471m suffice to meet required near-term liquidity. Cost reduction has been significant in H1; however, we expect expenses at previous levels as sales pick up. We lower our FY21e/FY22e revenue 7.7%/6% and EBITDA 9.3%/18.6% leading to a similar cut in EPS.
We roll forward our valuation to FY23 and retain our Buy rating, with a lower target of Rs968 (earlier Rs1,052) at 12x FY23e EV/EBITDA (earlier 12x FY22e EV/EBITDA).
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