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.
Outlook
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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