February 01, 2017 / 11:51 IST
KTG’s revenue increased 20.5% to INR 1,424m (est. of INR 1,394m) in 3QFY17 from INR 1,181m in 3QFY16, led by growth of 19% YoY in garments to INR 1,253m and 31% in fabrics (net of inter-segment revenues) to INR 171m. EBITDA margin contracted 120bp to 34.1% (est. of 36.3%) from 35.3% in 3QFY16 on account of an increase in other expenses (14.8% of sales v/s 10.8% in 3QFY16).
OutlookWe adjust the same in our estimates, and cut FY17E/FY18E EBITDA by 8%/7% and earnings by 11%/12% while keeping revenue unchanged. We introduce FY19 estimates, and expect 13% revenue CAGR and 16% PAT CAGR over FY16-19. Given huge scalability, strong return ratios and free cash generation, we maintain Buy with TP of INR 551, valuing it at 15x FY19E EPS.
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