Buy Kitex Garments; target of Rs 635: Firstcall Research

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26 Aug, 2025 12:21

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Firstcall Research report on Kitex Garments

"Kitex Garments’ net profit jumps to Rs. 231.31 million against Rs. 113.22 million in the corresponding quarter ending of previous year, an increase of 104.30%. Revenue for the quarter rose by 22.78% to Rs. 1220.98 million from Rs. 994.46 million, when compared with the prior year period. Reported earnings per share of the company stood at Rs. 4.87 a share during the quarter, registering 104.30% increase over previous year period. Profit before interest, depreciation and tax is Rs. 470.16 million as against Rs. 222.58 million in the corresponding period of the previous year."

OUTLOOK AND CONCLUSION

At the current market price of Rs.557.70, the stock P/E ratio is at 32.66 x FY15E and 30.34 x FY16E respectively.

Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.17.08 and Rs.18.38 respectively.

Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 44% over 2013 to 2016E respectively.

On the basis of EV/EBITDA, the stock trades at 15.84 x for FY15E and 14.29 x for FY16E.

Price to Book Value of the stock is expected to be at 10.38 x and 8.20 x respectively for FY15E and FY16E.

"Despite stiff competition from other countries, international buyers show preference to company’s product for its quality and timely delivery and hence Company will achieve better working results in the coming years. Major Internatioal buyers like KOHLS and THE CHILDRENS PLACE have shown interest in the company’s products by placing large orders. Kitex Garments Ltd has opened a merchandising Company in the name of Kitex USA LLC with 50% investment at Delaware, USA. Company also plans to take the performance to the next level by modernization, installing high tech and time saving machinery and supportive systems, improving quality of work by employee training, and by Research and Development in major areas pertaining to the industry in which the company is in business. We expect that the company surplus scenario is likely to continue for the next two to three years, will keep its growth story in the coming quarters also. Hence, we recommend ‘BUY’ on the stock with a target price of Rs 635 for medium to long term investment", says Firstcall Research Report.

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