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Last Updated : Sep 21, 2015 02:45 PM IST | Source:

Buy Kitex Garments; target of Rs 960: Motilal Oswal

Motilal Oswal is bullish on Kitex Garments and has recommended buy rating on the stock with a target price of Rs 960 in its research report dated September 18, 2015.

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Motilal Oswal's reserach report on Kitex Garments

Kitex Garments Ltd (KTG) is based in Kochi, India.Incorporated in 1992, its first public issue was in 1995. Its promoters are Mr MC Jacob, Mr Boby Jacob and Mr Sabu Jacob. KTG is in the business of manufacturing and exporting infant garments.Company derives 80% of its revenue from the sale of infant garments and the balance 20% from the sale of fabric to Kitex Childrenwear.

We expect KTG to capture a larger pie of the infant-wear value chain with the launch of its own brand in the US as well as licensing of private labels there. Forward integration holds high significance for the company, as margins in its own brand will be double of the current business (~60% versus current margins of ~30%), along with higher realizations. We value the stock at 26x FY17E EPS of INR36.9, arriving at a March-2016 price target of INR960. Maintain Buy.

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First Published on Sep 21, 2015 02:45 pm
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