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Buy KPR Mill; target of Rs 710: Sharekhan

Sharekhan is bullish on KPR Mill has recommended buy rating on the stock with a target price of Rs 710 in its research report dated August 03, 2022.

August 05, 2022 / 10:23 PM IST

"India’s specialty chemicals industry is a decadal growth opportunity and it is still not too late to participate in the value creation process. We prefer CRAMS/CSM players Navin Fluorine (Navin) and PI Industries (PI) as they provide long-term earnings visibility. We also like UPL due to robust growth outlook and reducing debt concerns and SRF due to rising contribution from the chemicals business," JM Financial research report.

 
 
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Sharekhan's research report on KPR Mill


In Q1FY23, KPR Mill’s (KPR’s) revenue growth was strong for yet another quarter, at 75.5% y-o-y to Rs. 1,584.8 crore aided by a 63% y-o-y growth in the textile business, while the sugar business reported 2.6x y-o-y growth. Yet, EBITDA margin fell by 160 bps y-o-y to 23.2%, as cotton/yarn prices surged. PAT grew by 35.3% y-o-y to Rs. 226.7 crore. Textile business PBIT margin came in at 22.8% (down 106 bps y-o-y), while sugar business PBIT margin stood at 9.7% (up 426 bps y-o-y). A slowdown in global export markets and higher input prices would keep near-term performance stressed but KPR’s integrated business model would help it recover faster than peers.



Outlook


Stock trades at 21.0x/17.8x its FY2023E/FY2024E EPS and 13.7x/11.5x its FY2023E/FY2024E EV/EBITDA. We maintain a Buy with a revised PT of Rs. 710.

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KPR Mill - 040822 - khan

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first published: Aug 5, 2022 10:23 pm
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