ICICI Direct recommended hold rating on Kewal Kiran Clothing with a target price of Rs 1300 in its research report dated March 26, 2019.
ICICI Direct's research report on Kewal Kiran Clothing
We met the management of Kewal Kiran Clothing to gain an insight into the company’s business outlook. Kewal Kiran is one of India’s leading branded apparel companies with popular home-grown brands like ”Killer”, ‘Integriti’, ‘Lawman’ and ‘Easies’. Though KKCL has a strong brand portfolio, revenue growth has remained sluggish over FY17-9MFY19 owing to the onslaught of discounting by e-commerce players. KKCL has shied away from discounting its brands, leading to slower revenue growth. However, the management is looking to revive revenue growth by introducing lower priced products as brand extensions rather than diluting the original brand.
KKCL has a strong balance sheet, with debt/equity ratio comfortably placed at 0.2x and having a strong cash position. We roll our estimates to FY21 and model revenue and PAT CAGR of 10% and 11%, respectively, in FY18-21E. We have a HOLD rating on the stock with a revised target price of Rs 1300 (16.0x FY21E EPS).
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