Multibagger stock gains 134% in 6 months, FIIs stake up 2.08% QoQ: Buy?
- With a market worth of ₹3,079.72 crore, Kewal Kiran Clothing Ltd. is a small-cap business that operates in the consumer-discretionary goods and services (CDGS) sector.
With a market worth of ₹3,079.72 crore, Kewal Kiran Clothing Ltd. is a small-cap business that operates in the consumer-discretionary goods and services (CDGS) sector. Kewal Kiran Clothing Limited (KKCL), one of India's top manufacturers of branded clothing, specialises in the design, manufacture, and marketing of well-known Indian clothing brands including Killer, Easies, LawmanPg3, and Integriti. For the fiscal year 2022–2023, the Board of Directors has announced a first interim dividend of 30% or Rs. 3 per share, on 6,16,25,185 equity shares of Rs. 10 each. The date of payment of the aforementioned interim dividend will be on or after November 14, 2022. After Kewal Kiran Clothing Ltd.'s Q2 results, the brokerage firm ICICI Direct Research maintained a buy recommendation on the stock.
The research analysts of ICICI Direct Research have said in a note that “KKCL’s stock price has appreciated by 120% in the last one year (three year CAGR of 30%). It has one of the best margin profiles among branded apparel players with a healthy b/s. We believe KKCL is well placed to benefit from demand revival owing to strong brand portfolio and pan-India store and distribution network. We have a BUY rating on the stock. We value KKCL at ₹580 i.e. 26x FY24E earnings.”
KKCL is well placed to benefit from robust demand owing to its diversified product portfolio and established distribution network. Many regional brands and unorganised apparel players are financially stressed owing to impact of pandemic, which is beneficial for organised players like KKCL, the company has a virtually debt free status (D/E: 0.2x) with cash & investments worth ₹338 crore and revenue, earnings CAGR of 22%, 29% in FY22-24E, respectively are the top 3 key triggers for the stock’s future price performance according to the analysts.
They have further said in their research note that “KKCL continues to be one of the most profitable branded apparel players in India with a strong presence in the branded menswear category. From a strategy perspective, the company is planning to continue its asset light store expansion, which would be driven by franchisee outlets across India. Also, the company is expanding its presence in select national chain stores and e-commerce platforms, which would enable it to acquire newer set of customers. Also, to fuel revenue growth, KKCL is planning to continue to expand its product portfolio and garner higher consumer wallet share. KKCL is further strengthening its own digital and e-commerce platform to capitalise on its brand strengths and thereby provide an omni-channel access across its EBO network. We believe the initiatives are positive for providing the required thrust to its revenue trajectory and expect the company to register revenue, earnings CAGR of 22%, 29% in FY22-24E, respectively, with return ratios in excess of 20%+.”
Kewal Kiran Clothing's net profit rose on a standalone basis by 44.82% YoY to ₹39.13 crore in Q2FY23 as contrasted to ₹27.02 crore in Q2FY22. In Q2FY23, sales went up 29.28% YoY to ₹226.34 crore from ₹175.08 crore in Q2FY22. On a consolidated basis, Kewal Kiran Clothing's net profit grew 45.59% YoY to ₹39.09 crore in Q2FY23 from ₹26.85 crore in Q2FY22. From ₹175.08 crore in Q2FY22 to ₹226.34 crore in Q2FY23, sales grew by 29.28% YoY. EBITDA margin improved 370 bps YoY to 22.1% in Q2FY23 (Q2FY22: 18.4%, Q1FY23: 19%). EBITDA was at ₹50 crore in Q2FY23 vs. ₹32.3 crore in Q2FY22 (Q1FY23: ₹29 crore).
Kewal Kiran Clothing Limited's shares closed at Rs. 500.00 a piece on Friday, up 0.85% from the previous close of Rs. 495.80. The stock has produced a multibagger return of 105.76% over the last year, and so far in 2022, it has produced a multibagger return of 115.47% YTD. The stock has produced a multibagger return of 134.74% over the past six months and has gained by 22.84% during the past month. For the quarter ended September or Q2FY23, the company reported a promoter shareholding of 74.25%, FIIs holding of 3.95% vs 1.87% in Q1FY23, DIIs stake of 5.60% compared to 5.90% in Q1 and public stake of 16.21% vs 17.98% in Q1.
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