ICICI Direct Bullish on this clothing retailer
The brokerage’s perspective on Kewal Kiran Clothing
In its research report, the brokerage analyzed that “KKCL is a branded apparel player with a strong brand mix (brands owned” Killer “,” Lawman Pg 3 “,” Integriti “and” Easies ” ) through different price points. The company’s product portfolio is mainly focused on men’s casual wear, while KKCL has also entered the women’s and children’s wear segment. due to the company’s policy of not resorting to excessive discounts like many of its peers. KKCL has exhibited a strong margin profile over the past decade with an average margin above 20% which is better than most of its peers in the branded clothing space. “
ICICI Direct affirmed that “the board of directors recommended the issuance of free shares in proportion to four free shares (nominal value of Rs. 10 each) for each share held. The recording date of it is December 17, 2021, while the same date is today, December 16, 2021. As a result, KKCL’s share price has dropped to Rs. 275 / share against Rs. 1375 / share. “
Main triggers for the future price performance of Kewal Kiran Clothing according to ICICI Direct
- KKCL is well positioned to benefit from robust demand thanks to its diverse product portfolio and well-established distribution network. Many regional brands and unorganized clothing players are under financial stress due to the impact of the pandemic, which is beneficial for organized players like KKCL.
- The company has a virtually debt-free status (D / E: 0.1x) with cash and investments worth Rs. 298 crore.
- We model revenue, CAGR profit of 32%, 79%, respectively, in fiscal years 21-24E.
Why is ICICI Direct bullish on Kewal Kiran clothing?
According to the brokerage’s research report, “KKCL’s stock price has underperformed the broader indices over the past five years, primarily due to moderate income growth. However, we believe that The company is well positioned to benefit from a recovery in demand due to its strong brand portfolio and pan-Indian store and distribution network and aspires to achieve double-digit revenue growth through the Accelerated addition of stores and a growing share of online space. KKCL is trading at reasonable valuations of 18x, 15x EPS of FY23, FY24E, respectively. Convenience ensures that we maintain our PURCHASE rating on the share. We value KKCL at Rs. 325, which is 18 times the profit for fiscal year 24E. “
The stock was selected in the ICICI Direct brokerage report. Investing in stocks presents a risk of financial loss. Investors should therefore exercise caution. Greynium Information Technologies, the author and the brokerage are not responsible for any losses caused as a result of decisions based on the article.