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Kewal Kiran Clothing : Growth priced in…
Kewal Kiran Clothing’s (KKCL) Q3FY11 results were in line with our
estimates. KKCL’s topline increased 62.8% YoY to | 63.3 crore ahead of
our estimate of | 57.5 crore, led by 46% volume growth and an 11%
increase in realisation to | 724 per unit. While the EBITDA margin was
lower than our expectation, it increased 351 bps YoY to 27.1%. A robust
topline growth and healthy margins led to a PAT growth of 77.2% in
Q3FY11. PAT stood at | 11.3 crore ahead of our estimated | 10.5 crore.
We continue to opine that the valuations have captured the growth
potential of the company and investors should BOOK PROFITS at
current levels.
ƒ Healthy growth
On a YTD basis also, KKCL has put up a good show. Sales increased
40% YoY to | 180.6 crore led by 36% volume growth and 7%
realisation growth. The EBITDA margin improved from 26.03% in
9MFY10 to 28.95% in 9MFY11. PAT too grew 46% to | 35.15 crore
(higher than the PAT for FY10).
ƒ Expanding retail presence
During the quarter under review, the company added 6 K-Lounge,
three Killer, two Integriti, one Lawman and two Addiction stores.
Valuation
KKCL has continued its growth trajectory and has reported a healthy
performance over the last six quarters. Its financial health has also
improved. The debt/equity ratio has reduced from 0.10x as on December
2009 to 0.04x as on December 2010. Over the same period, KKCL’s RoE
and RoCE have also improved from 19.7% to 24.9% and 17.5% to 23.4%,
respectively. KKCL’s virtually debt-free status and cash & cash equivalent
worth | 70 per share also strengthen its financial case. However, we
continue to believe these merits have been factored into the share price
and the stock is trading at peak valuations of 16.5x and 13.8x FY11E and
FY12E EPS, respectively. We recommend investors BOOK PROFITS at
current levels.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Kewal Kiran Clothing : Growth priced in…
Kewal Kiran Clothing’s (KKCL) Q3FY11 results were in line with our
estimates. KKCL’s topline increased 62.8% YoY to | 63.3 crore ahead of
our estimate of | 57.5 crore, led by 46% volume growth and an 11%
increase in realisation to | 724 per unit. While the EBITDA margin was
lower than our expectation, it increased 351 bps YoY to 27.1%. A robust
topline growth and healthy margins led to a PAT growth of 77.2% in
Q3FY11. PAT stood at | 11.3 crore ahead of our estimated | 10.5 crore.
We continue to opine that the valuations have captured the growth
potential of the company and investors should BOOK PROFITS at
current levels.
ƒ Healthy growth
On a YTD basis also, KKCL has put up a good show. Sales increased
40% YoY to | 180.6 crore led by 36% volume growth and 7%
realisation growth. The EBITDA margin improved from 26.03% in
9MFY10 to 28.95% in 9MFY11. PAT too grew 46% to | 35.15 crore
(higher than the PAT for FY10).
ƒ Expanding retail presence
During the quarter under review, the company added 6 K-Lounge,
three Killer, two Integriti, one Lawman and two Addiction stores.
Valuation
KKCL has continued its growth trajectory and has reported a healthy
performance over the last six quarters. Its financial health has also
improved. The debt/equity ratio has reduced from 0.10x as on December
2009 to 0.04x as on December 2010. Over the same period, KKCL’s RoE
and RoCE have also improved from 19.7% to 24.9% and 17.5% to 23.4%,
respectively. KKCL’s virtually debt-free status and cash & cash equivalent
worth | 70 per share also strengthen its financial case. However, we
continue to believe these merits have been factored into the share price
and the stock is trading at peak valuations of 16.5x and 13.8x FY11E and
FY12E EPS, respectively. We recommend investors BOOK PROFITS at
current levels.
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