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ICICI Securities Report
Key positives in Kewal Kiran Clothing Ltd.'s Q4 FY24 result include:
the core segments (jeans and shirts) revenue grew by healthy 13%/7% YoY.
Strong overall volume growth at 10%.
Operating profit margin maintained at 19% led by mix improvement.
Ontrack rationalisation of K-Lounge exclusive brand outlets to Killer; at the current rate, we expect most of the K-lounge stores to be rationalised into single brand EBOs (primarily to Killer) over next two years.
Net cash position improved by Rs 1 billion to Rs 3.9 billion.
Foray into women denim wear through acquisition of 50% stake in Kraus Casuals Pvt. Ltd. shall help KEKC to further enhance its total addressable market (after its foray into kids wear in Q4). Expected valuation of the target company is ~60% lower than Kewal Kiran Clothing fair multiple and hence shall be value accretive. Maintain 'Buy'.
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