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ICICI Securities Report
We met the management of Kewal Kiran Clothing Ltd. Takeaways:
Kewal is well positioned to capitalise on its strength of backward integration (20% better quality at similar price versus competition),
intense competition amongst top players has led to the exit of some brands (Lee, Wrangler) from multi brand outlet channels,
long brand history, high reputation amongst distribution/channel partners, and better quality at similar price point enable Kewal to enjoy relative immunity against competition from other top branded players especially in jeans segment,
healthy working capital management; faster payment to vendors versus peers,
competing on e-commerce channel with stock keeping units differentiation (versus offline channel) and outright model.
We maintain our earnings per share estimates for FY24E-FY25E. We model revenue, Ebitda and profit after tax compound annual growth rates of 16%, 19% and 19%, respectively, over FY23-FY25E.
Maintain 'Buy'. with a revised discounted cash flow-based target price of Rs 830 (earlier: Rs 780).
Key downside risks:
Slower than expected pick up in discretionary consumption, and
rise in competition from private label retailers.
Key upside risks:
Success in new categories, jackets, women and kids wear.
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