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Anand Rathi Report
In line with our estimates, Kewal Kiran Clothing Ltd.'s Q4 revenue grew 10% YoY, but the 19.3% Ebitda margin slightly lagged ARe. Better working capital led to higher, Rs 1.4 billion/1.3 billion, operating cash flow/free cash flow generation (FY23 Rs 0.8 billion/0.5 billion). The company strengthened its presence in women's wear by acquiring a 50% stake in Kraus Casuals for Rs 1.7 billion. Management revised its FY25 revenue growth guidance to 15-18% (15-20% earlier), excluding the recent acquisition, due to tough market conditions, with 18-20% Ebitda margins.
Growth ahead would be driven by same-store sales growth, the channel mix, network expansion and category extensions to kids' and women's wear. We lower our FY25e/26e revenue/ Ebitda ~3%/4% on average each year on the revised guidance.
We haven't factored in Kraus Casuals' acquisition. We upgrade our rating to a Buy, with a lower 12-month Rs 811 target price (earlier Rs 831), 18 times FY26e enterprise value/Ebitda.
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