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has buy call on Kewal Kiran Clothing with a target price of Rs 270. The current market price of Clothing is Rs 192.35. Time period given by analyst is one year when Kewal . price can reach defined target.

Kewal Kiran Clothing Ltd., incorporated in the year 1992, is a Small Cap company (having a market cap of Rs 1163.48 Crore) operating in Retail sector.

Kewal Kiran Clothing Ltd. key Products/Revenue Segments include Apparels, Homemart & Accessories, Service Income, Other Operating Revenue, Export Incentives and Power for the year ending 31-Mar-2021.

Financials

For the quarter ended 31-03-2022, the company reported a Consolidated Total Income of Rs 173.12 Crore, down -1.22 % from last quarter Total Income of Rs 175.26 Crore and up 52.72 % from last year same quarter Total Income of Rs 113.36 Crore. Company reported net profit after tax of Rs 24.83 Crore in latest quarter.

Investment Rationale
Kewal Kiran Clothing’s (KEKC) Q4FY22 revenues increased 53% YoY to Rs1.7bn (I-Sec: Rs1.48bn), implying a 2-year revenue CAGR of 16%. Gross margin expanded 250bps YoY to 42.8% led by improved realisation (up 9.3% YoY), while EBITDA margin increased 978bps YoY to 19% aided by better operating leverage. EBITDA and PAT more than tripled YoY to Rs322mn and Rs248mn, respectively – both ahead of our estimates. Net cash increased by Rs89mn YoY to Rs2.6bn with the company declaring an interim dividend of Rs5/sh in 4QFY22 (Rs11/sh in FY22). THe brokerage broadly maintains FY23-24E estimates with an unchanged target price of Rs270/sh based on 15x FY24E P/E. It upgrades to BUY from Add on a recent 20% stock price correction over past one month, attractive valuations of 10x FY24E P/E, and improving growth prospects led by necessary investments. Key risks: Lower discretionary spends, execution challenges and lockdown restrictions.

Promoter/FII Holdings
Promoters held 74.25 per cent stake in the company as of 31-Mar-2022, while FIIs owned 1.66 per cent, DIIs 6.01 per cent.

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