S tock TALES - ICICI Directcontent.icicidirect.com/mailimages/IDirect_KPR_StockTales_Sep20.pdf · garment manufacturer & is currently among largest garment manufacturers in India

Stock Tales are concise, holistic stock reports across wider spectrum of sectors. Updates will not be periodical but based on significant events or change in price.

Stock_____

TALES

September 14, 2020

ICIC

I S

ecurit

ies –

Retail E

quit

y R

esearch

Stock T

ale

s

September 14, 2020

CMP: | 597 Target: | 735 (23%) Target Period: 12 months

KPR Mill (KPRMIL)

BUY

Well placed to ride apparel export opportunity

KPR Mill is among select vertically integrated textile players in India (from

fibre to fashion) that has displayed consistent revenue growth and positive

operating margin trajectory with strong return ratios. The strength of its

integrated model is visible in its FY12-20 financial performance with

revenue, PAT CAGR of 13%, 35%, respectively, average EBITDA margin of

~18%, average RoCE of 15%+. KPR has transformed itself from a

commoditised yarn player (capacity: 104000 tonnes) to value-added

garment manufacturer & is currently among largest garment manufacturers

in India (capacity: 115 million pieces). It has a healthy balance sheet with D/E

ratio comfortably placed at 0.4x. KPR through its strong promoter pedigree

and long standing relationship with marque clients is expected to tide over

the situation better than small peers.

Garmenting division to benefit from shift of business from China

Global brands in textile, apparel are exploring competitive sourcing

alternatives to China. India, owing to its competence due to abundant

availability of raw material (cotton, manmade yarn/fabric), strong pool of

skilled labour at competitive wages can garner a higher share of global

garmenting business. Global brands have shown higher preference for

vertically integrated garment manufacturers who have control over quality,

delivery timelines. KPR, with a vertically integrated model from yarn to

garmenting seems well set to benefit from shift in demand from China to other

low cost Asian countries. We expect garmenting business to post 10% CAGR

in FY20-23E, share of garments in revenue to move up from 42% to 45%.

Higher value addition to aid improvement in margins

The company has over the last two years invested in more than doubling its

processing capacity to 22000tpa. It has also added 7500 TPA of printing

capacity. This would enable KPR to produce more value added products

and, hence, garner higher realisation for its products thereby improving its

operating margin profile. Furthermore, the company has entirely upgraded

its conventional yarn capacity to value added yarn (Compact, Melange,

Vortex yarn) that fetch higher realisations. KPR is also expected to benefit

from the improved scenario for the sugar business. For Q1FY21, sugar

business revenues doubled to | 113 crore driven by near 2x sugar volumes

and commencement of the ethanol plant (steady profitability) with EBIT

margins improving 310 bps YoY. We build in EBITDA CAGR of 11% in FY20-

23E with margin expansion of 140 bps to 20.0% in FY23E.

Valuation & Outlook

KPR’s strategy of focusing on high asset turnover garmenting segment for

future growth provides scope for improvement in return ratios over the

medium to longer term. We like KPR as a structural long term story to play

the apparel export space. We continue to remain positive on KPR due to its

competitive advantages due to lower power & labour cost, vertically

integrated operations, focus on value-added products and robust balance

sheet. The recent ethanol capacity addition is likely to reduce volatility in the

sugar business. We ascribe BUY rating to the stock with a target price of

| 735 (10.0x FY23E EPS).

Key Financial Summary

Particulars

Price Chart

Research Analyst

Bharat Chhoda

[email protected]

Cheragh Sidhwa

[email protected]

Par ticu lars Am o u n t

Market Capita lisation (| crore) 4,108.6

Tota l Debt (FY 20) (| crore) 787.6

Cash (FY 20) (| crore) 154.2

EV (| crore) 4,742.0

52 Week H / L 715 /316

Equity Capita l (| crore) 34.4

Face V alue (|) 5.0

050001000015000200002500030000350004000045000

0100200300400500600700800900

Sep-1

7

Jan-1

8

May-

18

Sep-1

8

Jan-1

9

May-

19

Sep-1

9

Jan-2

0

May-

20

Sep-2

0

KPR BSE Sensex

Source: ICICI Direct Research, Company.

| cro re FY19 FY20 FY21E FY22E FY23E C AG R (FY20-23E)

Net Sales 3,384.0 3,352.6 3,221.2 3,825.8 4,193.5 7.7%

EBITDA 611.8 621.9 631.3 738.4 838.7 10.5%

A djus ted PA T 334.9 376.7 354.3 438.2 506.6 10.4%

P/E (x) 12.3 10.9 11.6 9.4 8.1

EV /EBITDA (x) 8.0 7.6 7.4 6.1 5.2

RoCE (% ) 19.6 19.6 18.6 21.0 22.6

RoE (% ) 18.7 20.2 16.9 18.4 19.2

ICICI Securities |Retail Research 2

ICICI Direct Research

Stock Tales| KPR MILL

Company Background

KPR Mill has 12 manufacturing units and employs a work force of ~ 22000

people. It has an annual capacity to produce 104000 MT of yarn, 40000 MT

of fabric and 115 million readymade knitted apparel. The company also has

an embedded fabric processing capacity of 22000 MT and a sophisticated

printing division with a capacity to print 7500 MT per annum (one lakh high

fashion garments per day). KPR has also invested in captive power plants

and has 66 wind mills with a total green power capacity of 61.9 MW; co-gen

cum sugar plant with capacity of 30 MW & 5000 TCD and ethanol plant

capacity of 90 KLPD. It has recently forayed into the retail business with the

launch of its own brand ‘FASO’ producing first of its kind organic cotton

men’s innerwear and athleisure products.

The key segments are yarn and fabric (42% of sales), garment (42%), sugar

(10%) and others (6%).The revenue share of yarn and fabric has reduced

from 79% in FY14 to 42% in FY20 and is expected to go further down as the

company plans to add capacity in garmenting and increase the captive

utilisation of yarn and fabric. For yarn, captive utilisation is at 30% while for

fabric captive utilisation is at 60%. The revenue share of garment has

increased from 16% in FY14 to 42% in FY20.

Exhibit 1: Segmental revenue share trend

Source: ICICI Direct Research

Exhibit 2: Geographic revenue share

Source: ICICI Direct Research

14 18 16 15 8 5 4

48 40 41 4344 43 38

16 20 26 29 33 40 42

10 11 8 7 9 7 109 8 9 7 6 5 5

0

20

40

60

80

100

120

FY14 FY15 FY16 FY17 FY18 FY19 FY20

%

Fabric Yarn Garment Sugar Others

72 67 64 61 60 57 58

28 33 36 39 40 43 42

0

20

40

60

80

100

120

FY14 FY15 FY16 FY17 FY18 FY19 FY20

%

Domestic Exports




Exhibit 3: Presence across textile value chain

Source: Company, ICICI Direct Research

Investment Rationale

India well placed to play global apparel export opportunity

The US and EU have been major importers of apparel and constitute ~60%

of global apparel imports. China has been the dominant exporter in global

apparel trade. However, China has been challenged by rising production

costs, which has resulted in its apparel export share declining from 42% in

CY10 to ~ 33% in CY18. China has been losing market share both in the US

and EU markets with its share in the US market declining from ~39% in CY10

to 31% in CY2018. In EU, its market its share has declined from 45% in CY10

to ~ 33% in CY18. With global brands looking at diversifying their sourcing

partnerships and reducing dependence on China, India can emerge as a

potential beneficiary owing to its strong presence across the textile value

chain. India’s apparel exports are currently at ~US$16 billion (~4% share in

global exports), of which ~60% is to US and EU markets. Even a marginal

shift of global apparel trade share in favour of India can provide immense

opportunity to Indian apparel exporters and provide sustained growth

opportunity to the sector.

Exhibit 4: China dominates textile exports. figures in US$ billion

Source: Wazir Advisors, ICICI Direct Research

C o u n try T e xtile Exp o r ts Sh are 2018 (%) Ap p are l Exp o r ts Sh are 2018 (%) T o tal Exp o r ts

China 128.8 36.5 158.1 33.6 286.9

India 21.4 6.1 15.6 3.3 37.0

V ietnam 7.8 2.2 28.7 6.1 36.5

Bangladesh 1.9 0.5 32.9 7.0 34.8

USA 21.9 6.2 5.3 1.1 27.2

G ermany 15.7 4.5 24 5.1 39.7

Spain 5.0 1.4 14.4 3.1 19.4

RO W 150.2 42.6 191.6 40.7 341.8

Tota l 352.7 470.6 823.3




Exhibit 5: Trends of Indian textile exports


Lower factor cost strengthens India’s global competitive

positioning

Over the last few years, Indian apparel capacities have been modernised and

major Indian players in the apparel trade have invested in capacity building.

Owing to abundant availability of labour and other factors of production at

competitive rates, India, in recent years, has emerged as a cost competitive

base for manufacturing. Although lending rates in India may be on the higher

side compared to China (~7%), Vietnam (~8%) and Ethiopia (~9%), they

are better than its major competitor in the region with lending rates in

Bangladesh close to ~14%. On the water cost front, India is among the

lowest in the world and significantly cheaper than China. Compared to other

destinations that are being scouted by global apparel players as sourcing

alternative to China, India is favourably positioned in terms of ease of doing

business ranking, better compliance and political stability. However, major

advantage for Bangladesh and Ethiopia over India is their duty free access

to the EU. The labour cost in India is highly competitive in the region and

significantly lower than China.

India is a viable and competitive alternative to China. The Indian textile

industry possesses inherent and unique strength such as abundance of raw

material, presence of entire value chain, competitive manufacturing costs

and availability of skilled manpower. Also, India possesses a large and

growing domestic market, higher proportion of young population, rising per

capita income, higher disposable income and increased preference for

brands and enhanced organised retail landscape, which provide sustainable

growth prospects for large apparel players.

Exhibit 6: Factor cost comparison between India and other competing countries


3 4 5 5 5102 4 4 4 4

79

1216 16 15

32

0

10

20

30

40

50

60

FY06 FY11 FY18 FY19 FY20 FY26

US

D B

n

Fabric Yarn Apparels

Param e te r Un it C h in a In d ia Ban g lad e s h V ie tn am Eth io p ia

Labour Cos t US$/month 550-600 160-180 110-120 190-200 80-90

Pow er Cos t US$/K WH 0.15-0.16 0.10-0.12 0.09-0.12 0.08-0.10 0.03-0.04

Water Cos t Usc/m3 55-60 16-20 20-22 50-80 30-40

Ease of doing bus iness ranking Rank 31.0 63.0 168.0 70.0 159.0




Scaling garmenting capacity to cater to global demand

Over the last six years, KPR has strategically focused on increasing

capacities in the garmenting businesses. In FY14-20, KPR’s garment capacity

has increased at a CAGR of ~20% and is currently at 115 million pieces.

Share of garment revenue has increased from 16% in FY14 to 42% in FY20.

The expansion of the garmenting capacity is in line with its stated strategy

of investing in high asset turnover businesses. The asset turnover of the

garmenting business is typically 2x the fabrics business yielding higher

return on assets employed. Also, the garmenting business tends to have

higher visibility and connect with the consumer aiding in brand building in

the longer term. The company strategically has a vertically integrated

alignment. On the back of this, higher emphasis on garmenting would create

multiple levers for improvement.

Exhibit 7: Strong capacity addition in garmenting


Ethiopian garment capacity to provide better margins

After setting a strong garment capacity footprint in India, KPR has

geographically diversified by setting a garment capacity of 10 mn pieces in

Ethiopia at an investment of ~ | 30 crore. The Ethiopian plant is expected to

be more profitable than existing Indian garment plants of KPR owing to a)

labour cost being ~50% lower than India and b) power cost ~70% cheaper

than India and c) capex requirement being ~50% less than India as land &

building will be on 25+ years lease from the government. Also, it would

enhance the competitiveness of KPR with global peers (Bangladesh and

Vietnam) as there is no import duty in the US and EU from Ethiopia (vs. 10%,

15% duty in EU, US, respectively, from India). The Ethiopian foray provides

KPR a cost efficient alternative. If this initial capacity is successful, KPR can

ramp up the capacity quickly as construction work is already done by the

Ethiopian government and KPR would just have to set up the machinery and

train the labour for any additional capacity expansion. As on Q1FY21,

capacity utilisation was at ~50%. The management expects a ramp-up in

H2FY21.

63.0 63.0 63.0 59.0

95.0 95.0 95.0

115.0 115.0 115.0125.0

135.0

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

Pie

ce

s in

million

Annual Capacity Utilisation rate




Vertical integration provides cost advantage, enhances its

positioning as preferred supplier to global brands

KPR is among the few fully integrated textile players with a presence across

the textile value chain from yarn to garmenting. The vertically integrated

model enables KPR to 1) maintain consistency in quality by constant

monitoring and control over the product quality at every stage, 2) also due

to an integrated model and large scale of operations, it is able to mitigate

the volatility in raw material price and, hence, generate better operating

margins than peers. The strength of KPR’s business model can be gauged

by the fact that its 10-year average EBITDA margin is ~18%, which is

commendable considering the volatile nature of the textile business. 3)

Control over the value chain enables KPR to cut down the lead time (15-20

days) and provide timely delivery to both domestic and international clients

thereby positioning itself as a preferred vendor for clients.

Exhibit 8: Presence across textile value chain


Proximity to Tirupur textile cluster enables lower logistics cost

and ready market

Tirupur in Tamil Nadu is known as the knitwear capital of India. Availability

of labour at low cost and locational advantage with significant government

investment in the region to support the textile industry has led to many

textile units being set up in the region across the textile value chain. The

region also has units that cater to processing, sewing, embroidery, etc. All

KPR’s facilities are strategically located around a 50 km radius from Tirupur.

This helps KPR to reduce logistics cost as it is in close proximity to the

customer base as most reputed global brands source their requirements

from the Tirupur region.

Sourcing Raw

materials

(Key RM: Cotton)

Spinning

(Yarn: 100000 MT,

Viscose: 4000 MT)

Knitting grey fabric

(40000 MT)

Processed Fabric

(22000 MT, Fabric

Printing: 7500 MT)

Knitted Garments:

100% exports

(India: 105 million

pieces, Ethiopia: 10

million pieces)

Retail

(Forayed into mens

innerwear segment)




Captive power capacity enhances self-sufficiency, provides

continuity to operations

Power cost is among the major costs for KPR and Tamil Nadu (where

majority of KPR plants are located) earlier had been a power deficit state

leading to higher cost and impact on operation owing to power cuts. The

power cost as a percentage to sales had increased from~3% in FY14 to 5%

in FY16. In order to reduce dependence on the state power grid and be more

self-sufficient, it has installed wind mills at four locations in Tamil Nadu. The

total wind power capacity is 61.92 MW (with 66 wind mills). It has

additionally invested in a co-gen cum sugar plant with a capacity of 30 MW

and 5,000 TCD in Bijapur, Karnataka. The company operates this business

under its wholly owned subsidiary KPR Sugar Mill Ltd. This enables the

company to hedge itself from any power shortage that may be faced in Tamil

Nadu. The company has been able to bring down the power cost (as

percentage of sales) from ~ 5% in FY16 to 3.8% in FY20 thereby lowering

the operating cost and supporting EBITDA margins.

Exhibit 9: Power cost trend (% to sales)


Foray into branded innerwear

After reaching sizeable scale in yarn and fabrics and building garmenting

capacity of 115 million pieces, KPR has ventured into the branded innerwear

business with the launch of own brand ‘ FASO’. The company is planning to

expand its presence via asset light MBO model and online channel. The

product would initially cater to menswear, would be launched in southern

India and then gradually expanded to other regions depending on customer

acceptance. The company is targeting products in the mid-premium

category (lower price points than Jockey). As per industry reports, the men’s

innerwear market is currently pegged at | 11000 crore and is expected to

grow at CAGR of 7% to | 21800 crore by 2028. We have not factored in the

revenues from the innerwear segment in our estimates as it is currently at a

nascent stage and would include the same once there is more data or

commentary from the management related to the progress of the business

venture. The segment, though crowded with a host of domestic and

international brands, provides an opportunity for growth considering that

athleisure and comfort wear, as a segment, has shown strong growth

potential. The company has set an internal target to reach sales worth | 100

crore over the next three to four years.

3.0

4.2

5.0

3.5 3.6 3

.9

3.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20




Financials

Garment capacity addition to fuel revenue growth

KPR Mill is one of India’s largest knitted garment manufacturers, boasting

capacity of 115 million pieces per annum. The nationwide lockdown had a

material impact on performance in Q1FY21 with garmenting volumes

declining 46% to 15.5 million pieces. However, given the swift recovery in

knitted products (leisure wear, innerwear) and inherent strength of the

business model, the company has revived to its monthly run-rate of 10.0

million pieces. KPR has a healthy order book of | 500 crore till October-

November 2020 with new order inflows expected from September 2020

onwards. Subsequently, the company expects to exit FY21E with marginal

growth in the garmenting segment.

Going forward, the company is aiming to enhance its capacity by 30-40

million pieces over the next two to three years. Furthermore, it has already

augmented its fabric capacity from 27000 tonnes to 40000 tonnes for captive

consumption. With the increase in garmenting capabilities, KPR is

positioning itself as the most preferred sourcing partner in India. We expect

overall revenues to increase at 8% CAGR in FY20-23E with majority of the

growth driven by garmenting segment (10% CAGR with share of garmenting

to increase by 300 bps to 45% by FY23E). We bake in steady revenue CAGR

of 4% in the yarn & fabric segment on the back of a gradual increase in

captive consumption for garmenting segment. We expect revenues from the

sugar segment to be buoyed by ethanol sales. For Q1FY21, KPR’s revenues

from ethanol were at | 40 crore. For FY21, we factor in revenues to the tune

of | 150 crore.

Exhibit 10: Revenue trend


1268.5 1664.7

2371.0

2565.8

2591.1

2816.6

3024.4

3384.0

3352.6

3221.2 3825.8

4193.5

0.0

500.0

1000.0

1500.0

2000.0

2500.0

3000.0

3500.0

4000.0

4500.0

FY

12

FY

13

FY

14

FY

15

FY

16

FY

17

FY

18

FY

19

FY

20

FY

21E

FY

22E

FY

23E

| cro

re




EBITDA expected to grow at CAGR of 11% in FY20-23E

KPR strategically has a vertically integrated alignment from yarn to apparels.

This has translated into lower RM volatility and steady EBITDA margins over

the years. On an average, the company, over the last 10 years, has

consistently reported healthy EBITDA margins of ~18%. Higher proportion

of garmenting enhances overall margin profile as the segment yields

margins in the range of 20-22% while yarn division derives ~14-15%

EBITDA margins. In recent times, the company has entirely upgraded its

conventional yarn capacity to value added yarn (Compact, Melange and

Vortex yarn), which fetch higher realisations. Also, KPR has established a

new advanced technology knitting factory housing the contemporary

imported knitting machines. This would help produce value added products.

Further, the new ethanol business would provide stability to the margin

profile in the sugar segment. We build in EBITDA CAGR of 11% in FY20-23E

with margin expansion of 140 bps to 20.0% in FY23E. Subsequently, PAT is

estimated to grow at a CAGR of 11% over the estimated period.

Exhibit 11: EBITDA margin trend


Exhibit 12: PAT trend


422.2 437.3 469.6563.3 575.2 611.8 621.9 631.3

738.4838.7

17.8 17.018.1

20.0

19.0 18.1 18.6

19.619.3

20.0

1616171718181919202021

0

100

200

300

400

500

600

700

800

900

FY14 FY15 FY16 FY17 FY18 FY19 FY20A FY21E FY22E FY23E

%

| cro

re

EBITDA EBITDA Margin

141.7 173.6210.1

286.8 290.4334.9

376.7354.3

438.2506.6

0

100

200

300

400

500

600

FY14 FY15 FY16 FY17 FY18 FY19 FY20A FY21E FY22E FY23E

| cro

re




Healthy balance sheet; expect to report RoCE of 20%+

KPR has a capital efficient business model, generating healthy gross block

asset T/O ratio of 2x, robust EBITDA margins (18%) and controlled working

capital cycle (average NWC days: 90 days). This has translated into KPR

generating health RoCE of 18%+. In FY20, the company undertook a major

capex plan worth | 296 crore pertaining towards: a) increase in fabric

capacity from 27000 tonnes to 40000 tonnes, b) added viscose yarn capacity

of 4000 tonnes and c) established ethanol plant with capacity of 90 KLPD at

the sugar factory. The new capacities in the yarn and fabric division are

mainly towards the requirements of new garmenting facilities (to add 30-40

million pieces). With no major capex in the near term (incremental

garmenting capacity requires lower capex) and improvement in FCF, we

expect a further reduction in total debt (from 0.4x in FY20 to 0.2x by FY22E).

We expect KPR to generate cumulative FCF worth | 950 crore in FY21-23E.

We anticipate RoCE will improve 300 bps to 23% in FY23E.

Exhibit 13: Working capital trend


Exhibit 14: Return ratio trend


Exhibit 15: Debt/equity ratio trend


69.1

77.3

108.6

77.9

110.0

105.0

100.0

44.2

50.6

57.0

48.3

55.0

45.0

45.0

31.3

30.8

24.0

14.4 23.0

20.0

20.0

82.0 9

7.2

141.5

111.8 142.0

130.0

125.0

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

FY17 FY18 FY19 FY20 FY21E FY22E FY23E

Inventory Days Debtor Days Creditor Days Cash cycle

17.4 18.2 19.1

22.3

18.5 18.7 20.2

16.9 18.4 19.2

16.7 17.2 17.2

21.4 20.3 19.6 19.6

18.6 21.0

22.6

-

5.0

10.0

15.0

20.0

25.0

FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21E FY22E FY23E

%

RoE RoCE

1.4

1.2

0.90.8

0.6

0.40.5 0.4

0.30.2 0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21EFY22EFY23E

(x)




Key risk and concerns

Ethiopian operations can face labour and logistic challenges:

Garmenting is a labour intensive business and availability of skilled

labour is a critical factor for the industry. The company has recently

expanded its operation outside India by setting up a garment factory in

Ethiopia. Though the labour cost is cheaper than India, the company

could face challenges in training the work force in the initial stages of

ramping up the capacity. Also, the company’s plant is situated ~ 800 km

from the nearest port, which could pose challenges in managing the

logistic operations

Fluctuation in foreign exchange: KPR’s export revenues constitute ~

40% of total annual revenues. Hence, any significant volatility and

strengthening of the Indian currency can negatively impact KPR Mills’

competitiveness compared to its international peers

Volatility in raw material (cotton) prices: Cotton is the most critical raw

material for KPR Mills. Any significant change in cotton prices can impact

the operating margins of the company. To mitigate this, KPR usually

books the cotton price at the time of signing the contracts with the

clients, thereby mitigating its exposure to raw material price volatility




Financial Summary

Exhibit 16: Profit & loss statement


Exhibit 17: Cash flow statement


Exhibit 18: Balance Sheet


Exhibit 19: Key ratios


(Ye ar -e n d March ) FY20 FY21E FY22E FY23E

Ne t Sale s 3,352.6 3,221.2 3,825.8 4,193.5

G row th (% ) 10.9 (3.9) 18.8 9.6

Tota l Raw Materia l Cos t 1,987.2 1,836.1 2,219.0 2,432.2

G ross Margins (% ) 40.7 43.0 42.0 42.0

Employee Expenses 394.4 402.6 451.4 465.5

O ther Expenses 349.1 351.1 417.0 457.1

Tota l O perating Expenditure 2,730.7 2,589.8 3,087.4 3,354.8

EBIT DA 621.9 631.3 738.4 838.7

EBITDA Margin 18.6 19.6 19.3 20.0

Interes t 49.7 44.8 36.9 32.0

Depreciation 137.1 145.8 152.7 164.6

O ther Income 36.5 32.8 36.8 34.9

Exceptional Expense - - - -

PBT 471.7 473.5 585.5 677.0

Tota l Tax 95.0 119.2 147.4 170.4

Pro fit Afte r T ax 376.7 354.3 438.2 506.6


Prof it/(Loss ) af ter taxation 376.7 354.3 438.2 506.6

A dd: Depreciation 137.1 145.8 152.7 164.6

Net Increase in Current A ssets 341.7 -306.4 -126.1 -114.6

Net Increase in Current L iabilities -88.1 73.9 9.7 23.3

C F fro m o p e ratin g activitie s 767.3 267.7 474.5 579.9

(Inc)/dec in Inves tments -7.0 -0.1 -0.8 -0.8

(Inc)/dec in Fixed A ssets -315.7 -103.0 -132.3 -139.8

O thers 9.8 -2.9 -3.0 -3.2

C F fro m in ve s tin g activitie s -312.9 -105.9 -136.1 -143.8

Inc / (Dec) in Equity Capita l -1.9 0.0 0.0 0.0

Inc / (Dec) in Loan -68.7 -98.2 -104.2 -84.9

O thers -304.4 -123.7 -153.0 -252.9

C F fro m fin an cin g activitie s -375.0 -221.9 -257.2 -337.8

Net Cash f low 79.4 -60.1 81.2 98.3

O pening Cash 74.8 154.2 94.1 175.3

C lo s in g C as h 154.2 94.1 175.3 273.6


Equity Capita l 34.4 34.4 34.4 34.4

Reserve and Surplus 1,831.5 2,061.8 2,346.6 2,599.9

Tota l Shareholders funds 1,865.9 2,096.2 2,381.0 2,634.3

Tota l Debt 787.6 689.4 585.2 500.3

Non Current L iabilities 54.2 54.6 54.9 55.3

So u rce o f Fu n d s 2,707.7 2,840.2 3,021.1 3,189.9

G ross block 2,014.3 2,113.7 2,246.1 2,385.9

L ess : A ccum depreciation 694.8 840.6 993.3 1,158.0

Net Fixed A ssets 1,319.6 1,273.1 1,252.7 1,227.9

Capita l WIP 6.4 10.0 10.0 10.0

Intangible assets 1.8 1.8 1.8 1.8

Inves tments 9.1 9.2 10.0 10.8

Inventory 715.7 970.8 1,100.6 1,148.9

Cash 154.2 94.1 175.3 273.6

Debtors 443.5 485.4 471.7 517.0

Loans & A dvances & O ther CA 189.7 199.2 209.2 230.1

Tota l Current A ssets 1,503.2 1,749.4 1,956.7 2,169.6

Creditors 132.0 203.0 209.6 229.8

Prov is ions & O ther CL 57.5 60.4 63.4 66.6

Tota l Current L iabilities 189.4 263.3 273.0 296.3

Net Current A ssets 1,313.7 1,486.1 1,683.7 1,873.2

LT L& A , O ther A ssets 57.2 60.0 63.0 66.2

O ther A ssets 0.0 0.0 0.0 0.0

Ap p licatio n o f Fu n d s 2,707.7 2,840.2 3,021.1 3,189.9


Pe r s h are d ata (|)

EPS 54.7 51.5 63.7 73.6

Cash EPS 74.7 72.7 85.9 97.5

BV 271.1 304.6 346.0 382.8

DPS 5.5 18.0 22.3 36.8

Cash Per Share 22.4 13.7 25.5 39.8

O p e ratin g Ratio s (%)

EBITDA margins 18.6 19.6 19.3 20.0

PBT margins 14.1 14.7 15.3 16.1

Net Prof it margins 11.2 11.0 11.5 12.1

Inventory days 77.9 110.0 105.0 100.0

Debtor days 48.3 55.0 45.0 45.0

Creditor days 14.4 23.0 20.0 20.0

Re tu rn Ratio s (%)

RoE 20.2 16.9 18.4 19.2

RoCE 19.6 18.6 21.0 22.6

RoIC 21.0 19.4 22.4 24.9

V alu atio n Ratio s (x)

P/E 10.9 11.6 9.4 8.1

EV / EBITDA 7.6 7.4 6.1 5.2

EV / Sa les 1.4 1.5 1.2 1.0

Market Cap / Revenues 1.2 1.3 1.1 1.0

Price to Book V alue 2.2 2.0 1.7 1.6

So lve n cy Ratio s

Debt / Equity 0.4 0.3 0.2 0.2

Debt/EBITDA 1.3 1.1 0.8 0.6

Current Ratio 7.1 6.3 6.5 6.4

Q uick Ratio 3.3 2.6 2.5 2.5




RATING RATIONALE

ICICI Direct endeavors to provide objective opinions and recommendations. ICICI Direct assigns ratings to its

stocks according to their notional target price vs. current market price and then categorizes them as Buy, Hold,

Reduce and Sell. The performance horizon is two years unless specified and the notional target price is defined as

the analysts' valuation for a stock

Buy: >15%

Hold: -5% to 15%;

Reduce: -15% to -5%;

Sell: <-15%

Pankaj Pandey Head – Research [email protected]

ICICI Direct Research Desk,

ICICI Securities Limited,

1st Floor, Akruti Trade Centre,

Road No 7, MIDC,

Andheri (East)

Mumbai – 400 093

[email protected]




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S tock TALES - ICICI Directcontent.icicidirect.com/mailimages/IDirect_KPR_StockTales_Sep20.pdf · garment manufacturer & is currently among largest garment manufacturers in India