Sharekhan recommends buying KPR Mill with a target price of Rs 755.
In its December 17, 2021 research report, Sharekhan advised a buy rating on KPR Mill with a target price of Rs 755.
It is the finest opportunity in the textile industry because of its integrated business strategy, consistent export demand, and solid return profile. Tamil Nadu has commissioned a new garment manufacturing capacity of 42 million garments; garment business income is estimated to grow at a CAGR of 22% between FY2021 and FY2024, with a total capacity of 157 million garments. Capital deployment in high RoCE businesses (garment – 30%; ethanol – 22-23%) will help boost RoCE to 31.9 percent in FY2024, up from 25.2 percent in FY2021.
Export demand remains strong in the United States and Europe, and the company’s medium-term growth drivers include a free trade agreement with the European Union, retailers/large international players looking for sustainable supply options in Asia, and the United States’ likelihood of imposing sanctions on countries like Bangladesh.
With a revised PT of Rs. 755, we retain our Buy rating on KPR Mill Limited (KPR).
moneycontrol.com is the source for this information.
On a strong growth forecast, KPR Mill rebounds 6% and reaches a new high.
On Thursday’s intra-day trade on the BSE, shares of KPR Mill rose 6% to Rs 562.40, a new high, on expectations of robust profits growth. The shares of the textiles and sugar firm was trading higher for the fourth day in a row, having gained 11% over that time frame. It has previously reached a high of Rs 548.40 on November 9, 2021.
After the firm reported successful completion of its new 42 million garments manufacturing capacity at Chengapally, Tirupur district, Tamil Nadu on November 21, 2021, the market price of KPR Mill has risen 16 percent in the last 11 trading days. According to KPR Mill, the entire garment production capacity has expanded to 157 million garments per year.
“Strategic planning have always driven KPR’s growth, and we anticipate that this expansion will position us to meet expanding market possibilities while bolstering KPR’s bright future,” the business stated.
KPR Mill increased its consolidated net profit by 137 percent year on year (YoY) to Rs 410 crore in the first half of the financial year 2021-22 (H1FY22) on the strength of strong operational performance. Revenue increased by 44.5 percent year on year to Rs 2,166 crore. The ebitda margin (earnings before interest, taxes, depreciation, and amortisation) increased by 730 basis points to 29 percent from 21.7 percent in H1FY21.
KPR Mill is one of the major captive power generators in the textile sector, with wind power accounting for 60% of total textile power consumption. The corporation has invested in a 40-megawatt cogeneration power plant. KPR has achieved self-sufficiency in fulfilling its significant power need throughout the year thanks to co-gen electricity, according to the firm.
In addition, management stated that the domestic yarn category was in high demand. “While cotton costs had risen rapidly, yarn prices had risen in lockstep. We anticipate it will be able to pass on the increase in input costs while maintaining its margins as long as demand for cotton goods remains strong. “In the yarn business, the firm intends to maintain margins in the range of 22-23 percent,” the company’s management stated.
“As a result of the company’s low-cost cotton inventory, Q2FY22 margins (30%) were much higher. The firm also stated that it had enough cotton to last another month. KPR plans to begin buying fresh cotton shortly and is assessing the market situation before stocking up on cotton for the upcoming cotton season. ICICI Securities said in a result update that “normally the firm has a cotton stock of roughly four to six months and buys cotton at the start of the season since the quality of the early arrival cotton is pretty good.”
KPR has two large capital projects of Rs 750 crore in the works: a garmenting facility (Rs 250 crore) and an ethanol factory (Rs 750 crore) (Rs 500 crore). KPR’s capital allocation to value-adding initiatives (targeted RoCE: garmenting: 30%, ethanol: 22%) bodes well for the company. The brokerage company maintained a ‘buy’ recommendation on the stock with a target price of Rs 575, citing the significant potential in the US market as providing great visibility for continued growth in exports (currently, Europe is the largest market for garment exports).
business-standard.com is the source for this information.
KPR Mill – Stock Split Completed; ICICI Direct Remains Positive
KPR Mill Ltd. is one of India’s few vertically integrated textile manufacturers (from yarn to garments) with a stable revenue growth and positive operating profit trend, as well as high return ratios.
The company’s shares were divided on September 24, 2021 (ex-date) as a result of board and shareholder approvals issued on July 27, 2021 and September 9, 2021, respectively, for sub-division of shares.
The deadline for submissions has been set for September 27, 2021.
Following that, KPR Mill’s shares were split, with the current face value of Rs 5 being subdivided into five equity shares with a face value of Rs 1 each.
bloombergquint.com is the source for this information.
Return 6 times in 16 months! The stock of KPR Mill is expected to continue to rise.
Thanks to its consistent performance over the last several years, value-accretive expansion at its garment and sugar divisions, and the prevailing sectoral tailwind in the form of the ‘China Plus One’ strategy, shares of textile maker KPR Mill look set to gain 20-22 percent after delivering a whopping six times return in the last 16 months.
Yarn, fabric, clothes, and sugar are the four main categories in which the Coimbatore-based company operates.
In FY21, combined revenues from the yarn and fabric categories were for 43% of total sales, down from 72% in FY13. During the same time span, the garment segment’s top-line share increased from 16 percent in FY13 to 39 percent in FY21.
When opposed to the fabric and yarn sectors, the garment segment is a value-added section with a greater margin. As a result, the corporation employs around 83 percent of its fabric output and about 25% of its yarn production for captive consumption.
This vertically integrated alignment, according to analysts, has resulted in decreased raw material volatility and consistent Ebitda margins over time.
According to ICICIdirect, a higher proportion of garments improves the overall margin profile, with margins in the 22-23 percent range. The company has consistently maintained an 18 percent margin profile, a 20% average return on capital employed, and a debt to equity ratio of 0.3 times over the past several years.
KPR Mill is investing Rs 750 crore in two big capital projects. A textile facility worth Rs 250 crore and an ethanol facility worth Rs 500 crore are among them. It now has a yarn capacity of 1,00,000 million tonnes, a garment capacity of 115 million pieces, and an ethanol production capacity of 130 kilolitres per day.
“Over the years FY11-21, KPR has had strong growth as a result of its steady capacity development and diversification into value-added industries. “We believe KPR’s stable financials and volume rampup in the garment industry and sugar market would enable the company maintain robust growth with strong profitability and return ratios,” said Antique Stock Broking, which has commenced covering with a target price of Rs 2,379.
The stock is valued at Rs 2,310 by ICICIdirect and Rs 2,360 by Sharekhan.
The goals show a possible upside of up to 22% from Tuesday’s BSE closing of Rs 1,979. This is despite the fact that the stock has more than doubled from its March 2020 low.
“With a new sugar facility of 10,000 tonnes crushed per day (TCD) and an ethanol capacity of 230 KLPD (to be operational in the next 10-12 months), the sugar division is expected to contribute around Rs 1,000-1,200 crore in the next 2-3 years,” Sharekhan said. He also expects the garment division’s margins to improve significantly in the coming years due to better realisation and higher volumes.
The sugar segment currently accounts for 14% of total revenues.
On the strength of a moderate growth in captive demand in the garment market, ICICIdirect anticipates revenues from the yarn and fabric divisions to stay stable going forward. The garmenting and sugar segments are expected to generate the majority of growth between FY21 and FY23, according to the brokerage (35 per cent annually).
“Capital deployment into value-adding initiatives, with a projected return on capital employed of 30% from garmenting and 22% from ethanol augur well for KPR,” the company added.
According to the brokerage, solid potential in the US market provide great visibility for continued export development. Currently, Europe is the most important market for clothing exports.
The company’s apparel order book has increased to Rs 700 crore from Rs 575 crore in the March quarter.
KPR Mill recorded a 178.7% YoY increase in net profit at Rs 168.7 crore in the previous quarter, with revenues up 71.2 percent to Rs 940.61 crore. Ebitda margin increased 90 basis points from the previous quarter to 24.9 percent. KPR maintained margins in excess of 20% for the seventh consecutive quarter, according to analysts.
economictimes.com is the source for this information.
The board of directors of K P R Mill has approved a stock split of equity shares; the stock is down 1%.
The Board of Directors of K P R Mill Ltd authorised the sub-division of one equity share of Rs.5/- each fully paid up into five equity shares of Rs.1/- each fully paid up at its meeting on July 27, 2020.
K P R Mill’s consolidated net sales in June 2021 were Rs903 crore, up 67 percent year on year.
K P R Mill was selling at Rs1,984.50 a piece at 10:14 a.m., down Rs17.75 or 0.89 percent.
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