All brands of Kewal Kiran on growth track: Crisil Report

A Crisil Research report on Kewal Kiran Clothing shows the

company has sold 8.8 lakh garments in Q3 of FY13 compared to 7.7 lakh in the same quarter last year and 11.1 lakh in Q2 of FY13. Kewal Kiran’s revenues in the third quarter of FY13 were lower while earnings were in line with Crisil Research’s expectations. Revenues increased by 20 per cent year-on-year to Rs 775 million owing to 14 per cent growth in apparel volumes and 6 per cent growth in realisations.

Kewal Kiran has recorded growth across brands. Its premium brand Killer reported 26 per cent revenue growth (to Rs 398 m) and Easies (which contributes 2 per cent) recorded 36 per cent growth. Lawman, the fashion brand, posted 20 per cent year-on-year growth (to Rs 156 million) while Integriti, the mass brand, clocked 8 per cent year-on-year growth to Rs 157 million. With a rise in share of Killer, realisations grew six per cent year-on-year. Backed by well-established brands, entrenched distribution network in the non-metros and a healthy balance sheet, Kewal Kiran is expected to tide over the short-term slowdown in consumer spending. CRISIL has maintained the fundamental grade of 4/5.

The reports states, “We have marginally reduced the revenue estimate for FY13 on account of lower-than expected revenue growth in Q3FY13. However, if demand picks up in the short to medium term, the company is likely to benefit from operating leverage. We continue to use the discounted cash flow (DCF) method to value Kewal Kiran and have rolled forward our valuation to FY15. The fair value is revised to Rs 628 per share. At the current market price of Rs 716, the valuation grade is 2/5.”