Crisel upgrades Kewal Kiran's value to Rs 690

Crisel Research has come out with its report on Kewal

Kiran Clothing. The research firm has raised its earnings estimates to factor in the removal of excise duty on branded garments and increased fair value estimate from Rs 628 to Rs 690.

Kewal Kiran Clothing's (Kewal Kiran's) Q4 FY'13 revenues were in line while earnings beat Crisel Research's expectations. Revenues increased by 15 percent year-on-year to Rs 771 million driven by 13.7 percent year-on-year growth in the apparel segment's sales realisations. PAT grew by 33 percent year-on-year to Rs 165 million because of higher-than-expected EBITDA margin expansion.

“We believe that well established brands, entrenched distribution network in the non-metro cities and a healthy balance sheet should enable Kewal Kiran to tide over the short-term slowdown. We maintain the fundamental grade of 4/5,” Crisel said.

In an environment of economic slowdown, the company's flagship brand Killer posted strong performance. Sales grew 44 percent year-on-year to Rs 455 million and accounted for 59 percent of overall sales. However, weak performance of other brands dragged the overall growth of the company. Sales of Lawman declined by 22 percent year-on-year and that of Integriti grew by 11 percent year-on-year. Growth was impacted by the sluggish demand environment and the non-availability of products as the company worked on improving its supply chain logistics in Q3 FY'13.

The company has been expanding its network by opening new stores and closing the nonperforming ones. In Q4 FY'13, the company opened 19 stores in Tier II cities and closed 10, taking the total store count to 295 by FY13 year-end.