Kewal Kiran Clothing Share Price Could Reach Rs 670: Anand Rathi Research
Kewal Kiran Clothing has received a bullish recommendation from Anand Rathi with a “Buy” rating. The brokerage cites the company’s strong market position, growth in revenues, and focus on expanding its retail footprint as key factors for this positive outlook. This report delves into the company’s performance, key metrics, and future prospects, offering insights for investors to consider.
Stock Levels and Target Price
Anand Rathi has set a target price of Rs 670 for Kewal Kiran Clothing, reflecting an upside of approximately 18% from its current market price. The stock levels and related financial data highlight its potential for growth.
Operational Highlights
Expanding Retail Presence: Kewal Kiran Clothing continues to expand its retail presence with strategic store openings and increasing penetration into Tier-2 and Tier-3 cities.
Steady Revenue Growth: The company reported a 21% year-on-year (YoY) revenue growth, supported by strong domestic demand and robust festive season sales.
Financial Projections for Kewal Kiran Clothing
The financial projections for Kewal Kiran Clothing over the next three fiscal years highlight expected growth in revenue, EBITDA, and PAT. The details are summarized below:
| Metric | FY25e | FY26e | FY27e |
|---|---|---|---|
| Revenue (Rs m) | 9,904 | 11,434 | 13,318 |
| EBITDA (Rs m) | 1,797 | 2,363 | 2,803 |
| EBITDA Margin (%) | 18.1 | 20.7 | 21.0 |
| PAT (Rs m) | 1,305 | 1,751 | 2,082 |
| EPS (Rs) | 21.2 | 28.4 | 33.8 |
KEKC has revised its financial estimates downward to reflect short-term headwinds but anticipates robust medium-term growth supported by Kraus and its retail initiatives.
Technical Analysis
1. Candlestick Patterns on Daily Charts
Recent price action reflects bullish momentum, with the stock breaking key resistance levels near Rs 620, supported by higher volumes.
2. Fibonacci Retracement Levels
Using recent highs of Rs 814 and lows of Rs 582, key retracement levels are:
38.2% at Rs 679
50% at Rs 698
61.8% at Rs 717
3. Support and Resistance Levels
Immediate support: Rs 610
Major support: Rs 582 (52-week low)
Resistance levels: Rs 678 and Rs 730
Actionable Insights for Investors
Investment Strategy: KEKC's expanding retail network, combined with Kraus' strong brand equity, positions the company well for long-term growth. With EBITDA margins expected to rebound in H2 FY25, the current price offers an attractive entry point for medium- to long-term investors.
Target Levels: Near-term target of Rs 720, with a 12-month horizon target of Rs 803.
Risks to Consider
Intensifying Competition: A crowded market with aggressive pricing strategies could pressure margins.
Raw Material Price Volatility: Any sharp increase in input costs could impact profitability.
Execution Challenges: Delays in store openings or Kraus' integration could pose headwinds.
Conclusion
KEKC's strategic retail expansion, backed by the successful integration of Kraus Casuals, underscores the company's potential for robust growth in the coming years. Despite near-term challenges, the long-term outlook remains promising, with improved profitability and expanding market presence. Investors are advised to conduct due diligence while considering KEKC as a strong portfolio addition for FY25 and beyond.
