Buy Kewal Kiran Clothing, target Rs 1775: ICICI Direct

ICICI Direct has a buy call on Kewal Kiran Clothing Ltd. with a target price of Rs 1775. The current market price of Kewal Kiran Clothing Ltd. is Rs 1560. Time period given by analyst is 12-18 Months when Kewal Kiran Clothing Ltd. price can reach defined target.
Kewal Kiran Clothing Ltd., incorporated in the year 1992, is a small cap company with a market cap of Rs 1925.17 crore operating in the retail sector.


Investment rationale by ICICI Direct: KKCL has been one of the most profitable Indian brands, generating 20%+ EBITDA margins, having a lean balance sheet with debt/equity ratio comfortably placed at 0.1x and generating healthy return ratios (20%+ RoCE). FY18 revenue remained flattish owing to GST led disruption in trade channel. However, improved offtake from MBOs is expected to lead to a revival in revenue growth from FY19 onwards. We continue to like the company given its strong balance sheet and healthy margin profile. Hence, we reiterate our BUY rating on the stock with a revised target price of Rs 1775 (21.0x FY20E EPS).