KPR Mill extends rally on strong Q4 results; stock zooms 37% in 7 days

Shares of hit a new high of Rs 1,631.80 after rallying 18 per cent on the BSE in intra-day trade on Monday on the back of heavy volumes in an otherwise weak market. The stock was trading higher for the seventh straight day, zooming 37 per cent during this period, after the company’s net profit more-than-doubled at Rs 186.16 crore in the March quarter (Q4FY21). It had posted profit of Rs 80.91 crore in the year-ago quarter.

The company’s revenue from operations jumped 28 per cent to Rs 1,130 crore from Rs 882 crore. Earnings before interest, taxes, depreciation, and amortization (EBITDA) margins expanded by 820 basis points to 24.7 per cent. The company said that new expansion project of 42 million garments factory and sugar cum ethanol plant was progressing as per schedule.

The upcoming garmenting facility (42 million pieces) is expected to be commissioned by Q2FY22. The same would be fully ramped up in eight to 12 months. Of total incremental capacity, 60-70 per cent is to be utilised for existing customer with balance for new customers.

Europe has been the key market for KPR (54 per cent of garment export revenues) whereas US stays underpenetrated with share of 22 per cent. Robust opportunities in US market gives strong visibility for sustained export growth. At average realisation of Rs 150/piece, the new facility would generate incremental revenue of around Rs 600 crore (Asset/Turnover: ~ 2.5x).

Analysts at ICICI Securities expect the company’s garmenting division to post revenue CAGR of 28 per cent in FY21-23E. The new sugar and ethanol plant is expected to be commissioned in Q3FY22 with company targeting revenue mix of 50:50 from ethanol and sugar division. With the new expanded capacity, the management is aiming at overall sugar revenues to cross Rs 1,000 crore in next two to three years (from current Rs 496 crore in FY21).

Meanwhile, the counter has seen huge trading activities with a combined 155,000 equity shares changing hands on the NSE and BSE, till 10:04 am. In comparison, the S&P BSE Sensex was down 0.84 per cent at 48,371 points. In the past one month, the stock has outperformed the market by surging 52 per cent, against 3.2 per cent decline in the benchmark index.

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