Sharekhan has given Buy recommendation for KPR Mill with a target price of Rs. 1420 in its research report issued on Apr 16, 2021
Sharekhan’s research report on KPR Mill
Integrated business model, deleveraged balance sheet, and strong growth prospects in the garmenting business make it a good pick in the textile space with decent valuation of 12x its FY2023E EPS. Reduction in replacement cycle to 15-20 days from 20-25 days earlier will give boost to garment demand; the garmenting division’s revenue is expected to post a CAGR of 21% over FY2020-FY2023 with new capacity. New sugar facility (Sugar – 10,000 TCD and ethanol 230 kilo litre per day) will contribute additional revenue of Rs. 500-600crore in FY2023E; sugar division’s margins are expected to be at 25%. Balance sheet remains strong with Rs. 350 crore of cash on books and debt:equity ratio standing at 0.3x as of December 2020. The company expects return ratios to significantly improve once new capacities reach optimum utilisation.
Outlook
We maintain our Buy recommendation on KPR Mill with a revised PT of Rs. 1,420.