Q4FY21 Firm Replace – KPR Mill – ICICI Direct

KPR Mill continued to expertise encouraging demand in all of its segments at T4FY21. Income for the quarter elevated 28% year-on-year (20% T / T) to Rs. 1,117.9 crore, with the textile division (80% of gross sales) displaying 26% year-on-year progress (12% QoQ), with sugar division gross sales rising 50% year-on-year (81% QoQ). Due to a wholesome order guide and sustained demand for informal put on (the place KPR’s experience lies), attire volumes jumped 12% year-on-year to 29.7 million (hundreds of thousands) items. Nonetheless, the achievements have been decrease at Rs. 127 / piece (common achievements: Rs 150-160) because of an unrecorded export incentive (~ 4-5%). KPR is awaiting clarification on the brand new RoDTEP incentive and can take it under consideration retrospectively within the coming quarters. The export backlog on the finish of Q3FY21 was wholesome at Rs. 575 crore. The demand for cotton yarns world wide in latest months has been fairly strong, leading to a major enhance in yarn manufacturing. The income of the Yarn and Cloth division grew sharply by 42% year-on-year to Rs. 496 crore pushed by achievement progress of twenty-two%, quantity progress of 17%. EBITDA margins for the quarter elevated considerably from 810 bps yoy to 24% with absolute EBITDA progress of 94% yoy (6% yoy) to Rs. 267.5 crore. KPR has two main pipeline funding initiatives price Rs. 750 crore to garment facility (Rs. 250 crore), ethanol facility (Rs. 500 crore).

Evaluation and outlook

KPR generated wholesome working money movement price ~ Rs. 580 crore (CFO / EBITDA: 70%) in FY21E attributable to wholesome progress in profitability and dealing capital cycle managed (NWC days: 115). The liquidity place stays strong with internet debt of ~ Rs. 350 crore (D / E: 0.2x). Of the entire proposed capex price Rs. 750 crore, KPR has already incurred Rs. 235 crore in FY21. The capex necessities of the stability can be initiated throughout FY 22E, which can be a combination of inner regularization and debt (garments coated by TUFS and 50% curiosity subsidy for ethanol capability). Deploying capital to value-creating initiatives (focused RoCE: clothes: 30%, ethanol: 22%) bodes nicely for KPR. Resilient efficiency throughout robust instances (RoCE enchancment from 440 bps yoy to 24% in FY21) instills confidence within the enterprise mannequin. We revise our earnings estimates up 6-8% for FY 22-23E and mannequin the earnings CAGR of 16% for FY 21-23E. We reiterate BUY and consider it at Rs. 1620 or 16x FY23E EPS (1x PEG, outdated TP: Rs. 1200).

For extra particulars, click on on the hyperlink under: https://www.icicidirect.com/mailimages/IDirect_KPR_CoUpdate_Apr21.pdf

Shares of KPR Mill Restricted have been final traded in BSE at Rs 1,380 from the earlier shut of Rs. 1,359.6. The whole variety of shares traded in the course of the day was 3,220 in additional than 537 transactions.

The inventory hit an intraday excessive of Rs. 1385.95 and an intraday low of 1331.75. The web turnover in the course of the day was Rs. 4,405,050.


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