KITEX GARMENTS LTD

Transcription

KITEX GARMENTS LTD
KITEX GARMENTS LTD
Result Update (PARENT BASIS): Q3 FY15
BUY
CMP
557.70
Target Price
635.00
JANUARY 17th 2015
ISIN: INE602G01020
Index Details
SYNOPSIS
Stock Data
Sector
BSE Code
Face Value
52wk. High / Low (Rs.)
Volume (2wk. Avg.)
Market Cap (Rs. in mn.)
Other Apparels & Accessories
521248
1.00
601.75/80.90
43000
26490.75
Annual Estimated Results (A*: Actual / E*: Estimated)
YEARS
Net Sales
EBITDA
Net Profit
EPS
P/E
FY14A
4422.10
1084.82
573.69
12.08
46.18
FY15E
4922.55
1654.63
811.17
17.08
32.66
FY16E
5513.25
1818.75
873.15
18.38
30.34
Shareholding Pattern (%)
Kitex Garments Limited engages in the manufacture,
export, and sale of garments in India and
internationally.
During Q3 FY15, net profit jumps to Rs. 231.31 mn
against Rs. 113.22 mn in Q3 FY14, an increase of
104.30%.
Revenue for the quarter rose by 22.78% to Rs.
1220.98 mn from Rs. 994.46 mn, when compared
with the prior year period.
During the quarter, EBIDTA is Rs. 470.16 mn as
against Rs. 222.58 mn in the corresponding period of
the previous year, grew by 111.23%.
During Q3 FY15, Profit Before Tax (PBT) grew by
104.62% to Rs. 351.85 mn from Rs. 171.95 mn in Q3
FY14.
EPS of the company stood at Rs. 4.87 a share during
the quarter, registering 104.30% increase over
previous year period.
Kitex Garments Ltd has opened a merchandising
Company in the name of Kitex USA LLC with 50%
investment at Delaware, USA.
1 Year Comparative Graph
ICRA have upgraded the long term rating for Rs. 167
crores bank facilities of the company from ICRA A
minus to ICRA A Plus and that of short term rating
from ICRA A two plus to ICRA A one.
KITEX GARMENTS LTD
S&P BSE SENSEX
Net Sales and PAT of the company are expected to
grow at a CAGR of 20% and 44% over 2013 to 2016E
respectively.
PEER GROUPS
CMP
MARKET CAP
EPS
P/E (X)
P/BV(X)
DIVIDEND
Company Name
(Rs.)
Rs. in mn.
(Rs.)
Ratio
Ratio
(%)
557.70
441.70
270.85
375.00
26490.75
3688.30
70074.30
7288.50
12.08
30.04
15.46
8.03
46.18
14.70
17.55
46.70
15.21
2.96
2.66
4.14
100.00
75.00
23.50
45.00
Kitex Garments Ltd
Sarla Performance Fibers Ltd
Arvind Ltd
Zodiac Clothing Company Ltd
QUARTERLY HIGHLIGHTS (PARENT BASIS)
Results Updates- Q3 FY15,
Months
Dec-14
Dec-13
% Change
Net Sales
1220.98
994.46
22.78
PAT
231.31
113.22
104.30
EPS
4.87
2.38
104.30
470.16
222.58
111.23
EBITDA
The company’s net profit jumps to Rs. 231.31 million against Rs. 113.22 million in the corresponding quarter
ending of previous year, an increase of 104.30%. Revenue for the quarter rose by 22.78% to Rs. 1220.98 million
from Rs. 994.46 million, when compared with the prior year period. Reported earnings per share of the company
stood at Rs. 4.87 a share during the quarter, registering 104.30% increase over previous year period. Profit
before interest, depreciation and tax is Rs. 470.16 million as against Rs. 222.58 million in the corresponding
period of the previous year.
Break up of Expenditure
Break up of
Expenditure
Cost of Material
Consumed
Employee Benefit
Expenses
Depreciation &
Amortization Expense
Other Expenses
Rs. in Mn
Q3 FY15
Q3 FY14
%
Change
518.45
519.42
0%
190.04
145.10
31%
52.80
25.08
111%
153.52
126.94
21%
Segment Revenue
Latest Updates
•
Kitex Garments Ltd has opened a merchandising Company in the name of Kitex USA LLC with 50%
investment at Delaware, USA.
•
ICRA Limited, the credit rating agency, have upgraded the long term rating for Rs. 167 crores bank facilities
of the company from ICRA A minus to ICRA A Plus and that of short term rating from ICRA A two plus to ICRA
A one with a comment that the outlook on the long term rating is stable.
COMPANY PROFILE
Kitex Garments Limited is based in Kochi, India. Kitex Garments Ltd. was incorporated in 1992. It made its public
issue in the year 1995. It is promoted by Boby M Jacob, Kitex Exports Ltd, Sabu M Jacob and Somy Varghese. Kitex
Garments Limited is in the business of manufacturing and exporting garments. The Company manufactures
different types of garments, such as hosiers, shirts, pants, jackets, innerwear and outerwear. The company also
exports infant and children’s wear, and jackets to the United States.
The company is supplying Toddler wear/Kids wear to 5 of the worlds top 10 companies like Mother care, Fruit of
the Loom, Toys R Us, Kids R Us, Carters, Gerber, Jockey.
FINANCIAL HIGHLIGHT (PARENT BASIS)
(A*- Actual, E* -Estimations & Rs. In Millions)
Balance Sheet as at March 31, 2013 -2016E
FY13A
FY14A
FY15E
FY16E
47.50
47.50
47.50
47.50
1176.08
1694.19
2505.36
3181.80
1223.58
1741.69
2552.86
3229.30
Long term Borrowings
25.20
289.14
315.16
334.07
Deferred Tax Liabilities
161.50
216.06
231.18
242.74
Long term Provisions
25.31
23.32
26.12
28.47
212.01
528.52
572.47
605.28
Short term Borrowings
892.65
905.12
1194.76
1314.23
Trade Payables
228.90
244.17
288.12
322.70
Other Current Liabilities
197.46
304.59
341.14
368.43
Short Term Provisions
195.13
313.37
451.25
523.45
3. Sub Total - Current Liabilities
1514.14
1767.25
2275.27
2528.81
Total Liabilities (1+2+3)
2949.73
4037.46
5400.60
6363.40
1168.37
1809.11
2134.75
2433.61
Intangible Assets
4.10
2.95
3.30
3.60
Capital work-in-progress
22.82
6.67
7.60
8.36
a) Sub Total - Fixed Assets
1195.29
1818.73
2145.66
2445.58
b) Non-current investments
0.04
0.04
0.06
0.07
c) Long Term loans and advances
98.99
28.01
35.29
42.35
d) Other non-current assets
6.95
17.33
21.14
24.74
1301.27
1864.11
2202.15
2512.74
Inventories
458.62
108.00
138.24
160.36
Trade receivables
506.29
530.64
589.01
642.02
Cash and Bank Balances
411.84
1036.08
1793.69
2152.37
Short-terms loans & advances
217.15
342.10
513.15
718.41
Other current assets
54.56
156.53
164.36
177.51
2. Sub Total - Current Assets
1648.46
2173.35
3198.45
3850.66
Total Assets (1+2)
2949.73
4037.46
5400.60
6363.40
SOURCES OF FUNDS
Shareholder's Funds
Share Capital
Reserves and Surplus
1. Sub Total - Net worth
Non Current Liabilities
2. Sub Total - Non Current Liabilities
Current Liabilities
APPLICATION OF FUNDS
Non-Current Assets
Fixed Assets
Tangible Assets
1. Sub Total - Non Current Assets
Current Assets
Annual Profit & Loss Statement for the period of 2013 to 2016E
Value(Rs.in.mn)
FY13A
FY14A
FY15E
FY16E
15m
3169.83
12m
4422.10
12m
4922.55
12m
5513.25
Other Income
40.25
133.44
181.45
192.34
Total Income
3210.08
4555.54
5104.00
5705.59
Expenditure
-2568.75
-3470.72
-3449.36
-3886.84
Operating Profit
641.33
1084.82
1654.63
1818.75
Interest
-114.72
-106.16
-218.17
-244.35
Gross profit
526.61
978.66
1436.46
1574.39
Depreciation
-86.21
-96.80
-213.08
-251.43
Profit Before Tax
440.40
881.86
1223.38
1322.96
Tax
-146.64
-308.17
-412.21
-449.81
Net Profit
293.76
573.69
811.17
873.15
Equity capital
47.50
47.50
47.50
47.50
1176.08
1694.19
2505.36
3181.80
Face value
1.00
1.00
1.00
1.00
EPS
6.18
12.08
17.08
18.38
Description
Net Sales
Reserves
Quarterly Profit & Loss Statement for the period of 30th June, 2014 to 31st Mar, 2015E
Value(Rs.in.mn)
30-Jun-14
30-Sep-14
31-Dec-14
31-Mar-15E
3m
3m
3m
3m
1027.62
1282.03
1220.98
1391.92
Other income
24.34
52.62
50.97
53.52
Total Income
1051.96
1334.65
1271.95
1445.44
Expenditure
-755.57
-945.50
-801.79
-946.50
Operating profit
296.39
389.15
470.16
498.93
Interest
-35.57
-41.10
-65.51
-75.99
Gross profit
260.82
348.05
404.65
422.94
Depreciation
-50.44
-51.76
-52.80
-58.08
Profit Before Tax
210.38
296.29
351.85
364.86
Tax
-65.99
-103.09
-120.54
-122.59
Net Profit
144.39
193.20
231.31
242.27
Equity capital
47.50
47.50
47.50
47.50
Face value
1.00
1.00
1.00
1.00
EPS
3.04
4.07
4.87
5.10
Description
Net sales
Ratio Analysis
Particulars
FY13A
FY14A
FY15E
FY16E
6.18
12.08
17.08
18.38
EBITDA Margin (%)
20.23%
24.53%
33.61%
32.99%
PBT Margin (%)
13.89%
19.94%
24.85%
24.00%
PAT Margin (%)
9.27%
12.97%
16.48%
15.84%
P/E Ratio (x)
90.18
46.18
32.66
30.34
ROE (%)
24.01%
32.94%
31.77%
27.04%
ROCE (%)
33.97%
40.25%
45.97%
42.44%
Debt Equity Ratio
0.75
0.69
0.59
0.51
EV/EBITDA (x)
42.09
24.57
15.84
14.29
Book Value (Rs.)
25.76
36.67
53.74
67.99
P/BV
21.65
15.21
10.38
8.20
EPS (Rs.)
Charts
OUTLOOK AND CONCLUSION
At the current market price of Rs.557.70, the stock P/E ratio is at 32.66 x FY15E and 30.34 x FY16E
respectively.
Earning per share (EPS) of the company for the earnings for FY15E and FY16E is seen at Rs.17.08 and
Rs.18.38 respectively.
Net Sales and PAT of the company are expected to grow at a CAGR of 20% and 44% over 2013 to 2016E
respectively.
On the basis of EV/EBITDA, the stock trades at 15.84 x for FY15E and 14.29 x for FY16E.
Price to Book Value of the stock is expected to be at 10.38 x and 8.20 x respectively for FY15E and FY16E.
Despite stiff competition from other countries, international buyers show preference to company’s product for
its quality and timely delivery and hence Company will achieve better working results in the coming years. Major
Internatioal buyers like KOHLS and THE CHILDRENS PLACE have shown interest in the company’s products by
placing large orders. Kitex Garments Ltd has opened a merchandising Company in the name of Kitex USA LLC
with 50% investment at Delaware, USA. Company also plans to take the performance to the next level by
modernization, installing high tech and time saving machinery and supportive systems, improving quality of
work by employee training, and by Research and Development in major areas pertaining to the industry in which
the company is in business. We expect that the company surplus scenario is likely to continue for the next two to
three years, will keep its growth story in the coming quarters also. Hence, we recommend ‘BUY’ for ‘Kitex
Garments Ltd’ with a target price of Rs. 635.00 for medium to long term investment.
INDUSTRY OVERVIEW
The Indian textile industry plays a vital role in the economy of the country by contributing to GDP, generating
employment and earning foreign exchange.
Opportunities and Threats
The big business houses in the USA and Europe manufacturing and dealing in textiles and garments depend upon
India, China and the neighbouring countries, due to availability of the raw materials and skilled labour at lower
prices in these countries, to get the required output at the lowest possible cost.
However the company perceives threats by way of competition from the neighbouring countries like China,
Pakistan and Sri Lanka. Although the competition is hectic company has an edge over others with quality and
timely execution of orders. The more transit time due to geographical position and adverse movement of foreign
exchange rate of the Rupee are major concerns for the growth of the industry. The appreciation of Rupee against
US Dollar, a trend noted during the last quarter of the year may effect the company’s profitability in both short
and long term.
China, Europe, Japan along with the U.S. (the four largest economies in the world) will largely determine the
direction of the global economy through the rest of this year and into 2015. The good news is that the advanced
economies overall will perform more strongly and contribute more to global growth in 2014.
Outlook
The company is taking all efforts to improve the quality and productivity to get more orders at competitive rates.
Due to the own processing plant the company is able to quote better rates and maintain high quality &
productivity in the finished goods manufactured. Barring unforeseen circumstances the company is confident of
achieving better results in the current year. The key risks for the global economy include China and other
emerging markets and the situation in the Middle East and North Africa. The developing nations of Asia are
expected to experience a higher rate of growth next year, provided China remains in the 7.0% to 7.5% growth
range.
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contained herein is from publicly available data or other sources believed to be reliable but we do not represent that
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in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the
information contained in this report. Firstcall Research and/ or its affiliates and/or employees will not be liable for
the recipients’ investment decision based on this document.
Firstcall India Equity Research: Email – [email protected]
C.V.S.L.Kameswari
U. Janaki Rao
B. Anil Kumar
M. Vinayak Rao
G. Amarender
Pharma & Diversified
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