Buy K P R Mill; target of Rs 1289: Prabhudas Lilladher

Moneycontrol • 2 days ago

Original source

Key Investment Pillars

  • Realization-driven revenue growth: KPR Mill's revenue grew 18.9% YoY, driven by robust performance across segments, with textiles revenue increasing 16.6% YoY and sugar and ethanol revenue growing 26.9% and 20.5% YoY, respectively.
  • EBITDA margin expansion: The company reported a 25.7% EBITDA margin, beating estimates, driven by higher realizations and strong volume growth.
  • Capacity expansion: KPR Mill has announced a INR12.3bn capex plan to increase garmenting capacity to ~250mn pieces per annum, which will be a key growth lever in the medium term.

Thesis Validation Checklist

  • Monitor sustainability of margins: The recent margin expansion was driven by realization gains, which may cool down over the next few quarters.
  • Track capacity expansion execution: The successful execution of the capex plan will be crucial for future growth.
  • Watch for industry trends: Keep an eye on the overall textile and sugar industries, as they may impact KPR Mill's performance.