- 25 Oct 2022
- ICICIdirect Research
Kewal Kiran Clothing reports strong operational performanceKKCL - 429 Change: 4.35 (1.02 %)
Kewal Kiran Clothing reported a strong revenue performance and registered its highest ever quarterly revenues in Q2. Standalone revenue for Q2FY23 increased 29% YoY to Rs 226.3 crore (QoQ growth of 46%). The revenue for Q2FY23 surpassed pre-Covid revenue of Rs 167 crore (Q2FY20). Gross margin improved 40 bps YoY to 41.4% but still continued to be lower than pre-Covid average of ~ 50%. EBITDA margin improved 370 bps YoY to 22.1% (Q2FY22: 18.4%, Q1FY23: 19%). EBITDA was at Rs 50 crore vs. Rs 32.3 crore in Q2FY22 (Q1FY23: Rs 29 crore). Consequently, PAT was at Rs 39.1 crore vs. Rs 27.1 crore in Q2FY22 (Q1FY23: Rs 21.6 crore).
KKCL continued to exhibit strong revenue recovery and has been reporting revenue above pre-Covid levels from Q2FY22 onwards. The momentum in sales continued aided by pre festive festive buying. Also, the company added 38 new EBOs during Q2FY23 (total EBOs 419) and expanded its presence in the large format stores. It also fortified its presence on multiple e-commerce portals, which aided the revenue growth. Gross margins improvement on a YoY basis is positive while EBITDA margin is gradually inching closer to EBITA margin of 22.7% reported in Q2FY20 (pre-Covid level). Owing to its strong balance sheet (debt equity ratio of ~ 0.2x), pan-India presence and diversified brand portfolio and a renewed focus on revenue growth, the company is well placed to benefit from the normalisation of business scenario.