KPR MILLS SUGAR SEGMENT AIDS OVERALL PROFITABILITY

News: KPR Mill reported a decent set of numbers in Q3FY23 with sugar segment (~35% of EBIT) saving the day for the company. Overall revenue grew 11% YoY (17% QoQ) to ers in Q3FY23 with sugar segment (~35% of EBIT) saving the day for the company. Overall revenue grew 11% YoY (17% QoQ) to ers in Q3FY23 with sugar segment (~35% of EBIT) saving the day for the company. Overall revenue grew 11% YoY (17% QoQ) to Rs 1367.9 crore. Revenue from textile segment (80% sales) grew 10% YoY (4% QoQ) to  1367.9 crore. Revenue from textile segment (80% sales) grew 10% YoY (4% QoQ) to  1367.9 crore. Revenue from textile segment (80% sales) grew 10% YoY (4% QoQ) to Rs 1152.3 crore. While we await volume data, we expect the garmenting division to have clocked in volume to the tune of ~ 30 million pieces in Q23FY23 (Up 9% YoY). Back of the envelope calculations suggest volumes for yarn & fabric division to have declined ~20% YoY owing to weak global demand for yarn segment. EBITDA margins for the quarter declined 540 bps YoY to 18.8% with absolute EBITDA declining by 12% YoY to ers in Q3FY23 with sugar segment (~35% of EBIT) saving the day for the company. Overall revenue grew 11% YoY (17% QoQ) to Rs 1367.9 crore. Revenue from textile segment (80% sales) grew 10% YoY (4% QoQ) to  268.7 crore. On the segmental front, EBIT margins for textile division declined by  870 bps YoY to 13.3% owing to negative cotton yarn spreads, however sugar segment reported EBIT of ers in Q3FY23 with sugar segment (~35% of EBIT) saving the day for the company. Overall revenue grew 11% YoY (17% QoQ) to Rs 1367.9 crore. Revenue from textile segment (80% sales) grew 10% YoY (4% QoQ) to  85 crore (up 2.6x), which aided overall margins for the company

Views: With cotton prices declining ~40% from peak levels and price disparity between Indian and international prices now gradually narrowing, we expect textile margins to improve going forward. The company’s garmenting segment continues to perform well with overall production during 9MFY23 at 97.3 million volumes (up 8% YoY). We expect the garmenting division to drive revenue growth for the company, going forward, as it yields better margins (20%+) and higher RoCE

Impact: Neutral