AI-generated · cited to primary sources · not investment advice
Kitex Garments (521248) Mar 2024 Filing Analysis
How durable is the business?
Consolidated revenue from operations grew by 10.76% YoY, reaching INR 616.92 Crores, driven by scaling up production and sales despite global headwinds. (1 expanding)
“During FY24, the company achieved operating revenue of ₹ 61,692.20 lakhs, which is 10.76% higher than earlier year’s ₹ 55,699.55 lakhs. The increase is on account of scaling up the production and sales for the year under review.”
The company is significantly expanding its scale through a massive INR 3,000 Crore investment in Telangana, aiming to produce 11 lakh garments daily and achieve backward integration via a ginning facility. (4 expanding)
“This total investment of ₹3,000 crore in both phases aims to produce around 11 lakhs garments daily with a turnover of with a turnover of with a turnover of ₹3,000 crore p.a. To further strengthen our production capabilities, we are also establishing a ginning facility as a backward integration.”
See the full cited Business Model analysis of Kitex Garments
What could break the thesis?
The risk is easing as the company reported a recovery in the second half of FY24, with turnover increasing to INR 354 Cr compared to INR 287 Cr in the first half. Consolidated revenue for the full year grew 5% YoY. (1 easing)
“The first half year clocked only ₹ 287 Crores turnover with an average PBT of 10%. only. However we made a strong come back in 2nd half by clocking a turnover of ₹ 354 crores with a PBT of 20%.”
The risk is intensifying as the company's current ratio deteriorated by 31% due to increased working capital borrowings for the Telangana investment. ICRA has also revised the outlook on long-term ratings to 'Negative'. (1 intensifying, 1 stable)
“ICRA has revised the credit rating... Unallocated Long-term [ICRA] A (Negative)... Current Ratio (times) 3.44 (vs 5.02) -31% Variance. Reason: The working capital borrowing increased due to deployment of existing surplus funds for Telangana investment.”
See the full cited Risk analysis of Kitex Garments
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