Shares of KPR Mill Ltd. experienced a significant rally in early trading on Tuesday, climbing 6.19 percent to reach a high of Rs 1,151.95. The surge followed the textile and apparel company's announcement of its June-quarter earnings for FY27, which revealed a strong performance.
Q1 FY27 Performance Highlights
KPR Mill reported a 9.6 percent year-on-year increase in revenue, reaching Rs 1,940 crore for the first quarter of fiscal year 2027. Motilal Oswal Financial Services Ltd. (MOFSL) highlighted that this revenue growth was primarily fueled by an improved performance in the sugar segment.
- Segment Growth: While the textile portfolio saw a modest 1 percent growth, the sugar segment demonstrated robust expansion, growing by 21 percent.
- Profitability: The company's gross margin improved by 480 basis points year-on-year to 40.7 percent. EBITDA margin also saw an increase of 180 basis points year-on-year, settling at 19.4 percent.
Analyst Outlook and Valuation Concerns
Despite the positive quarterly results, MOFSL maintains a cautious stance on KPR Mill's stock valuation. The brokerage firm projects KPR Mill's revenue growth to continue at approximately 13 percent, supported by ongoing capacity ramp-up, sustained demand in the garment segment, and expansion into higher-margin branded apparel.
MOFSL anticipates profitability to strengthen gradually, with EBITDA margins potentially expanding to 21.5 percent and APAT margins to 14.8 percent by FY28E, driven by operating leverage and an improved product mix. The brokerage firm noted, "We believe the company is well-positioned to benefit from its leadership in the Indian textile and apparel industry, supported by the largest garmenting capacity among listed peers."
However, MOFSL has reiterated a 'Neutral' rating for KPR Mill, setting a target price of Rs 1,200 (valuing the stock at 22x FY28E EV/EBITDA). The firm explained that the current valuation already accounts for low-to-mid teen growth, thereby leaving limited room for further upside from the current market price. Key risks identified include dependence on export markets, demand cyclicality in the apparel industry, and intense global competition.
Capex Plans Noted by Nuvama
In related news, Nuvama Institutional Equities brought attention to KPR Mill's announced capital expenditure plans. The company intends to invest Rs 1,230 crore, funded through internal accruals. This capex is expected to add approximately Rs 2,000 crore to the top-line at full capacity.