Kewal Kiran Clothing - CMP: Rs.700; Target Price: Rs.828 - Karvy

KKCL has a diversified brand portfolio across the value pyramid. It has also entered the accessories business with the launch of Addictions brand. Now, it has 240 stores across India, including 238 franchisees and 20 company-owned stores. It is looking to aggressively expand its stores, largely on franchises to meet its topline growth.

KKCL receives around 97% its revenues from the domestic market. We believe that this trend is likely to continue in the range of 4%-6%. Its top line and net income is expected to grow at a CAGR of 13.4% and 11.5%, respectively over FY12-FY14E. We expect KKCL to post an EPS of Rs. 44.5 and Rs. 52.6 in FY13E and FY14E, respectively.

We initiate coverage on Kewal Kiran Clothing (KKCL) with "BUY" recommendation with a target price of Rs. 828 per share - applying a 14x multiple for FY14E EPS and Rs. 91 per share of cash & equivalents - representing 18% upside from the CMP.

Source : Equity Bulls

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