KPR Mill Ltd

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KPR Mill Ltd (NSE:KPR) is an India base garment exporter, as well as a vertically integrated apparel company and was originally incorporated on March 19, 2003. The company is a leading manufacturer of ready-made knitted apparel, cotton knitted fabric and yarn in India, having manufacturing facilities located at Coimbatore, Sathyamangalam, and Tirupur in Tamilnadu, South India. As of March 31, 2012, KPR Mill Ltd had a cumulative capacity of 336,960 spindles to produce 86,000 million tons of yarn per annum; knitting facility to produce 21,000 million tons of fabrics per annum; garmenting facility to produce 63 million pieces of ready-made knitted apparel per annum and processing facility to process 9,000 million tons per annum, and 66 wind mills with total power generation capacity of 61.92 megawatts.

The company competes in India with Page Industries (BSE: 532827), Zodiac Clothing (BSE: 521163), Kitex Garments (BSE: 521248), Pearl Global (BSE: 532808), Gokaldas Exports (BSE: 532630) and Store One Retail India (BSE: 532679).

The KPR Mill has purchased the entire equity shares in M/s. Jahnvi Motor Private Limited in January 2013. This Coimbatore base company holds the Audi Car Sales and Service Dealership. After the deal the company has become the wholly owned subsidiary of the Company. In June 2011 acquired a group company K.P.R. Sugar Mill Limited based in Bijapur District, Karnataka.  The sugar company which has co-generation capacity to facilitate 100% self-sufficiency in captive consumption is now a 100% subsidy of the KPR Mill. Earlier the company has acquired KPR Knits in 2005.

India’s total textile and apparel industry size domestic and exports combined is projected to grow at a CAGR of 9.5 per cent to reach $223 billion by 2021 from the $89 billion in 2011, according to a white paper by industry body Ficci and Technopak. India’s textile and apparel exports were at $31 billion in 2011 and are growing at an annual rate of 10 per cent since 2005. Apparel exports contribute the most to the overall exports in terms of value, followed by contributions from fibre, yarn and fabrics. It further said the global share of textile industry was 4.5 per cent in 2011 and is expected to be 6 per cent in 2016 and 8 per cent in 2021. Globally, apparel industry is expected to grow at a CAGR of 6 per cent.

In an another report by Care Research said “The domestic apparel industry will grow at a CAGR of about 8 per cent from Rs 2,026 billion in FY12 to Rs 2,746 billion in FY16. Policy reforms, revival in economy and entry of new brands to support recovery of apparel demand in FY14. The industry grew at a CAGR of 10 per cent from Rs 1260 billion in FY07 to Rs 2,026 billion in FY12. The growth is attributed to an upsurge in the economy coupled with the rise in per capita disposable income.”

(in Million) 2012 – 13 2011 – 12 2010 – 11 2009 – 10 2008 – 09
Revenue 14,930.20 11,981.40 10,568.08 8,275.36 7,476.88
Other Income 62.7 67.4 21.37 29.14 29.45
Total Income 14,992.90 12,048.80 10,589.45 8,304.50 7,506.33
Expenditure -11,361.70 -10,211.20 -8,100.85 -6,639.91 -6,380.10
Interest -800.8 -470.4 -311.56 -271.61 -383.69
PBDT 2,830.40 1,367.20 2,177.04 1,392.98 742.54
Depreciation -1,418.10 -1,036.20 -1,256.75 -704.97 -559.54
PBT 1,412.30 331 920.29 688.01 183
Tax -404.7 -18.7 -207.7 -187.26 -81.97
Net Profit 1,007.60 312.3 712.59 500.74 101.03
Reserves 6,248.10 5,505.80 5,424.68 4,722.35
EPS 26.41 7.96 18.72 13.29 2.68
OPM % 24.32 15.34 23.55 20.12 15.06
NPM % 6.75 2.61 6.74 6.05 1.35

The company shows good growth over past five years. Promoters hold 75% shares of the company. High promoter holding and low floating shares give better ablution in market. The stock is trading around Rs 124 having market cap of Rs 4.67 billion. At current price its price to earning ratio is 4.6 verses industry average of 24. The company pays Rs 5 dividend annually yielding 4%. The low valuation makes this an attractive buy.