Hi,
This is my first post in this forum and let me just say that based on what I have seen this is a terrific forum.
On Kitex; clearly the key tactical issue for now is what will the numbers be like for the next two quarters and will they meet their guidance of INR 600 – 650 Crores.
The seasonality data for last three years show that the second half can contribute anywhere between 54 to 60% of annual revenues. Based on numbers of first half, the full year revenues of Kitex can range anywhere between INR 471 Crores to INR 542 Crores. Applying the 20% net margin figure and using the 4.75 C Equity base, EPS looks to be around INR 20 to INR 22. The impact of such a EPS on a share trading at this multiple need hardly be spelt out.
Looking at this the other way; in order for them to reach INR 625 Crores for the full year, the second half has to generate revenues of INR 408 Crores; which is 65% of Annual Sales. Given that second half has contributed in the past upto 60% ( FY 12) the number is just tantalizingly within reach but is stretched enough to raise concern on immediate valuations.
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