Thanks Naveen for your inputs…I agree the margins are higher and hence the valuation relative to Ambika. But if you compare the differential valuation of the two, you would notice that while Ambika has remained around P/B of 1.1- 1.4 over last 10 years while for KPR it has jumped from less than 3 to around 7.5 now.
As pointed by you, what has changed for KPR from pre-pandemic to now is their foray into sugarmills, ethanol and specially the FASOs branded innerwear. Seems to me the market is liking the branded D2C business and in the short run the sugarmills and ethanol are also helping only currently…
Below from their annual report:
However in the notes, i see the security deposit from dealers has reduced from 3L to 1L.
Does it show reducing demand? Or atleast less favorable terms… But certainly not expansion…
Considering all this, and the current market mood was just trying to seek if there is more which warrants the increased valuation market is willing to give to KPR currently…
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