Essentially my takeaway was this – The future guidance for upto FY 19 is around a 20% CAGR on top lines and a 24 – 25% CAGR on Net Margins. This for a company trading at a multiple of 35. PEG is 1.4. Keep in mind this guidance is from a management which is historically aggressive on guidances, more so for the mid and long term which it corrects downwards as it comes closer to actual delivery date, so to speak. Over and above this is the overhang from listing and merging KCL. It is not so clear to me that there is such a clear client segregation between KCL and KGL. Am I wrong in saying this ? How then will business be separated. The answer again was extremely unclear, evasive and had a waffle like quality to it. At best , I now classify Kitex as an overpriced compounder with Corp Governance issues. I will be looking to reduce my position in line with what I allocate to compounders in my portfolio.

This had me laugh out. No offence meant. A textile company waiting for 67 INR to convert the forex holdings? What if it appreciates to 64? This may be an intelligent decision by forex desk at the company but not a wise decision in the larger interests of the company. What if such decision making percolates to other areas of business decisions?

I’m not invested in Kitex so take my opinion as that of an outsider’s.

Just to add my observation on company’s foray into branded wear in the US. I’m sorry, but branded companies whack their brains out to gain customer’s mindshare in US. Adidas tried, tried and tried but could not move an inch out of Nike’s market share. May be an extreme example here. Same piece of clothing sold by GAP but made by a Bangladeshi exporter will sell out easily compared to this Bangladeshi company coming out with its own proprietary brand. Brand building is exorbitantly costly affair. Less expensive means – very long gestation period to build customer loyalty.

Rather than this, company could have expended efforts in widening the current customer base, mining current customers, innovate in the product lines and more.

This point raised red flag…why is promoter waiting for 67?… I mean why are they speculating on forex rather than focussing on core business. Also, the saving between 67 and 65 exchange rate is just 3-4% and they are paying interest on debt of c.9%…net-net it is loss for company…

Plan to repay debt in this quarter and convert USD to INR.. waiting for Re to touch 67..

Key points from today’s concall:

• They are planning to separately list KCL and then merge it to KGL for proper price discovery and transparancy. No timeline finalized yet for the same.

• Revenue guidance of c. 575 Cr. to 600 Cr. for this year. Margins to remain stable or slightly grow from here.

• Capacity to double in next 2-3 years as per earlier plan. Capex requirement would be c.15 Cr to 20 Cr. each year for the same

• Guidance to double 2015 revenue by 2018-19 i.e. c. 1000 Cr to 1025 Cr.

• No plans to launch any brands in India in future. They might further negotiate brands in US

• Reg election news article: No family member of promoter group is participating. The industry association (which includes kitex and other companies in the region) will be contesting the same

Disc.: Invested

This is draft summary; feel free to add or correct any points if I have wrongly drafted any of these