Kitex Garments Limited


(ffaizan) #981

Well in my view, mr.Jacob is specialised in infant wear under 2 years and he uses cotton and organic for these clothing wears.the fibres are developed in house. Jockey though was a good client but wanted more of synthetic cloths for adults I believe. So here was a dilemma. To leave the focus and long term goal on scaling in a specialised infant wear segment or to diversify into synthetics with significantly more investment and loosing focus.

In my view Mr. Jacob took the right decision and took a hit and exited the segment completely for a short term pain and long term gain. He now focuses on scaling his business and improving the margins further by forward integration of selling the infant wear himself and thorough Lamaze.

I am yet to see how well this forward integration works out.

Disc: Not invested but being curious and keeping an eye.


(nirmalsashi) #982

For Kitex Childrenwear

According to un-audited results, during FY2016, KCL reported a net profit of Rs. 28.3 crore on an operating income of Rs. 205.4 crore as against a net profit of Rs. 19.0 crore on an operating income of Rs. 204.2 crore during FY2015

Source: http://www.icra.in/Files/Reports/Rationale/Kitex%20Chil-R-31082016.pdf


(nirmalsashi) #983

From Q3 Concall:

16 December 2016: Little Star first sale

Lamaze: Sales less than 100 thousand dollar, Already selling to target, buybackbaby
target getting 4th order.

9-10 customers showed interest in Expo. Expect Huge orders in feb-march

Guidance of 20$ mln sales next year : For Little star & Lamaze

Debt: Rs 4 .15 crores long term

Expectation for Q4 : Rs 200+ cr expected in Q4 ,
Overall, Revenue might increase 5-10 pc YOY.
Guidance was for 20 pc but impacted due to US Elections.
Hope next year guidance is not impacted by Border Adjustment Tax @US :wink:

Not much effect seen from Tax implication in US as for eg:
Take body suit which account for 40pc of sales,
basic cost is 70 cents and they sell @ 2dollars

cotton price : expect similar price

other operating income: ROSL, MIS .

Lamaze margin expect 15-20 pc of sales,

Expect more brand tieups soon

Customer Outlook:

  1. Carter sales 1.8 bln in fob , kitex supplies less than 1pc
    Kitex sales to Carter at 5mln dollars,committed 4-5 times

  2. Gerber buys 15 pc buying from kitex

  3. Sams club second order huge

Investment: Rs 17 cr investment in effluent treatment plan will increase debt but 25% TUFS scheme subsidy

Expecting 4-5 indian business pvt labels

Old Customer kohl came back.


(Ayush Mittal) #984

#985

While Sabu is exaggerating it a bit, I believe that garmenting is one business where you can add capacity very fast. It is among the most labour intensive businesses and least capital intensive one. You just need a few sewing machines, skilled labour, and a basic factory set-up to expand capacity. I feel what he meant by ‘adding capacity daily’ is that he might have some extra space where he has moved more machines and workers.

Disc: Invested


(suranjit sarkar) #986

These are my few observations:

  1. WC is increasing more wrt total assets and sales for last 5 years.
  2. Sales is also decreasing comparatively with respect to the invested capital for last 5 years but its fixed assets is providing more sales than earlier. So other assets are increasing and not contributing to sales and earnings.
  3. Increase in sales = Increase in receivables=> increase in WC.
  4. Decreasing dividend payout for last few years.

I think the company is adding on assets, investing at KCL although sales is suffering. Increase in sales is mainly due to pushing products and mercy of raw material prices but it has been able to maintain and improve its margins->earnings well for last 5 years which is driving its returns and ratios.

Please correct me for any mistakes. Provide your views on point 2 and point 3.


(Chirag Tekriwal) #987

I checked the CRILC report which is reported by all banks for the Sep quarter as well as the Dec quarter 2016.
Sep quarter showed a cash balance of INR 201 Crs but the Dec quarter just showed INR 1 Crs.
My view:
The company has cash in its kitty. So, cash is real but the problem is where is it deploying that cash since it is not keeping in its Current Account.
It is just keeping the cash in its current account at half year and year end to report it in the balance sheet and that might be the reason for so less interest being received for that cash.


(nirmalsashi) #989

Sabu Jacob Speaks about Design Studio and plans for US Export.
https://www.youtube.com/watch?v=ze901ILhvcI

Mayor Mike Ghassali post opening ceremony details of Kitex Garments


(IndyaInvestor) #990

What if this cash is loaned off the records for a very short term by a shadow party with vested interest who benefits from showing bloated cash in balance sheet? One of the private investment funds could be the shadow party.


(Vivek Mashrani, CFA) #991

When is the kitex annual result? They generally publish in 4-5 days due to efficient MIS I think :slight_smile:


(jirohit) #992

any idea why kitex results not declared till now or date for the same? normally co is the first one to declare results.


(kaustubhkale) #993

Since the new auditor has come in (auditor change), the results have been reasonably similar to when other companies have declared. Honestly, there was nothing to boast about (by company) being the first one to declare results. Neither do I think there is too much to read, that the results are now declared later, than earlier.


(Tolaha) #999

One other advantage - bonus stripping (the loss incurred after selling a stock once it turns ex-bonus can be used to set off against short term capital gains) - was mentioned by someone here. You can find the gist of it here:


#1003

Results out (PDF): http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/7f55c7ee-c631-4e29-95bc-53e7f95d503a.PDF

Updated:

Top line plunged by 5% and bottom line by 40%.


(Furkan Alam) #1004

Looks like bad set of numbers again. YOY 24% fall in Net profit and flat Sales.

In Q3 concall they had stated - 5-10% growth still expected in revenue for this year compared to last year.They expect 200+ cr sales in Q4FY17.

So again overestimating their numbers.

Disc : Invested


(Furkan Alam) #1005

The board has reccommended issue of bonus shares in the ratio 2 : 5.

http://www.moneycontrol.com/stocks/reports/kitex-garments-board-recommends-bonus-issue-7063121.html


(Sd) #1008

Hi Sowmay,
Invested in this few months back but after going through various posts by senior members, found that Mr Sabu doesn’t walk the talk… there was an issue with parking cash (if remembering correctly) while not attending debt. He is found to be glorifying the business and wanted to remain in talks… This is where a small investor start needs to take due care.


(ANANT JAIN) #1009

It is always better to make sure that we have ample data when we cast aspersion on a company or an individual.

Discl. No holding


(amit) #1010

Biggest problem 240 cr cash , he had said dont require much capital to grow to double revenues , now he is going ahead and spending huge 250 cr to expand capacity in automation etc . Suspicion is becoming stronger that this money does not exist. . i also want to understand how much money he charges KCL in terms of salary.

dic : invest 10 %


(jirohit) #1011

how is investing free cash flow linked to raising capital? if the business has to grow and its operating at 90-100% capacity, he needs to 1. increase prodcution efficiency OR 2. increase prices OR 3. invest in increasing production capacity which the promoter seems to be doing. I think there are 2 key issues which needs to be analysed in details: 1. mgmt has been much higher guidance than the ground realities of the business 2. need to analyse reason for lower sales and see if business model getting impacted