Kitex Garments Limited

(Janarthanan Natarajan) #1324

@Shikhar, Thanks, that was useful. Did you manage to get answers for the below queries?

  1. In the recent TV interview, Mr Sabu mentioned that there are tie-ups already in place with customers and hence they are increasing production by 3.5x? Any more details about these tie-ups?
  2. From the recent presentation, I understand that land is finalized. They were looking at various states. Was the location disclosed?
  3. Any news on KCL listing?

(shikhar mundra) #1325
  1. I think they r planning to scale up existing customers. For example take gerber…for them india wil be a small place in the map. And kitex will be even smaller. They will look up to consolidate their suppliers.hence kitex will in a sweet spot to capitalize on such opportunities.
    Also india seems to be gaining competitive advantage with respect to China. China and usa trade war puts us in a sweet spot
    Kitex will also be looking to manufacture wet tissues, diapers, socka for children which can be sold to rhe same clients .
  2. Kerala has been finalized. Along with kpmg they evaluated karnataka and AP as well but settled with kerala as the best place finally.
  3. No plans for kcl listing…i am personally not bothered with KCL at all. KCL has no relation what so ever to KGL. Both are in completely different age group of garments.

(shikhar mundra) #1326

Sabu jacob even added that when Kitex USA turns profitable he might remove KCL as its co owner and make it 100 percent KGL owned.
He expects kitex usa to become profitable in a couple of years as majority costs r fixed. Kitex usa has hired a 8 man management team and is paying heavy salaries to them right now. He has some very experienced and senior people in the team.
I also asked him regarding the increasing spend on CSR.he said he will take loan in personal capacity and do it from next year onwards.
From what i understood from the locals is that CSR spending is actually required in states like kerala to garner local support in order to run business smoothly.kerala is typically a tough place to do business with severe labor problems and political goons. Hence the need for kitex to get into gram panchayat and stuff… these reports of sabu jacob having political ambitions are completely baseless.

(siyaram7) #1327

Seems like company has accidently revealed Q1 results in AGM presentation by giving margin % numbers…works out to be 27cr PBT…Lets see ;)(Q1 results are on 13th Aug)

(shikhar mundra) #1328

results for this quarter
turnover of - 132.22 cr ( other income - 9.41 cr)
PBT - 30.16 cr

(Harshit Goel) #1329

Kitex gave decent numbers for Q1FY19.

  • EBITDA Margins declined yoy from 28.19% to 22.82%. EBITDA Margins improved qoq from 14.46% to 22.82%.
  • Current qrtr working was supported by Rs. 9.4 cr Other income.
  • Appointment of Mr. Krishnaraj S. as CFO from 01.10.2018. Mr. Krishnaraj S. has a good background.
  • Setting up unit in Infopark SEZ in Kochi with project cost of Rs. 3 cr.

Board Meeting outcome.


(almantri) #1330

Is there any impact of flood on production?

(koti) #1331

Sabu M Jacob and kitex story in andhra pradesh news paper sunday edition … inspiring

(dharma) #1332

The prices are going steeply up since Wednesday 29th Aug 2018. Despite looking around, I fail to see any reason for this. The unaudited quarterly results were declared on 13th Aug (18 days ago), and since then it only went down slightly after trading flat. Anyone can shed any light on this?

Disclaimer: I’m relatively new to investing world, so kindly excuse me if this is a stupid question. I’m interested in Kitex as have small holding that were purchased about 8-10 years ago by my father and I’m now trying to get to the bottom of this.

(rajput.delhi) #1333

Latest interview…


(prnwin) #1334

incorporation of wholly owned subsidiary in the name of ‘Kitex Littlewear Limited’. How different is it from the current line of business?

(IcyHot) #1335

As per the BSE shareholding pattern, Valuequest moat fund reduced its holding in Q1 2018 and exited completely in Q2 2018. Could it be indicating deeper troubles with governance? I guess VQ moat fund would have exited taking a loss…

(Janarthanan Natarajan) #1336

Yes, as per the latest shareholding pattern, Valuequest Moat Fund has exited.

Regarding governance, various issues have already been discussed extensively on the forum. It would be prudent for members to pay attention to them.

On the business side - all the subsidiaries have been incorporated as per the AGM presentation. Personally I am not sure of the logic of so many subsidiaries though.
New CFO appointment is a definite positive.

Would be good if they restart the investor conf calls. Would be great if we could get updates on the business side of things:

  1. Have new clients been tied up for the large capex plans?
  2. Who are those clients? I am assuming there would be a lengthy approval process and if so at what stage are those approval plans now?
  3. Little Star and Lamaze performance and future plans on the brand. How active would be the marketing for these brands?
  4. Capex related details - Has the land been finalized?
  5. Health of other US brick and mortar retailers and how much can we increase supply to existing clients with new capex plans?
  6. In the past Mr Sabu had mentioned that they had already started trials for Target, Walmart by sending them small samples and he expects big orders from them? Has there been any progress on those?
    Recently when I searched for little star organic on Walmart website I found some products listed. See below
    However when I searched for the same on Target website, it doesn’t seem to be listed.
  7. Any specific plans to engage with big online retailers like Amazon?

Disc: Holding

(IcyHot) #1337

Thanks for your response. Good set of questions. WiIl wait for somebody to answer the same. Hoping for a good recovery.
Disclaimer -Holding.

(shikhar mundra) #1338

good set of results
-revenue at 181 cr( includes other income of 13 cr ) as against 151 cr yoy
-PBT at 41.45 cr as against 38.3 cr last year.

  • PBT margins at 23 % ; EBITDA margin at 27 %;
  • turnover of the company has been slightly better than the projections given in the AGM for this quarter.

Disc- Invested

(Janarthanan Natarajan) #1339

Decent P&L nos but important to look at the balance sheet as well. Important points to note are:

  1. Working capital has increased and this could be the new normal (similar to what we saw in March 18 balance sheet too). Need to understand how much of the sales are to Kitex USA and the corresponding receivables from Kitex USA compared to sales and receivables of other clients.
  2. Short term borrowings of 65Cr. After bringing it down to almost zero in the last year they have started taking short term loans again.
  3. Cash balance has increased to 129Cr from ~93Cr.

(shikhar mundra) #1340

investor presentation

(phreak) #1341

Export numbers for baby garments has pretty much mirrored Kitex’s topline. FY11 to FY15 showing value growth at different rates and stagnant/receding since (FY19 numbers are till Sept). Realisation per piece doesn’t seem to have even kept pace with inflation.


With cotton yarn prices inching up now, should affect gross margins further. They are passing on some of it going by the realisation increases in recent months but yarn prices seem to have gone up about 20% levels in Q2, so the pain seen in the about 1000 bps reduction in gross margins for kitex in Q2 as well is in line with these numbers.

(koti) #1342

(Harshit Goel) #1343

Kitex Garment latest credit rating report by ICRA, rating is reaffirmed.

Key Points

  • The Group is expected to record revenue growth of over 20% in the current fiscal, as reflected in its steady H1 FY2019 performance and strong order book position at the end of Q2 FY2019, driven by a combination of healthy growth in volumes and moderate improvement in realisations.
  • Besides a modest revenue growth in FY2018, the operating margins fell sharply due to reduction in export incentives post implementation of the Goods and Services Tax (GST) coupled with rising operating costs.
  • Operating margins over the medium term are expected to remain at around 25-27%, driven by its integrated manufacturing setup with a high level of automation and strong operating efficiencies.
  • Addition of new customers and consistent growth in order inflow from existing large customers are likely to drive steady revenue growth of 15-20% over the medium term.
  • The Group’s performance improved in H1 FY2019, driven primarily by growth in volumes. With the order book position remaining at healthy levels at the end of September 2018 coupled with recent addition of new customers, volumes are likely to witness a robust growth of 15-20% over the medium term.
  • Top three customers of the Group continue to contribute to more than 90% of volumes.
  • Capital expenditure plan of Rs. 910 crore for the period FY2019 to FY2025 towards significant addition of capacities across the value chain including knitting, processing and garmenting. The Group’s cash accruals are expected to remain more than Rs. 150 crore per annum during the same period, which would result in Total Debt to Tangible Net Worth (TD/TNW) and Total Debt to operating profits (TD/OPBDITA) not exceeding 0.4 times and 1.0 times, respectively.