Shares of KPR Mill touched a 52-week low of Rs 479.60,
falling over 9% on the BSE in intra-day trade. The stock has plunged 24% so far
in the month of June on a cautious outlook.
Global retailers have significantly lowered their profit
projections, sighting raw material inflation and removal/reduction of stimulus,
dampening the outlook. With the recent decline, the stock of the garments and
apparel maker has fallen 38% from January 17, 2022. In comparison, the S&P
BSE Sensex was up 1.7% at 52,463 points at 12:50 PM.
Also Read | Crypto news daily: Bitcoin data and price analysis for June 21, 2022
In the past year, the market price of KPR Mill has surged
60% as compared to a 0.22% decline in the Sensex on the account of strong
earnings.
For the financial year 2021-22, the company reported a
profit after tax (PAT) of Rs 842 crore, up 63.38% year on year from Rs 515 crore
in the previous fiscal. Earnings before interest, taxes, depreciation, and
amortization (EBITDA) margin improved 230 basis points to 26.6% in fiscal 2022
from 24.3% in fiscal 2021. However, in the March quarter EBITDA margin
contracted 90 bps to 23.8% from 24.7% in the year-ago quarter.
Also Read | New WhatsApp update: All you need to know
Indian domestic textile firms witnessed a decline in market
share in the US. India’s apparel export data in May 2022 has seen a receding
trajectory, said analysts at ICICI Securities.
Also Read | New WhatsApp update: All you need to know
“US is one of the key textile markets for India
accounting for 50% of home textile exports and 28% of apparel exports. Hence,
reduced purchasing power in key export markets would negatively impact the
order book of Indian exporters,” the brokerage firm said in a textile
sector update.
Also Read | Sri Lanka troops open fire at protesters over petrol, diesel supply
Textile stocks have seen a significant surge in the past
two years. However, the brokerage firm says that current headwinds could
outweigh the long-term structural story (expected free trade agreements with
Europe/UK, PLI scheme, China+1) in the near future.
Also Read | Bitcoin meltdown lands El Salvador’s economy in a muddle
The brokerage firm further added that the recent
events/news flow suggested that major US retailers like Gap, Target, and
Walmart) were grappling with excess inventory issues owing to
lower-than-expected demand and delayed deliveries due to port congestion resulting
in seasonal and occasion-specific products remaining unsold.
Also Read | SpaceX fires employees critical of ‘free speech absolutist’ Elon Musk
“The textile sector has good long-term potential but
we advise a cautious stance on the sector currently owing to near-term
headwinds. Hence, we downgrade the stocks from BUY to HOLD,” analysts
said, with a target price of Rs 635 on KPR Mill.
The stock closed 18.95 points or 3.61% down at Rs 505.50 on
the Bombay Stock Exchange (BSE).