Khadim India IPO: All that you need to know | IPO | Substantial growth prospects in Tier II and Tier III cities | Outlook | Fundamental | Indianotes.com


Khadim’s India Ltd (KIL), incorporated in 1981, is a second leading footwear brand company with the largest presence in East India and one of the top three payer brand in South India. KIL core business object is “Fashion for everyone”, operates in 829 exclusive retail stores across 23 states and one territory in India, through retail business verticals and a network of 357 distributors. KIL is led by the promoter, chairman and MD – Siddhartha Roy Burman, with 34 year of rich experience working with the company. Company has its 162 owned and operated outlets and 667 are franchise operated stores.

  • Indian Footwear market to experience increase in demand
  • Second largest exclusive retail network with the largest exclusive franchisee retail network in India
  • Distribution Business aggregating on an Asset Light model for the company


 

Outlook and Valuation


With a large untapped market and increase in segmental demand across the geography, the company has substantial growth prospects through expansion in new and existing geographical locations (in Tier II and Tier III cities). Affordable pricing across its sub-brands will help the company garner market share of the unorganized segment of footwear industry. Although, high competition and restricted entry into new geographies could present a challenge for the company’s expansion plan, we believe affordable pricing, the asset light model and large distribution network of the company would contribute towards sustained growth and improvement in margins and asset turnover ratio. We expect revenues to grow at 15% CAGR FY17-19E with 140 bps expansion in EBITDA margins to 12%. We expect PAT to grow at compounded rate of ~36% to INR 566 mn by FY19 owing to reduction of Interest cost on account of debt repayment. At the upper price band of INR 750/share, the issue is valued at a PE of 43x with FY17 Adj.EPS of INR 17.4. We recommend to SUBSCRIBE to the issue as a high risk high return long term investment.

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