Prabhudas Lilladher has changed its stance on K P R Mill, setting a target of Rs 1,289 following a recent quarterly report. The company posted an 18.9% increase in revenue to Rs 19,397 million, supported by gains in its textile and sugar businesses. Investors may track potential margin pressure related to future expansion plans in the coming years.
Prabhudas Lilladher has adjusted its outlook on K P R Mill, issuing a positive rating with a price target of Rs 1,289. This change follows the company’s recent quarterly performance, which surpassed analyst expectations in several key areas. The company reported revenue of Rs 19,397 million, an 18.9% increase compared to the same period in the previous year. Profitability also showed improvement, with the company recording an EBITDA margin of 25.7%, representing a 6.4% gain over the second quarter of the previous fiscal year.
The improvement in financial performance was largely supported by growth across the company's core segments. The textile division, which remains the primary revenue contributor, posted a 16.6% year-on-year revenue increase. Within this, the yarn and fabric business grew by 20.7%, while the garment segment saw an 11% rise. These segments benefited from improved sales realizations, contributing to a 606 basis point expansion in EBIT margins for the textile business, which reached 24.9%.
Apart from textiles, the company's sugar and ethanol operations also recorded double-digit growth. Sugar revenue rose by 26.9%, aided by a 15.2% increase in sugar prices to Rs 45.1 per kilogram. The ethanol segment also performed well, with revenue climbing by 20.5%, driven by a 24.9% increase in volumes.
Despite the positive quarterly results, analysts are highlighting potential risks regarding profit margins as the company moves into fiscal year 2028. The brokerage anticipates that margins may face pressure due to costs associated with upcoming capital expansion projects. While the long-term projections remain, the pace of growth and the ability of the company to manage costs during this expansion phase are critical points for shareholders to monitor.
Investors may keep a close watch on several factors moving forward. These include the actual demand trends in the textile sector, the stability of sugar and ethanol prices, and the company's ability to execute its planned expansions without significant cost overruns. The timing of the commissioning of new projects and how these investments impact the company's cash flow will be key indicators for the coming quarters.