Kewal Kiran Clothing hosted a conference call on February 11, 2025. In the conference call, the company was represented by Mr Pakaj Jain –President Retail and Mr Hemant Jain –Joint Managing Director.

Key takeaways of the call

Q3FY2025

Revenues for the quarter stood at Rs 255.2 crore up 28% YoY. Growth momentum was driven by healthy volume growth in the apparel segment and consolidation of Kraus. The company has witnessed healthy growth in volumes both on standalone and consolidated levels.

Inventory method: The company had reduced inventory in FY2024 when compared to FY2023 for changing the production process for just in time or near to the season strategy. However, the lead time to produce garment is 3-4 months cycle and the company realized that the ecosystem is not ready to produce the desired output in short period. As such, despite having strong order book, the company was not able to produce the products in Q1and Q2FY2025. Stating from Q2 FY2025, the company has restored the earlier production timeline. However, it will take 6-9 months to reach the optimum level of inventory. Currently the production schedule has been streamed line and the company believes from Q4FY2025 the company will witness double digit revenue growth.

Lawmen brand: Some amount was revenue was lost in Lawmen brand due to discontinuation of MBO channel in Lawmen brand as part of brand reposition in fastfashion through own EBO only.

Lawmen brand mainly caters to men’s and the price is around youth centric brand.

The company has opened 61 EBO of Lawmen upto Q3FY2025.

EBO’s: The company has total EBO’s of 591 of which 404 EBO’s is for Killer brand, 116 is of K-Lounge & Others, 61 is of Lawmen and 10 is of Kraus. This has resulted in increase in increase in contribution from EBO channel driving overall momentum in the sales performance.

The company plans to add 50-60 Killer brand EBO’s and 40-50 Lawmen brand EBO’s in FY2026.

In Killer brand 85% of the EBO’s ore FOFO(franchisee owned franchisee operated) and 15% is company owned company operated. While in Lawmen brand 10% is company owned company operated.

Of the new EBO’s 40% new EBO’s will be opened in Tier 1 cities and the balance in tier 2 and 3 cities.

Kraus Brand: Kraus had revenue of Rs 175 crore in FY2024 and in Q3, Kraus contributed revenues to the tune of Rs 53 crore.

Kraus had EBITDA margins of around 20% in Q3FY2025 and the sustainable EBITDA is around 18-20%.

CAPEX: The company plans to incur a CAPEX of around 30-35 crore over next 2 years of which 50% will be towards increasing the manufacturing capacity and the balance toward increasing the retail presence.

Volumes: Of the total volumes around 80% is manufactured in-house and the balance 20% is outsourced.

Advertisement Expenditure: Advertisement was around 5% of the total revenue for 9MFY2025 and the company expects the same to be in the range of 5-7%.

Other income: Reduced from Rs 9 crore in Q3FY2024 to Rs 1.5 crore in Q3FY2025. This is primarily due to MTM loss on investments in debt funds to the tune of Rs 3 crore.

Going forward, the company will have normalized other income in the range of Rs 8-9 crore going forward.

Manufacturing Expenses: Manufacturing expenses increased from 7.1% in Q3FY2024 to 11.4% in FY2025. This is due to built up of inventory and manufacturing expenses incurred for Kraus.  

Cash outflow: The company will have pay Rs 50 crore to wards the stake purchase over next 3 years. The company will also incur construction expenditure towards office building.

Outlook: Demand is good for the company’s products. The current quarter(Q4FY2025) looks exciting for the company and the company expects double digit growth.

The company expects double digit revenue growth in FY2026 and EBITDA margin in the range of 18-20%.