Report
Team AKD Research
EUR 9.10 For Business Accounts Only

KTML - Stars aligning; signaling Buy, (AKD Daily Nov 14 2023)

AKD Daily

 

KTML - Stars aligning; signaling Buy

 

  • Spinning division of KTML (contributing ~50% to the topline) is expected to grow amidst expected increase in the cotton arrivals (expected 11.5-12mn bales vs. 4.9mn bales SPLY).
  • Additionally, the possible recovery in textile exports and hedge to constantly weakening currency is poised to elevate the company's topline, with an expected CAGR of 8% from FY24 to FY28.
  • The decline in cotton prices (currently ~PkR18.9k/maund vs. FY23 avg. of PkR20.4k/maund) is expected to offset the increasing energy cost amidst removal of RCET. Furthermore, with more solar projects (15MW) under pipeline, solar contribution in the power mix is expected to increase to 32% from currently 9% (after-tax annual saving of PkR4.0/sh)
  • MLCF (company’s cement subsidiary) contributes heavily to the SOTP value, with KTML holding a controlling interest of 57.43% share, valuing at ~PkR88/sh as per LDCP.
  • Overall, we have a ‘Buy’ call on KTML with a Jun’24 SOTP Target Price of PkR113/sh, providing an upside of 45% over last close.

 

 

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AKD Securities Limited
AKD Securities Limited

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