A very known brand, S Kumars is a name associated with mainly school uniforms and suitings. Over the years, it has metamorphosed into a big company with many bigger brands. It continues to sell uniforms, work-wear fabrics and blended suitings under S. Kumars and Belmonte brands; worsted suitings, wool-polyester blended suitings sold under Reid & Taylor brand; home textiles sold under Carmichael house brand and ready-to-wear garments sold under the brands Reid & Taylor and Belmonte brands. Incidentally, Belmonte is the “official” suits sponsorer of IPL’s Kolkatta team, of which Shahrukh Khan was as such the brand ambassador. So over the next few days, this S Kumars brand is expected to get more visibility.
Financially also S Kumars Nationwide (SKN), the company seems to be doing pretty well. For the third quarter ended 31st December 2007, YoY, the company’s net sales rose 44% and despite a 40% rise in total expenditure, EBIDTA was up 61% at Rs.101.36 crore. OPM improved on the back of high sales at 22.37% from 19.99% in Q3 FY07. The company’s interest outgo rose by a whopping 75% at Rs.25.28 crore and despite this, the company has managed to post very healthy PBT up 72% at Rs.64.68 crore and PAT also rose 72% at Rs.57.20 crore. NPM was up from 10.57% to 12.62%. On an equity of Rs.202.16 crore, the EPS, on a face value of Rs.10 per share, stands at Rs.2.83.
The consumer textiles contributes about 60% to the sales, Reid & Taylor contributes 25%. Over the next three years, consumer textiles contribution is expected to be about 31 - 32% to sales, Reid & Taylor is expected to remain the same, home textiles is expected to become an area of focus and is expected to contribute 17-18%. Infact the company has stated that in the domestic market, its ready-to-wear segment is going to be the fastest growing segment, but on the international front, high value cotton fabrics and home textiles are going to be the focus. The company is also planning to launch brands in the home textile segment, called Carmichael House any time now.
The company is now busy restructuring some of its businesses. It has demerged its retail business - Brandhouse Retails Ltd (BRL) into a separate company and shareholders of SKN would be eligible to receive the one equity share of BRL against five equity shares held in SKN. Record date for this is yet to be fixed. What this also means is that the company, at a future date is surely looking at an IPO of this retail company.
SKN also hived off its Reid & Taylor division, including the factory at Mysore, with all assets and liabilities relating to the division on slump sale basis and on as is where basis as a going concern to its subsidiary company - Reid & Taylor (India) Ltd.
In textiles, it is all about the brand name. S Kumars has a very good brand presence and in the coming days, its brands are expected to get more visibility, thanks to IPL. Currently quoted at Rs.82, stay invested and on declines, one can even consider investment.
Source: sptulsian.com
