Kerala-based Kitex Garments has entered Telangana with an initial investment of Rs 1,000 crore. Shares of the company soared over 18 per cent to Rs 166.45 on Monday, scaling its new 52-week high. Sensex was trading 239.32 points, or 0.46 per cent, at 52,625.51 at the time of writing this report. The counter settled at Rs 140.55 on Friday.
Kitex, as part of the deal with Telangana government, would be setting up its factories at Kakatiya Mega Textile Park in Warangal district. The Telangana government had extended an invitation to the company for setting up an apparel unit in the state.
Sabu Jacob, chairman of Kitex Group, has reiterated that his group would not make any further investments in home-state Kerala. The labour department of Kerala govt has withdrawn showcause notices issued to the company on the minimum wage issue.
Kitex Garments has surged over 46 per cent in the last one week. The counter has delivered 55 per cent return in the last one year.
Likhita Chepa of CapitalVia Global Research said despite the company’s ROE appearing to be low, it is higher than the industry average. She has a target price of Rs 185 on the counter. “The company is retaining most of its earnings to fuel its growth but the earnings have actually shrunk,” she added.
On June 30, Kitex, the world’s second largest manufacturer of kids apparel had announced to withdraw Rs 3,500 crore investment from Kerala alleging an incessant witch hunt and harassment by state government officials.
The apparels and accessories manufacturer reported a 49.3 per cent decline in net profit to Rs 9.73 crore in March 2021 quarter as against a net profit of Rs 19.22 crore in the same quarter previous year.
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