KPR Mill sugar growth and garment expansion support margin outlook

Investment View and Valuation

Motilal Oswal Financial Services’ August 10, 2026 results update reiterates a Neutral rating on KPR Mill. The broker considers KPR Mill well positioned to benefit from its leadership in Indian textiles and apparel, supported by the largest garmenting capacity among listed peers.

However, Motilal Oswal believes the prevailing valuation already captures low- to mid-teen growth, leaving limited upside from the report CMP of Rs 1,086. Its target price of Rs 1,200 is based on 22x FY28E EV/EBITDA.

1Q FY27 Financial Performance

KPR Mill reported 1Q FY27 revenue of Rs 19,355 million, up 9.6 per cent year on year and 4.4 per cent above Motilal Oswal’s estimate of Rs 18,546 million. The sugar business, contributing 22 per cent of the portfolio, grew 21 per cent, whereas the textile portfolio, contributing 77 per cent of sales, recorded muted growth of 1 per cent.

Textile EBIT margin improved 130 basis points year on year to 18.5 per cent, while sugar EBIT margin rose 920 basis points to 9.5 per cent. Quarterly gross margin expanded 480 basis points year on year to 40.7 per cent.

EBITDA margin improved despite employee expenses rising 19.2 per cent and other expenses increasing 24.4 per cent year on year. Adjusted PAT grew 21.7 per cent year on year to Rs 2,585 million.

Earnings Outlook

Motilal Oswal expects KPR Mill to deliver revenue CAGR of 13 per cent, EBITDA CAGR of 20 per cent and PAT CAGR of 20 per cent over FY26 to FY28, led primarily by the garment portfolio. It expects profitability to improve through operating leverage, a better product mix and improved cotton-yarn spreads.

Motilal Oswal’s FY27E and FY28E revenue, EBITDA, PAT and EPS estimates were unchanged following the quarterly result.

Capacity Expansion and Growth Drivers

The board has approved a Rs 12,250 million capacity-expansion and modernisation programme across the textile value chain, with expected turnover of Rs 20,000 million.

• A greenfield readymade-garment manufacturing facility in Odisha with capacity of 45 million garments per annum, expected to be operational in 1Q FY28.
• Planned expansion in Coimbatore.

Motilal Oswal sees capacity ramp-up, favourable garment demand and expansion into higher-margin branded apparel as growth drivers.

Key Risks

• Dependence on export markets.
• Cyclicality in apparel demand.
• Intense global competition.