In This Article:
Kitex Garments Limited (NSE:KITEX), a ₹8.25b small-cap, operates in the consumer discretionary industry, whose performance is predominantly driven by consumer confidence. Macro elements tend to determine how fast, and how often, consumers buy luxury goods. Consumer discretionary analysts are forecasting for the entire industry, a positive double-digit growth of 25.1% in the upcoming year , and an enormous growth of 74.1% over the next couple of years. the growth rate of the Indian stock market as a whole. Below, I will examine the sector growth prospects, and also determine whether Kitex Garments is a laggard or leader relative to its consumer discretionary sector peers.
Check out our latest analysis for Kitex Garments
What’s the catalyst for Kitex Garments’s sector growth?
E-commerce continues to be the fastest growing sales platform, changing the retail landscape. In the previous year, the industry saw growth in the teens, though still underperforming the wider Indian stock market. Kitex Garments lags the pack with its negative growth rate of -23.9% over the past year, which indicates the company has been growing at a slower pace than its luxury goods. peers. However, the future seems brighter, as analysts expect an industry-beating growth rate of 36.9% in the upcoming year. This future growth may make Kitex Garments a more expensive stock relative to its peers.
Is Kitex Garments and the sector relatively cheap?
The luxury goods sector’s PE is currently hovering around 15.29x, in-line with the Indian stock market PE of 19.55x. This means the industry, on average, is fairly valued compared to the wider market – minimal expected gains and losses from mispricing here. However, the industry returned a lower 7.2% compared to the market’s 9.3%, potentially indicative of past headwinds. On the stock-level, Kitex Garments is trading at a PE ratio of 12.98x, which is relatively in-line with the average luxury goods. stock. In terms of returns, Kitex Garments generated 12.7% in the past year, which is 5.5% over the luxury goods. sector.
Next Steps:
Kitex Garments’s industry-beating future is a positive for shareholders, indicating they’ve backed a fast-growing horse. However, this high growth prospect is most likely factored into the share price, given the stock is trading in-line with its peers. If Kitex Garments has been on your watchlist for a while, now may be the time to enter into the stock. If you like its growth prospects, you’ll be paying a fair value for the company. However, if you’re hoping to gain from an undervalued mispricing, this is probably not the best time. However, before you make a decision on the stock, I suggest you look at Kitex Garments’s fundamentals in order to build a holistic investment thesis.