Issue Opens 2-Nov-17 Issue Closes 6-Nov-17 IPO Reviewcontent.icicidirect.com/mailimages/IDirect_Khadims_IPO...Khadim’s, revenue and PAT in FY13-17 grew at a CAGR of 10% and 36% respectively

November 1, 2017

IPO Review

ICICI Securities Ltd | Retail Equity Research

Khadim India (Khadim’s), incorporated in 1981, is one of the leading

footwear brands in India, positioned itself as an ‘affordable fashion’,

catering to the entire family for all occasions. With 853 exclusive branded

outlets (as on June 30, 2017), Khadim has the second largest number of

retail stores (after Bata) with largest presence in East India and one of the

top three players in South India. Bedside’s its retail stores; Khadim caters

to various multi branded outlets (MBOs) through its strong distribution

business model, consisting of 377 distributors. Apart from its flagship

brand ‘Khadim’, company has nine home-grown sub-brands catering to

premium category. Khadim’s, revenue and PAT in FY13-17 grew at a

CAGR of 10% and 36% respectively.

Key business aspects

Asset light business model for retail segment…

Over the years, Khadim has adopted an asset light business model to

operate its exclusive retail stores with minimal capex requirements. Of the

total 853 exclusive stores, 168 stores are company owned and company

operated stores (COO) and the rest 685 are franchisee operated stores.

Under the franchisee route, inventory, capex and operating costs are

borne by the franchisee owner. Out of the total 289 stores added between

FY13 and FY17, 229 stores were opened through franchisee route. The

company adopts dual strategy where it enters new potential markets

through flagship COO’s and once the brand is well established it further

fortifies its presence in such markets through franchisee route. Going

forward, the company intends to open 70-80 stores annually with 20%

through COO formats while the rest through franchisee formats. The

asset-light approach has enabled Khadim to generate high return ratio for

the retail segment (~27% ROCE).

Premiumisation of brands to enhance profitability …

Apart from its flagship brand ‘Khadim’, the company has nine home-

grown sub-brands catering to retail business. Over the years, company

has constantly focused on increasing the share of sub-brands in overall

retail sales to drive its premiumisation strategy. Share of revenues from

sub-brands to total retail sales has increased from 43% in FY13 to 52% in

FY17. Scaling up the share of sub-brands has resulted in increase in

average selling price (ASP) for COOs from | 375 in FY13 to | 451 in FY17

and higher gross margins for the retail business at 47% in FY17 vs. 43%

in FY13. Gross margin for the distribution business has also increased

from 28.5% in FY13 to 39.2% in FY17 owing to higher share of

premiumised products. Going forward, higher focus on premiumisation

would assist in margin improvement.

Key risks and concerns

Risks associated with expansion into new geographic markets

Higher concentration of operations in East India

Difficulties in attaining desired quantities from outsourced vendors

Reasonably valued at 2.2x MCap/sales & 43.8x P/E (FY17); Subscribe

At the higher end of IPO price brand of | 750, the stock is valued at 2.2x

MCap/sales and P/E of 43.8x on FY17 numbers (post issue). We believe

Khadim is reasonably valued as compared to its peers (Exhibit 23).

Khadim has followed an asset light business model leading to superior

return ratios (17%+RoCE), with debt/equity ratio comfortably placed at

0.6x. Khadim’s constant efforts towards premiumisation of product mix

coupled with asset light expansion plans would further enhance

profitability going ahead. We advise SUBSCRIBE on Khadim.

Khadim India Ltd

Price band | 745-750

Rating matrix

Rating : Subscribe (Apply)

Issue Details

Issue Opens 2-Nov-17

Issue Closes 6-Nov-17

Issue Size (| Crore) 543

Fresh Issue 50

Offer for Sale 493

Price Band (|) 745-750

No of Shares on Offer (crore) 0.7

QIB (%) 50%

Non-Institutional (%) 15%

Retail (%) 35%

Minimum lot size (No. of shares) 20

Objects of issue

Amount

a) Repayment of all or a portion of term loans

and working capital facilites availed | 40 crore

b) General corporate purposes | 10 crore

Shareholding pattern (at upper price band: | 750)

Pre-Issue Post-Issue

Promoter & promoter group 66.2% 59.7%

Public 33.8% 40.3%

Financial Summary

| Crore FY14 FY15 FY16 FY17

Total Revenue 478.1 460.2 534.5 621.2

EBITDA 49.6 13.7 52.4 65.8

EBITDA Margin (%) 10.4 3.0 9.8 10.6

PAT 12.1 (18.7) 25.2 30.8

EPS* 6.7 (10.4) 14.0 17.1

* Considering post equity dilution

Valuation Summary (at upper price band: | 750)

(x) FY14 FY15 FY16 FY17

P/E 111.2 -71.9 53.5 43.8

Price/Sales 2.8 2.9 2.5 2.2

Research Analyst

Bharat Chhoda

[email protected]

Cheragh Sidhwa

[email protected]

Page 2 ICICI Securities Ltd | Retail Equity Research

Company Background

Khadim India (Khadim’s), incorporated in 1981, is one of the leading

footwear brands in India, positioned itself as an ‘affordable fashion’,

catering to the entire family for all occasions. Khadim’s operates through

two distant business verticals, retail and distribution, each having its own

customer base, sales channel and product range. Its retail business

operates through exclusive retail stores catering to middle and upper

middle income consumers in metros and Tier I-III cities, who primarily

shop in high street stores and malls for fashionable products. As for the

distribution business is concerned, it operates through a wide network of

distributors catering to lower and middle income consumers, who

primarily shop in multi brand outlets (MBO’s) for functional products.

Exhibit 1: Sales mix trend

82.6 84.8 80.7 77.8 73.5

14.9 12.5 16.2 19.221.7

0.0

20.0

40.0

60.0

80.0

100.0

120.0

FY13 FY14 FY15 FY16 FY17

%

Others Distribution Retail

Source: DRHP, ICICIdirect.com Research. *Only footwear revenues

Retail business:

The retail business contributed 73.5% of the total revenues in FY17. With

853 exclusive branded outlets (as on June 30, 2017), Khadim has the

second largest number of retail stores (after Bata) with largest presence in

East India and one of the top three players in South India. Of the total 853

exclusive stores, 168 stores are company owned and company operated

stores (COO) and the rest 685 are franchisee operated stores (which are

further categorised as EBO’s, BO’s and FRM). Under the franchisee route,

inventory, capex and operating costs are borne by the franchisee owner.

As for the COO’s are concerned, majority of the retail stores are leased

with rental expenses in the range of 5.8-6.5%.

In the retail business, the product range primarily focuses on fashionable

footwear that are targeted towards middle and upper middle income

consumers in metros and Tier I-III cities, who primarily shop in high street

stores and malls. For FY17, the products for the retail business were

priced in the range of (MRP) | 75 to | 3599. The company presently

promotes nine-home grown brands which are ‘Pro’, ‘Lazard’, ‘Softouch’,

‘Cleo’, ‘British Walker’, ‘Turk’, ‘Sharon’, ‘Bonito’ and ‘Adrianna’. These

sub-brands contributed 52% of the overall retail sales.

Due to the fashion oriented nature of the footwear retail business

requiring lower volume per SKU, a significant portion of the products sold

through the exclusive stores are sourced from the outside vendors, who

are able to deliver small quantities of premium high quality products. For

FY17, 85.6% of the products sold in the retail business were outsourced.

Over the years, the company has rationalised its vendor base from 182

vendors in FY13 to 107 vendors as at June 30, 2017.


Exhibit 2: Retail segment: Revenues and gross margin trend

305.2

358.1

332.2

402.1

456.5

0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0


| c

rore

40

41

42

43

44

45

46

47

48

%

Revenue Gross Margins

Source: DRHP, ICICIdirect.com Research

Exhibit 3: Store operating metrics


Exhibit 4: Format-wise revenue and profitability break-up

Retail Breakup (FY17) COO EBO BO FRM

Revenue (| crore) 240.2 174.8 28.0 13.4

% of sales (retail) 52.6% 38.3% 6.1% 2.9%

Gross Margins (%) 51.6% 40.8% 43.3% 48.5%

Store level cost (%) 22.3%

Store level EBITDA (%) 29.4%

Source: DRHP, ICICIdirect.com Research. Since company does not bear any operating cost for franchises, gross

margins of company from its franchises is equal to store level EBITDA at company’s level.

Revenues from the retail segment grew at a CAGR of

10.6% over FY13-17 with gross margin expansion of 435

bps to 47%


Exhibit 5: Stores by city type FY17

Metros & Mini

metros

18%

Tier I

13%

Tier II

15%

Tier III

54%

Source: DRHP, ICICIdirect.com, Research

Exhibit 6: Geographical break-up of stores as on 30th June 2017

North

7%

South

18%

East

66%

West

9%


Exhibit 7: Average Ticket size (|) (For COO’s)

555

576

624

520

540

560

580

600

620

640

FY15 FY16 FY17

|


Exhibit 8: Sub- brands contributed 52% to overall retail sales



Distribution business:

Since 2015, company has focused on its distributions operations as a

separate business vertical. Through this model, the company caters to

lower and middle income customers who shop in MBOs. The products

are sold under its Khadim brand (sub-brands are not sold through

distribution model) which mainly consists of synthetic leather. For FY17,

the products were priced in the range of (MRP) | 30 to | 500. It has a

distribution network of 357 distributors and a sales team of 39 members.

The distribution business contributed 21.7% of the total revenues in FY17.

Due to high volume of products per SKU sold through the distribution

business and for better control over cost, a significant portion of products

sold through the distributors are manufactured by the company at its own

manufacturing facilities and through contract manufacturing facilities.

Khadim has two owned manufacturing facilities in West Bengal (installed

capacity of 2.34 crore pairs) and two outsourced manufacturing facilities

for which the raw material is supplied by Khadims. Also, Khadims has

established relationships with large to number of vendors for

procurement of raw materials to reduce any risk of supplier

concentration. Khadim has 33 major raw material suppliers with no single

supplier contributing more than 15% of its total raw material

procurements.

Exhibit 9: Distribution Segment: Revenues and gross margin trend

55.1 52.7

99.2

134.7

66.8

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0


| c

rore

20.0

25.0

30.0

35.0

40.0

45.0

%

Revenue Gross Margins


Revenues from the distribution segment grew at a CAGR of

25.0% over FY13-17 with gross margin increasing from

28.5% in FY13 to 39.2% in FY17


Industry overview

The domestic footwear market in India is projected to grow at a CAGR of

15% to reach US$ 12.6 billion by FY 2020 from US$ 7.2 billion in FY16.

The key drivers for the footwear segment will be: a) increased adoption

owing to versatility in usage, and b) shift from unbranded to branded.

Exhibit 10: Domestic footwear industry market size

5.5

7.2

12.6

0

2

4

6

8

10

12

14

FY14 FY16 FY20P

US

$ B

illion

15% CAGR

Source: DHRP, ICICIdirect.com Research

Segment per se, the market is currently dominated by men’s segment

with ~54% market share, while women and kid’s segment contribute

37% and 9% respectively. Going forward, women and kid’s segment is

expected to outpace men’s growth. Growth in women’s segment will be

driven by increasing number of working women and increasing

disposable income. Also, women are not loyal to particular brand and

change their fashion trend with specific occasion, which will drive volume

growth. Kid’s market is growing rapidly with increasing number of

working parents resulting in higher spending on kids. Also, with the

advent of activity based learning in schools, different shoe types are

needed for varied different activities. Men, women and Kid’s segment are

expected to grow at a CAGR of 12%, 18% and 20% respectively in FY16-

20E.

Exhibit 11: Men’s segment dominates the market

3.9

6

2.7

5.2

0.6

1.4

0

2

4

6

8

10

12

14

FY16 FY20P

US

$ B

illion

Men Women Kid

54%

37%

9%

48%

41%

11%

12% CAGR

18% CAGR

20% CAGR



Branded footwear market which currently has a market share of 42% is

expected to grow at a CAGR of 20% in FY16-20E to account for 50% of

the overall market share. The growth will be driven by penetration of

existing brands such as Bata, Khadim etc. in Tier 2 and smaller cities.

Growth will also be driven by the increasing reach of mid and economy

brands to Tier II/III Indian cities and shift of consumers from unbranded

products to branded with increase in disposable income, better

availability of product and increasing health consciousness. The mass

footwear segment driven by chappals and sandals too, is witnessing

consumers adopting branded products owing to strong distribution

network of brands like Khadim, VKC, Paragon, Relaxo etc.

Exhibit 12: Branded footwear market to account for 50% market share by FY20

3.0

6.3

4.2

6.3

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

FY16 FY20P

US

$ B

illion

Branded Unbranded

42%

58%

50%

50%

20% CAGR

11% CAGR



Khadim’s Strategies

Expanding geographical footprints in western India and northern India

Over the years, Khadim has an established strong presence in East and

South India through its exclusive retail network. In the last few years, its

presence in West and primarily in Uttar Pradesh in North India, has also

witnessed sustained growth. Going forward, the company intends to

continue expanding its geographical footprints in markets across west

India, south India and in Uttar Pradesh in North India through flagship

COO’s and further strengthen its presence in such markets through

franchisee route. In order to execute this strategy, the company

undertakes detailed micro-mapping which includes analysis with respect

to customer profile, purchasing habits, competition, average footfall and

major upcoming developments before entering new markets. For the

distribution business, the company has a network of 377 distributors,

spread across East (291), South (25), North and west (61). Company

intends to continue to penetrate in the existing markets and increase the

distribution networks in new markets.

Continue to focus on asset light model led growth

Over the years, Khadim has adopted an asset light business model to

operate its exclusive retail stores with minimal capex requirements. Of the

total 853 exclusive stores, 168 stores are company owned and company

operated stores (COO) and the rest 685 are franchisee operated stores.

Under the franchisee route, inventory, capex and operating costs are

borne by the franchisee owner. Out of the total 289 stores added between

FY13 and FY17, 229 stores were opened through franchisee route. The

company adopts dual strategy, where the company enters in new

potential markets through flagship COO’s and once the brand is well

established it further fortifies its presence in such markets through

franchisee route. Going forward the company intends to open 70-80

stores annually with 20% via COO formats while the rest through

franchisee formats. The asset-light approach has enabled Khadim to

generate high return ratio for the retail segment (~27% ROCE). For the

distribution business, which has comparatively lower return ratio than the

retail business, the company is planning to adopt an asset light model of

manufacturing by engaging contract manufacturing, thereby restricting

investments in real property and buildings. The contract manufacturer will

own and operate the factory on their premises, while the company will

only provide necessary machinery and moulds to manufacture products.

Premiumisation of product offerings to enhance margins

Apart from its flagship brand ‘Khadim’, company has nine home-grown

sub-brands catering to retail business. Over the years, company has

constantly focused on increasing the share of sub-brands in overall retail

sales to drive its premiumisation strategy. Share of revenues from sub-

brands to total retail sales has increased from 43% in FY13 to 52% in

FY17. Scaling up the share of sub-brands has resulted in increase in

average selling price (ASP) for COO’s from | 375 in FY13 to | 451 in FY17

and higher gross margins for the retail business at 47% in FY17 vs. 43%

in FY13. For the distribution business, company had earlier primarily

focused on distribution of basic Hawai, PVC, EVA and PU footwear.

However since 2015, company has started introducing premiumisation

versions of product offerings in Hawai, PVC and PU. Going forward

company intends to increase the ASP of its products by focusing on

distribution of premium products and upscale its product mix.


Key financials: Story in charts

Exhibit 13: Revenue trajectory- CAGR of 10% in FY13-17

423.0

478.1 460.2

534.5

621.2

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

0 FY14 FY15 FY16 FY17

| c

rore


Exhibit 14: EBITDA growth- CAGR of 11% in FY13-167

43.4

49.6

13.7

52.4

65.810.3 10.4

3.0

9.8

10.6

0

10

20

30

40

50

60

70


| c

rore

0

2

4

6

8

10

12

%

EBITDA EBITDA Margin


Exhibit 15: Net profit- CAGR of 36% in FY13-17

8.912.1

-18.7

25.2

30.8

-30

-20

-10

0

10

20

30

40


| c

rore


Exhibit 16: Return ratio trend

16.4

(14.5)

16.3 16.6

21.5

(2.2)

13.9

17.2

(20.0)

(15.0)

(10.0)

(5.0)

-

5.0

10.0

15.0

20.0

25.0

FY14 FY15 FY16 FY17

%

RoE RoCE


Exhibit 17: Net working capital days

56.9

63.8

53.9

59.8

48.0

50.0

52.0

54.0

56.0

58.0

60.0

62.0

64.0

66.0

FY14 FY15 FY16 FY17

No. of

days

Source: DRHP, ICICIdirect.com, Research. Calculated on net sales

Exhibit 18: Debt/Equity ratio trend

1.5

0.9

0.7

0.6

-

0.2

0.4

0.6

0.8

1.0

1.2

1.4

1.6

FY14 FY15 FY16 FY17

(x)


FY15 was a challenging year for the company owing to e-commerce

disruptions negatively impacting the revenue growth. Consequently, in

order to liquidate the unsold stocks, company had to provide higher

discounts, thereby hampering the margins for FY15.


Objects of issue

The offer consists of a fresh issue and an offer for sale (OFS) with a total

issue size ranging from | 539.8 crore to | 543.1 crore. The company

intends to raise | 50 crore at a price band of | 745-750 leading to a fresh

issue of 6.67-6.71 lakh shares.

Objects of fresh issue:

The details of the proceeds of the fresh issue are summarised below:

a) The company intends to utilise | 40 crore of the net proceeds towards

prepayment or scheduled repayment of all or a portion of term loans

and working facilities availed by the company.

b) General corporate purpose, which includes payment of issue

expenses and other general expenses (| 10 crore).

Exhibit 19: Repayment of working capital and term loans

Name of the Lender Nature of facility

Sanctioned

Amount

Rate of interest

Amt outstanding as on

1st Oct 2017

Amount to be

repaid

| crore | crore | crore

Axis Bank Term Loan 6.56 12.2% 1.9 1.9

Axis Bank Cash Credit 6.0 11.3% 4.3 2.1

HDFC Bank Short term 35 9.8% 30 30

ICICI Bank Demand Loan 6.0 11.9% 6.0 6.0

Total | 40.0


Offer for sale (OFS):

The OFS consists of 66 lakh equity shares amounting to | 493 crore.

Fairwinds Private Equity which currently holds 34% stake in Khadims will

sell 58.5 lakh shares. Promoter Siddhartha Roy Burman will offload 7.2

lakh shares.


Key risks and concerns

Delay or default in payment from franchisees & distributors may impact

profits

The company’s operations involve extending credit for periods of time,

ranging typically from 30 to 75 days, to its franchisee operated stores and

our distributors, and consequently, it faces the risk of the uncertainty

regarding the receipt of these outstanding amounts. If the distributors and

customers delay or default in making payments in the future, company’s

profits margins and cash flows could be adversely affected.

Risks associated with expansion into new geographic markets

Expansion into new geographic regions, including different states in India,

subjects the company to various challenges, including those relating to

the lack of familiarity with the culture, consumer preferences, regulations

and economic conditions of these new regions. Language barriers,

difficulties in staffing and managing such operations coupled with, the

lack of brand recognition and reputation in such regions may also affect

company’s ability to expand into newer geographic regions.

High dependence on outsourcing may lead to difficulties in attaining

desired quantities from outsourced vendors

Khadim relies on outsourced vendors for manufacturing of finished

products including accessories sold through its retail business. In FY17,

85.60% of total products sold through its retail business were procured

from outsourced vendors. Further, some of its products distributed

through the distribution business is also procured from outsourced

vendors. Thus, any shortfall or disruption in supply of products from the

outsourced vendors, or insufficiency in the quality and consistency of the

products supplied, would result in shortfall in supply, lower stock in

stores and /or lower sales.

Higher concentration of operations in East India …

Although Khadim’s geographical footprint has reached 23 states and one

union territory, its exclusive retail stores has historically been

concentrated in East India. As at June 30, 2017, 66.59% of its exclusive

retail stores catered to East India. Further it has two manufacturing

facilities in West Bengal. Any adverse development that affects the

performance of the stores or manufacturing facilities in the eastern region

could have a material adverse effect on the business, financial condition

and results of operations.


Financial Summary

Exhibit 20: Profit and Loss Statement

(Year-end March) FY13 FY14 FY15 FY16 FY17

Net Sales 423.0 478.1 460.2 534.5 621.2

Growth (%) 13.0 (3.8) 16.2 16.2

Total Raw Material Cost 279.7 314.1 312.4 336.0 371.4

Gross Margins (%) 33.9 34.3 32.1 37.1 40.2

Employee Expenses 36.4 42.2 46.1 45.3 55.2

Other Expenses 63.5 72.4 88.0 100.9 128.9

Total Operating Expenditure 379.6 428.6 446.5 482.2 555.5

EBITDA 43.4 49.6 13.7 52.4 65.8

EBITDA Margin 10.3 10.4 3.0 9.8 10.6

Interest 24.3 25.6 19.2 14.6 13.5

Depreciation 8.3 10.6 19.2 16.3 15.9

Other Income 2.7 4.9 5.5 4.3 4.3

PBT 13.5 18.3 (19.2) 25.8 40.7

Total Tax 4.6 6.1 (0.4) 0.6 10.0

Profit After Tax 8.9 12.1 (18.7) 25.2 30.8


Exhibit 21: Balance Sheet

(Year-end March) FY13 FY14 FY15 FY16 FY17

Equity Capital 12.1 12.1 17.3 17.3 17.3

Reserve and Surplus 91.5 61.7 111.9 137.1 167.9

Total Shareholders funds 103.6 73.8 129.2 154.4 185.2

Total Debt 170.2 107.1 121.9 104.7 104.2

Deferred Tax Liability 8.3 9.2 7.0 6.4 5.8

Non Current Liabilties 7.6 8.2 8.6 9.3 9.9

Source of Funds 289.6 198.3 266.6 274.8 304.9

Net Block 151.1 159.4 148.9 143.5 133.0

Capital WIP 8.3 2.5 2.1 0.9 3.1

Net Fixed Assets 159.4 161.9 151.0 144.4 136.2

Investments 0.0 0.0 0.0 1.1 0.0

Inventory 143.0 114.0 113.8 100.9 114.4

Cash 10.0 31.5 12.4 19.4 16.6

Debtors 22.0 57.1 24.1 34.9 77.2

Loans & Advances & Other CA 20.4 15.5 17.4 21.4 35.7

Total Current Assets 195.4 218.1 167.7 176.6 243.9

Creditors 77.4 96.5 57.4 56.8 89.8

Provisions & Other CL 28.5 106.2 21.5 20.6 15.0

Total Current Liabilities 105.9 202.8 78.9 77.5 104.9

Net Current Assets 89.5 15.4 88.8 99.1 139.1

LT L& A, Other Assets 40.6 21.0 26.8 30.2 29.6

Other Assets 0.0 0.0 0.0 0.0 0.0

Application of Funds 289.6 198.3 266.6 274.8 304.9



Exhibit 22: Key ratios

(Year-end March) FY14 FY15 FY16 FY17

Per share data (|)

EPS 6.7 -10.4 14.0 17.1

Cash EPS 12.6 0.3 23.1 26.0

BV 41.1 71.9 85.9 103.1

Cash Per Share 17.5 6.9 10.8 9.3

Operating Ratios (%)

EBITDA margins 10.4 3.0 9.8 10.6

PBT margins 3.8 -4.2 4.8 6.6

Net Profit margins 2.5 -4.1 4.7 5.0

Inventory days 87 90 69 67

Debtor days 44 19 24 45

Creditor days 74 46 39 53

Return Ratios (%)

RoE 16.4 -14.5 16.3 16.6

RoCE 21.5 -2.2 13.9 17.2

Valuation Ratios (x)

P/E 111.2 -71.9 53.5 43.8

EV / EBITDA 29.0 105.0 27.4 21.8

Market Cap / Revenues 2.8 2.9 2.5 2.2

Price to Book Value 18.3 10.4 8.7 7.3

Solvency Ratios

Debt / Equity 1.5 0.9 0.7 0.6

Debt/EBITDA 2.2 8.9 2.0 1.6

Current Ratio 1.1 2.1 2.3 2.3

Quick Ratio 0.5 0.7 1.0 1.2



Valuation

At the higher end of IPO price brand of | 750, the stock is valued at 2.2x

MCap/sales and P/E of 43.8x on FY17 numbers (post issue). We believe

Khadim is reasonably valued as compared to its peers (Exhibit 23).

Khadim has followed an asset light business model leading to superior

return ratios (17%+RoCE), with debt/equity ratio comfortably placed at

0.6x. Khadim’s constant efforts towards premiumisation of product mix

coupled with asset light expansion plans would further enhance

profitability going ahead. We advise SUBSCRIBE on Khadim.

Exhibit 23: Peer comparison (FY17)

Sales Market P/E Mcap/Sales RoCE RoNW

Company | crore Cap (| crore) (x) (x) (%) (%)

Bata 2,467.2 10,537.0 66.3 4.3 16.0 12.0

Relaxo 1,739.8 6,960.0 56.6 4.0 25.7 22.8

Liberty 497.4 451.6 69.0 0.9 8.5 4.0

Sreeleathers 99.6 503.2 37.6 5.1 9.6 6.3

Khadim 621.3 1,347.4 43.8 2.2 17.2 16.6

Source: Company, ICICIdirect.com Research


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Documents

Issue Opens 2-Nov-17 Issue Closes 6-Nov-17 IPO Reviewcontent.icicidirect.com/mailimages/IDirect_Khadims_IPO...Khadim’s, revenue and PAT in FY13-17 grew at a CAGR of 10% and 36% respectively