Antique sees stable FY26 for KPR Mill; garment, ethanol to drive growth

Antique Stock Broking on KPR Mill: Apparel knitting mills company KPR Mill’s financial performance in FY26 is expected to remain stable, supported by steady growth in its garment and sugar-ethanol businesses, according to a note by Antique Stock Broking following a recent management interaction.

 

The brokerage expects KPR Mill to post around 12 per cent year-on-year (Y-o-Y) revenue growth in FY26, with operating margins also likely to remain broadly unchanged. 

 

Recovery in European demand, improvement in the sugar and ethanol segment, and gradual normalisation of export markets are expected to underpin performance. Antique analysts have retained their earnings estimates and maintained a ‘Hold’ rating on the stock with an unchanged target price of ₹1,062, valuing the company at 28 times H1FY28 estimated earnings.

 

 

“We retain our earnings estimates and continue to maintain ‘Hold’ rating on the stock with an unchanged TP of ₹1,062, valuing it at 28x H1FY28E earnings,” said Biplab Debbarma, and Tanishk Khinvasra of Antique Stock Broking, in a note dated December 22, 2025.

Garments and ethanol anchor FY26 growth

 

Garments and ethanol are expected to be the key growth drivers in FY26. In the garments segment, Antique expects growth to be aided by brownfield expansion and improving demand conditions in Europe. Management noted that apparel imports into the European Union rose 10 per cent Y-o-Y in the first half of FY26, with major markets such as the UK, France, Germany and Italy witnessing growth.

 

Capacity utilisation in garments currently stands above 90 per cent, leaving limited headroom for further brownfield expansion at existing facilities.

 

The sugar and ethanol segment is also expected to contribute meaningfully, supported by easing of ethanol production restrictions and strong sugarcane availability. Management highlighted that the current sugarcane crop is among the best in the last four to five years. 

For FY26, KPR expects operating margins of 15-16 per cent in this segment, lower than the earlier peak of around 20 per cent, reflecting higher cane costs following the government’s increase in the minimum support price of sugarcane. During the 2025-26 sugar season, ethanol production is expected to reach 120-140 million litres, while sugar production is projected at around 0.2 million tonnes. Margins could improve if the government raises sugar and ethanol prices in the coming months.  ALSO READ | JM Financial initiates Brigade Enterprises with 'Buy'; sees 17% upside

US exposure trimmed; Europe remains key

 

Management indicated that FY26 would be a year of consolidation rather than aggressive expansion. The company scaled down its US business during the third quarter, primarily due to tariff-related uncertainties, which led to some underutilisation of capacity. However, normalisation is expected in the fourth quarter as US orders resume and trade realignment progresses.

 

The brokerage noted that the US accounts for about 16 per cent of KPR’s garment exports, translating into roughly 7-8 per cent of total revenue, limiting the overall impact. If a US-India trade deal does not materialise, management plans to further scale down US exposure and realign exports towards Europe, Australia and New Zealand. Given KPR’s established presence in Europe, Antique does not expect the realignment to be time-consuming.

 

Management also believes that the conclusion of trade agreements with the EU and the UK could provide a meaningful boost. In particular, the UK is seen as a strong growth opportunity following the finalisation of the India-UK free trade agreement.

Yarn under pressure; capex clarity awaited

 

Contrastingly, the yarn segment is expected to remain under pressure. Antique expects operating margins of 12-13 per cent in FY26, with no major improvement over the next six months. Raw cotton and yarn prices have remained largely stable, supported by steady demand from countries such as Bangladesh and Vietnam, though management noted that export markets have yet to see a meaningful recovery.

 

Going forward, expansion plans remain a key monitorable. KPR is contemplating a greenfield garment manufacturing facility in Odisha, with a memorandum of understanding (MoU) already signed with the state government. The initial plan involves adding around 50-60 million pieces of annual capacity, though the final scale will depend on land allotment and formal approvals.

 

That said, Antique expects FY26 to be a stable year for KPR Mill, with steady growth drivers offset by near-term challenges, while clarity on greenfield capex and trade developments will be crucial for future upside.

 

On the bourses, however, KPR Mill's share price was trading 0.45 per cent lower at ₹970.50 per share at around 11:00 AM, In comparison, BSE Sensex was trading 0.59 per cent higher at 85,427.56 levels.   

Disclaimer: The stock target/outlook has been suggested by Antique Stock Broking. Views expressed are their own.