Multibagger small-cap stock: In the fast-paced world of investing, finding a multibagger stock that delivers extraordinary returns within a short period is the dream of every investor. This dream turned into reality for investors in Kitex Garments, as the company’s shares delivered a phenomenal return in a very short span of time.
The company’s shares, which were trading at ₹69 apiece in July 2024, have surged by over 334% to reach the current value of ₹300. This rally was exceptional, especially considering the intense selling pressure across the Indian stock market during the second half of 2024. Yet, the stock weathered the storm and delivered an impressive 219% return in H1CY25.
If an investor had invested ₹1 lakh during that period and held the position to date, the investment would have grown to ₹4.35 lakh — a clear testament to the wealth creation potential in the Indian stock market.
The sustained rally has also propelled the stock to hit a fresh all-time high of ₹324.40 apiece in the previous trading session. Notably, textile stocks have attracted investor attention this month following the signing of a landmark Free Trade Agreement (FTA) between Britain and India, which analysts expect will benefit Indian textile exports.
Under the FTA, 99% of Indian exports — including textiles — will benefit from zero duty. India already enjoys advantages such as low labor costs and an abundant cotton supply, which are expected to benefit domestic textile producers in the long run.
The FTA holds enormous potential to enhance the competitiveness of the Indian textile industry in the UK market, where competing countries like Pakistan, Bangladesh, and Sri Lanka currently enjoy duty-free access under the UK’s Generalized Scheme of Preferences (GSP).
Kitex ramps up capacity to tap demand from US and Europe
Kitex Garments is a leading Indian apparel manufacturer and exporter of knitted garments for infants and kids. Kitex Apparel Parks Limited (KAPL), a wholly owned subsidiary of Kitex Garments Ltd, is spearheading a major expansion with a total planned capital investment of ₹3,550 crore across two phases — Warangal and Hyderabad. Of this, ₹1,550 crore has already been invested.
At full production, KAPL aims to generate ₹5,000 crore in revenue. The Warangal unit is set to begin operations by April 2025, followed by the Hyderabad unit in December 2026.
Looking at the company’s financials, it company reported a net profit of ₹41 crore in Q3FY25, a 105% jump compared to ₹20 crore in the same quarter the previous year and up from ₹37 crore in the September-ending quarter.
Revenue from operations during the reporting quarter rose to ₹276 crore, compared to ₹173 crore in Q3FY24. Operating profit also surged by 54.3% year-on-year to ₹54 crore. However, the EBITDA margin remained flat at 20%.
Indian textile industry finds itself in a sweet spot
India stands to significantly increase its global market share in the textile and apparel sector due to a combination of manufacturing strength, market positioning, and geopolitical advantages. Key growth drivers include the new US tariff structure, which favors Indian exports by imposing higher duties on major competitors.
Additionally, the ongoing China+1 policy could divert up to $21 billion worth of business away from China, creating new opportunities for Indian exporters. Political unrest in Bangladesh — a key supplier to Europe and the US — threatens $30 billion worth of exports, which may also be redirected to India.
Moreover, as Vietnam and Cambodia shift focus on higher value-added industries, India is well-positioned to capture additional global market share. These trends are further supported by India’s strong textile infrastructure and favorable government policies, reinforcing the country’s potential to emerge as a leading global hub for textile and apparel manufacturing.
Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.
