Synopsis: KDDL Ltd, a significant premium watch element producer and the principal shareholder of Ethos, has gone past borders with the acquisition of the Swiss model Favre Leuba, which additional strengthens its base within the watch trade.
On this article, we’ll perceive the enterprise mannequin of this main and the most important highlights this firm and the agency can ship a strong income progress, which goals to realize 15-20 p.c annual gross sales progress with EBIT margins of 19-20 p.c.
With a market capitalization of Rs 3,129 crore, the shares of KDDL Ltd closed at Rs 2498.05 per share, representing a decline of 25 p.c from its 52-week excessive of Rs 3,350 per share. Over the previous 5 years, the inventory has delivered a mutibagger return of 1,499 p.c in opposition to the NIFTY 50 return of 122 p.c.
Concerning the firm
KDDL Restricted is a top-notch watch elements producer that may be a main participant within the premium watch elements trade, producing dials, fingers, indexes, appliques, bracelets, and precision-stamped components. It has 8 manufacturing crops and derives virtually 66 p.c of its income by means of exports.
Aiming to strengthen its international footprint, the corporate took over Estima, a Swiss watch hand manufacturing unit. Its precision stamping enterprise, aside from watch components, meets the wants of assorted industries like automotive, electronics, client durables, aerospace, protection, and inexperienced vitality, reflecting the corporate’s innovation and suppleness. Additionally, its ornamental packaging unit caters to high-end watch and jewellery shoppers, thus widening its attain alongside the worth chain.
KDDL Restricted is engaged in varied product divisions. The corporate’s Packaging Unit focuses on designing and producing decorative packaging, enhancing the general worth and magnificence of the ultimate product. Its Eigen Engineering Unit focuses on manufacturing stamped elements and progressive instruments, guaranteeing high-quality precision components for a variety of functions. The Estima Unit (Swiss unit) is devoted to crafting watch fingers and dials, combining high quality workmanship with technical experience to fulfill exacting requirements.
The Dials Unit produces high-quality dials and elements, mixing precision engineering with inventive ending to fulfill international necessities. Equally, the Arms Unit focuses on the manufacture of watch fingers, delivering distinctive precision and flawless ending, which is important for luxurious timepieces. Lastly, the Bracelet Unit is a state-of-the-art facility that produces watch bracelets, notably catering to luxurious Swiss watches whereas sustaining world-class high quality.
Subsidiary Highlights
KDDL Restricted expands its affect within the domains of watches, luxurious items, and precision elements by means of a number of subsidiaries that help its place in numerous areas.
KDDL is a significant shareholder with a 50.12 p.c stake in Ethos Restricted that operates a community of shops promoting premium and luxurious watches. As of the most recent particulars obtainable, ETHOS has 73 retail shops throughout India, beneath which 70 premium and luxurious watch manufacturers are bought.
Mahen Distribution Restricted is in control of managing luxurious life-style merchandise and gives human assets companies, whereas Pylania SA offers with the buying and selling and manufacturing of watch elements. Estima AG is devoted to the manufacturing of high-precision watch fingers and dials, and Kamla Worldwide Holdings SA is a special-purpose car and holding firm. KDDL can be within the premium luxurious watch enterprise with the model Favre Leuba, by means of a 92.63 p.c stake in Silvercity Manufacturers.
Monetary Highlights
The corporate’s income for Q1 FY26 got here in at Rs 465 crore, up by 29 p.c from Rs 360 crore in the identical quarter final yr. Moreover, on a sequential foundation, income grew by 11 p.c from Rs 420 crore in This autumn FY25.
Coming to its profitability, the corporate reported a internet revenue progress of seven p.c to Rs 30 crore in Q1 FY26 as in comparison with Rs 28 crore in Q1 FY25. Moreover, on a QoQ foundation, it recorded a decline of 6 p.c from Rs 32 crore.
The corporate has delivered an ROE and ROCE of 11.51 p.c and 14.12 p.c respectively, and is at the moment buying and selling at a excessive P/E of 31.73x as in comparison with its trade common of 28.51x.
Future Outlook
The corporate just lately secured a 28,000 sf. ft. shed beneath lease in Bengaluru, and it is going to be absolutely operational within the second half of FY26. The corporate has a present capability utilisation of fifty p.c which it desires to extend to 65 p.c by FY26.
Additionally, the corporate remained assured because it outlined a future income progress of 15-20 p.c by FY26, majorly pushed by the restoration within the worldwide market. It additionally expects its EBITDA margins to stay within the vary of 19-20 p.c within the coming years, together with capex plans of round Rs 35 crore in the course of the interval.
The corporate could be very assured of reaching a 15-20 p.c income progress in FY26, of which one of many main progress drivers is its latest acquisition of Silvercity Manufacturers AG, which owns Favre Leuba and at the moment has a 92.63 p.c stake within the Swiss watchmaker.
Regardless of the occasional fluctuations within the inventory, KDDL Ltd continues to be sustaining its place as an enormous participant within the luxurious watch ecosystem. It’s greater than 50 p.c possession in Ethos, the biggest luxurious watch retail chain in India, provides it a robust presence within the retail sector.
Moreover, the acquisition of Favre Leuba is a daring transfer to take the Swiss watchmaking trade by storm. With these two pillars, KDDL just isn’t solely in a position to hold the expansion going but in addition consolidate its management within the home in addition to the worldwide luxurious watch markets.
In conclusion, KDDL is an effective inventory to be added to your watchlist because it has a promising portfolio that appears to ship good progress sooner or later. Now we have to see if it is ready to ship the topline progress as said, as it’s delivering a very good double-digit gross sales progress over the previous few years.
Written by Satyajeet Mukherjee
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