Textile Stock Tumbles 7% as Promoters Plan ₹1,196 Cr Stake Sale — Investor Concerns Mount
Textile Stock : In a sharp twist of events, shares of KPR Mill Ltd, a leading Indian textile conglomerate, plunged over 7% on Tuesday, sending shockwaves through investor circles. The crash came amid reports that three major promoters are likely to offload a 3.2% stake in the company through block deals, aiming to raise approximately ₹1,196 crores. This unexpected move has triggered worries among shareholders, who are interpreting it as a potential red flag regarding promoter confidence in the business.
📉 Stock Crashes Over 7% in a Single Day
The stock fell to an intra-day low of ₹1,143.00, marking a 7.09% drop from its previous close of ₹1,230.30. This sharp dip in share price reflects investor anxiety surrounding the promoter stake sale. While KPR Mill has delivered over 1,300% returns in the past five years, this recent development has led to a wave of profit-booking and selling pressure.
🔻 Promoter Stake Sale: Details You Should Know
According to a CNBC-TV18 report, promoters KP Ramasamy, KPD Sigamani, and P Nataraj are planning to divest a combined 3.2% stake, equivalent to 1.08 crore shares. The floor price has been set at ₹1,107 per share—nearly 10% lower than the stock’s closing price on May 20. This significant discount further fueled the market’s bearish sentiment.
The block deal is being facilitated by IIFL Finance, and once completed, it will bring down the promoter group’s total holding from 70.68% to 67.48%, with the stake of the three individual promoters dropping from 61.02% to 57.82%.
🏭 Business Overview: Strong Operations Across Segments
Despite the short-term market reaction, KPR Mill Ltd remains a formidable force in the textile sector, with diversified operations across spinning, garments, and sustainable energy.
✴️ Manufacturing Capacity:
| Segment | Capacity |
|---|---|
| Spinning Mills | 1,00,000 MT of yarn + 10,000 MT of vortex yarn |
| Garment Units | 177 million knitted garments annually |
| Fabric Processing | 25,000 MT |
| Fabric Printing | 15,000 MT |
| Sugar Crushing | 20,000 TCD (in Karnataka) |
| Ethanol Production | 470 KLPD |
| Wind Power | 61.92 MW (meets ~40% of textile energy needs) |
| Rooftop Solar + Co-gen Power | 38 MW + 90 MW |
📊 Financial Performance Snapshot: Q4 FY25
KPR Mill posted steady growth in its recent quarterly results:
- Revenue: ₹1,769 Cr (up 4.24% YoY)
- Net Profit: ₹205 Cr (down 4.21% YoY but up 1.49% QoQ)
- Strong sequential growth: Revenue up 15.7% from ₹1,529 Cr in Q3 FY25
These figures indicate resilient operations, even though YoY profit dipped slightly, suggesting margin pressure or cost-side headwinds.
📈 Key Financial Ratios
| Metric | Value |
|---|---|
| ROCE (Return on Capital Employed) | 20.34% |
| ROE (Return on Equity) | 16.30% |
| P/E Ratio | 51.58 (vs. industry avg 39.68) |
| EPS (Earnings Per Share) | ₹23.85 |
| Debt-to-Equity Ratio | 0.09 (very low) |
| Current Ratio | 9.16 (strong liquidity) |
📌 Shareholding Pattern (March 2025)
| Category | Holding (%) |
|---|---|
| Promoters | 70.68% |
| Foreign Institutional Investors (FIIs) | 6.25% |
| Domestic Institutional Investors (DIIs) | 16.47% |
| Retail Investors | 6.57% |
After the proposed sale, promoter holding will fall to around 67.48%, which is still a dominant controlling interest.
❓ Q&A Section: Simplifying the Headlines
Q1: Why did KPR Mill shares fall by 7%?
A: The stock declined after news broke that its promoters plan to sell a 3.2% stake worth ₹1,196 crore at a discounted price, causing concern among investors.
Q2: Who is selling the stake and how much?
A: Promoters KP Ramasamy, KPD Sigamani, and P Nataraj are selling a combined 1.08 crore shares—around 3.2% of the total equity.
Q3: Is KPR Mill fundamentally weak?
A: No, the company has strong financials, a low debt-to-equity ratio (0.09), and consistent profitability. The stake sale appears to be a liquidity move rather than a sign of weakness.
Q4: What’s the long-term outlook?
A: With robust infrastructure, sustainable energy initiatives, and strong export capabilities, KPR Mill remains well-positioned in the textile space, though short-term volatility may persist.
Q5: How has the stock performed historically?
A: Over the past five years, KPR Mill has delivered a massive return of over 1,300%, making it one of the top performers in the sector.
🔍 Final Thoughts
While the promoter stake sale has unnerved the market, it’s important to take a long-term perspective. KPR Mill Ltd continues to showcase strong fundamentals, diversified operations, and prudent financial management. For seasoned investors, the current dip may even present a buy-on-dips opportunity, provided the overall market conditions remain favorable.
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