Shares of Kitex Garments plunged 10.3 per cent on Wednesday, after the company reported lower-than-expected results and decided to put investment plans in Kerala on hold.

The stock of the company, a global player in the infant wear segment, closed 7.13 per cent lower at ₹114.25 on the BSE amidst higher trading volumes. As against two-week average of 23,000 shares, the counter on Wednesday witnessed a transaction of 1.33 lakh shares on the BSE.

Akshay Agarwal, Managing Director, Acumen Capital Services, said the shares of the kids apparel exporter ended lower after the company reported a weak set of Q4 numbers and several sets of negative news related to the tussle between the company management and the Kerala Government.

Kitex Garments is the world’s second largest manufacturer of kids apparels and largest private sector employer in the State. However, Covid-induced disruptions in exporting countries led to the bad performance. Both top line and bottom line remained weak on a quarterly and yearly basis, he said.

The Q4 sales came at ₹111.70 crore compared to ₹120.9 crore reported in the previous quarter and ₹146.32 crore in year-ago quarter. The Q4 net profit came at ₹9.72 core against ₹16.8 crore reported in the previous quarter and ₹19.22 crore posted in year-ago period. On percentage terms, the company’s yearly sales fell by 60 per cent and profits by 80 per cent, Agarwal said.

Geared for Covid threat

However, the Managing Director of Kitex Garments, Sabu Jacob, was optimistic about the company’s future, saying that the US market, which sources 100 per cent of the garments made, is back to normal. The company is fully booked to meet the demand and is looking at a 5-10 per cent growth in business, he told BusinessLine .

He is also confident of meeting any eventualities especially the new wave of the pandemic because of the vaccines administered to 100 per cent of the staff. “We are ready to move along with Covid and have taken steps to boost the immunity of workers by providing multi-vitamin tablets and herbal immunity boosters”.

Any further investment would be based on the surplus and the company did not want to create any debts. The company is making a surplus of ₹100-200 crore every year which would be utilised for modernisation or technology upgradation in the existing factories, he said.

Established in 1992, Kitex Garments manufactures cotton and organic cotton garments, especially infant wear for exports. These products find a market in the US and Europe. The company is a major supplier to brands such as Gerber, Walmart, Carters, The Children’s Place, Amazon, and Target, among others.