KCP Ltd. is a reputable Indian industrial conglomerate with a wide range of business ventures, mostly in the production of sugar and cement.
The brokerage firm HDFC Securities has selected KCP as its pick of the week with a target price of Rs. 230 with a time duration of 2-3 quarters. Following the release of KCP’s financial results for the quarter ending in June 2025, which showed revenue dropping 2% year on year to Rs 677 crores as a consequence of weaker market demand, a recommendation was offered by the brokerage. EBITDA decreased 9% QoQ and 65% YoY to Rs 111 crore. In contrast to the net profit of Rs 32 crore in Q1FY25 and Rs 71 crore in Q4FY25, the firm generated a profit of Rs 64 crore during the quarter under review.
KCP Target Price
Recommendation: Buy in Rs. 195-210 band and add on dips in Rs. 165-180 band, Base Case Fair Value: Rs Rs.220, Bull Case Fair Value: Rs. 230, Duration: 2-3 quarters
“We estimate K C P to deliver 7% revenue CAGR during FY25-27E and EBITDA to grow at 15% during FY25-27E, supported by a stabilised pricing environment by FY26, and cost reduction initiatives. It has superior growth prospects, better market mix/profitability, and return ratios vs. peers. We believe investors can buy the stock in Rs 195-210 band (3.6x FY27E EV/EBITDA) and add on dips in Rs 165-180 (3x FY27E EV/EBITDA) band for a base case fair value of Rs 220 (4x FY27E EV/EBITDA) and bull case fair value of Rs 230 (4.3x FY27E EV/EBITDA) over the next 2-3 quarters,” said HDFC Securities in note.
Key Triggers
Here are the important factors that led HDFC Securities to suggest buying KCP.
Established track record in the cement and sugar businesses: The company is having significant market footprint in Andhra Pradesh (AP) and Telangana. Healthy volume growth, recorded over the past few years, led to an increase in capacity utilisation to over 75% in fiscal 2024.
However, the company may witness a decline in volume during fiscal 2025, owing to muted demand and the strategic decision to reduce sales in non-core markets amidst the weak pricing environment. The performance is expected to sustain in fiscal 2026 owing to an increase in sugarcane area and continued government support to local producers in Vietnam.
Diverse and resilient business mix: K C P sustains a well-diversified presence across cement, sugar (through K C P Vietnam with 11,000 tpd crushing capacity), engineering, and even a hospitality segment with a 127-room hotel in Hyderabad.
Notably, the sugar division – comprising 35-45% of overall revenue -continues to perform strongly due to favourable sugarcane yields and government support in Vietnam. K C P’s diversified footprint across multiple verticals-cement, sugar, engineering, and hospitality-enhances its resilience against sector-specific cyclicality.
Ongoing capital expenditure for cost efficiency: K C P is investing ₹235 crore in a Waste Heat Recovery System (WHRS) and ₹102 crore in a railway siding, with commissioning expected in H2 FY 2026.
Collectively, these investments are expected to meaningfully boost K C P’s EBITDA margins over the medium term, with the full benefits likely to be realised in FY 2027 and beyond, positioning the company on a firmer financial and environmental footing.
Strong Liquidity position: As of March 31, 2025, K C P Ltd’s consolidated cash and bank balances stood at ₹978 crore, compared to ₹915 crore in the prior year, reflecting sustained, healthy liquidity and robust working capital management. CRISIL reaffirmed K C P’s long-term rating as A+ / Stable, short-term rating as A1, and fixed deposit rating also as A+ / Stable during FY 2024-25.
Earning consistently high credit ratings across its borrowings and fixed deposit instruments demonstrates K C P Ltd’s strong financial risk profile and reliability in meeting its obligations. The A+ / Stable long-term rating and A1 short-term instruments signal creditworthiness and bolster investor confidence.