The company recently faced multiple headwinds like sharp demand drop, liquidity challenges, frequent top management changes, triggering a sharp de-rating even as long-term growth drivers are in place. Expanding product basket, which is likely to drive double-digit growth over 2-3 years, remain largely underappreciated.

Pricing challenges forced KKC to take extreme cost-cutting initiatives with clear targets to regain lost margins which would raise EBITDA margin by 150-200bps over next 2-3 years. KKC has been clearly focusing on cash conversion, reflecting in the 20% growth in OCF in FY17–19.

Weak near-term demand in power generation and domestic markets led todrop in EBITDA margins. DG market is expected to grow 6-8% over next 3-5 years due to growing commercial real estate, IT infra and an uptick in construction activity.

Key risks include low DG demand due to persistent weakness in domestic activity and Weak construction activity in key export regions.

Disclaimer: The above report is compiled from information available on public platforms. inChat team advises users to check with certified experts before taking any investment decisions.

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