Arvind Ltd. share price target

With a 34% upside from the CMP, we maintain our long-term BUY rating on the stock.

Arvind ltd. is a leading business conglomerate in Textiles, Brand Retail, Engineering, Water Treatment, and Advance Materials sectors. In the year 2018, Brand Retail and Engineering businesses have been demerged into separate entities namely Arvind Fashions ltd and Anup Engineering ltd respectively. Arvind is among the top fabric suppliers globally having...

Arvind Limited's (Arvind's) Q2FY2021 revenues recovered to ~66%, better than ~32% recovery in Q1FY2021. Revenues declined by 33.5% y-o-y to Rs. 1,305.2 crore, lower than our expectation of Rs. 1,472 crore, largely impacted by slower recovery in the domestic market. Gross margins declined by 118 bps to 48.4%. However, a ~25% reduction in fixed costs stemmed the decline in OPM to 63 bps to 9.3%. A ~78% recovery was witnessed in September. Denim, woven and garment volumes have recovered to 80%, 60% and 66%, respectively of the corresponding quarter, driven by healthy export demand. Advanced material division (AMD) revenue has...

Arvind Limited's (Arvind's) Q4FY2020 performance was affected by stoppage of production and supply chain disruptions during the lockdown in the last 10 days of March 2020, as revenue declined by 11.7% y-o-y. However, revenue grew by 6.7% for January-February 2020 driven by 10.5% growth in the textiles business and 7.4% growth in the advanced materials (AMD) business. Though gross margins fell sharply, the fall in OPM was limited to just 27 bps to 9.6%. The company is operating at a 50-55% capacity utilisation currently which is expected to scale up in the coming months. The export market is recovering faster than the domestic...

Sector: Textile /Mid-Cap | Earnings Update 1QFY20 Background: Arvind Ltd is the flagship company of the Lalbhai Group, established in 1931. The company manufactures and sells about 300 million meters (mn mtr) of fabrics (denim, woven, knit, etc) and over 34 mn pieces of garments (FY19). In Advance materials business, the company is catering to various segments under this division. This includes human protection products such as firefighting jackets, bullet proof jackets, etc. The company across its other subsidiary Arvind fashions Ltd has...

Arvind Limited's (Arvind) Q1FY2020 performance was affected by lower margins in the textile business due to subscale operations of its newer garmenting facilities. Revenue grew by ~5% y-o-y as the denim segment's volumes continued to remain under pressure (garmenting segment's revenue grew by 20% because of increased garment production). Revenue of advanced material business grew by 31% and margins improved on a y-o-y basis. Management expects revenue to grow by 6-7% and OPM is likely to sustain at 10% y-o-y for FY2020 (we have factored in OPM of...

We met the Mgt of Arvind Fashions to get a glimpse of corporate strategy as a branded player and improve profitability in coming years. FY20 is likely to be a year of consolidation with little focus on driving sales and more on balance sheet and cash flows. Unlimited will see store closures in North and...

Sector: Textile /Mid-Cap | Earnings Update 4QFY19 Background: Arvind Ltd is the flagship company of the Lalbhai Group, established in 1931. Arvind's business is broadly classified into Textiles, Brand & Retail and others. Textiles, Brand & retail and others which accounts for 55%, 39% and 6% of the revenue respectively. In India, Arvind sells international brands such as Arrow, US Polo Associate, Tommy Hilfiger (JV brand), Calvin Klein (JV brand), IZOD, Elle, TCP, Cherokee, GANT, Hanes, GAP, Wonderbra, Ed Hardy, Geoffrey Beene, Nautica etc. Company has a strong distribution network of 1,336 stores with a retail space of ~2.19mn sq.ft. (Brands: 1,201 stores with ~1.07mn sq.ft retail space & Unlimited: 99 stores...

Revenues from Power brands remained constant at | 746 crore (64% of revenues) YoY in Q4FY19. During the quarter, the management decided to discontinue selling to certain MBOs and distributors, which have an elongated credit period. Though it would have a negative impact on revenues in the near term, it would translate to controlled working capital cycle, going forward. Power brands concluded FY19 with revenue growth of 9% YoY to | 2797 crore with robust growth witnessed in innerwear division (USPA brand innerwear revenues grew 2x to | 100 crore). On the...

Power brands: Cash Cow for Arvind Fashions AFL's brand portfolio consists of a balanced mix, with power brands (brands that have crossed | 200 crore in revenues) and emerging brands. Power brands of AFL include Arrow, Tommy Hilfiger, US Polo Association (USPA), and Flying Machine. USPA has turned out to be one of the most profitable brand for AFL, with turnover of over | 1000 crore. Predominantly in casual menswear category, over the years, USPA has successfully leveraged its brand in newer product categories. On profitability front, the entire EBITDA...

Arvind has demerged its branded apparel & retail business and engineering business into separate companies Arvind Fashions Ltd (AFL) and Anup Engineering Ltd (AEL), respectively. This would create three separately listed companies focusing on different businesses which will increase focus on individual businesses. The company management is positive on the long term fundamental of all the entities. As per company PPT, AFL and AEL are expected to be listed on exchanges tentatively in early February 2019. Post demerger, Arvind will be present in two main businesses; textiles ~87%...

ICICI Securities Ltd | Retail Equity Research NCLT has approved the demerger of Arvind Fashions and Anup Engineering from Arvind Ltd. The company has reported financials for its continuing business only. However, for the purpose of comparison, the company has provided the consolidated summary Revenues from the textile division (excluding advanced materials) grew 6.4% YoY to | 1488 crore mainly driven by 15%, 14% growth in the garmenting, woven division, respectively. The denim business...

Arvind Ltd Q2FY19 results Comment Revenue decreased by 0.92% to Rs. 1792.91 Cr in Q2FY19 when compared to the previous quarter. On the other hand, it rose by 13.07% when compared with Q2FY18

We recently met the management of Arvind Ltd. The company is positive on all major businesses textiles, Apparels and engineering business. The company expects to complete demerger of branded apparel business and engineering business in the near future. The company has maintained FY19...

Sector: Textile /Mid-Cap | Earnings Update 1QFY19 Background: Arvind Ltd is the flagship company of the Lalbhai Group, established in 1931. Arvind's business is broadly classified into Textiles, Brand & Retail and others. Textiles, Brand & retail and others which accounts for 55%, 39% and 6% of the revenue respectively. In India, Arvind sells international brands such as Arrow, US Polo Associate, Tommy Hilfiger (JV brand), Calvin Klein (JV brand), IZOD, Elle, TCP, Cherokee, GANT, Hanes, GAP, Wonderbra, Ed Hardy, Geoffrey Beene, Nautica etc. Company has a strong distribution network of 1,336 stores with a retail space of ~2.19mn sq.ft. (Brands: 1,201 stores with ~1.07mn sq.ft retail space & Unlimited: 99 stores...

Revenue decreased by 7.56% to Rs. 2860.96 Cr in Q1FY19 when compared to the previous quarter. Arvind Ltd Q1FY19 results Comment

ICICI Securities Ltd | Retail Equity Research Consolidated revenues for the quarter grew 10.3% YoY to | 2860.96 crore (I-direct estimate: | 2927.5 crore). The growth was accelerated by 14% growth in brand & retail segment to | 1016.4 crore. Revenues from textile segment grew marginally by 2.3% YoY to | 1561.5 crore Despite a 350 bps decline in gross margins to 52.8%, EBITDA margins for the quarter improved 50 bps YoY to 8.6% (I-direct estimate: 9.3%). Lower other expenses (down 460 bps YoY) aided the margin...