Mutual Funds Commodities Research Tax Planning IPO Our Team Contact Us  
Google
Web www.equitybulls.com
Research

| More

Arvind Fashions Ltd - A step in the right direction - ICICI Securities

Posted On: 2021-07-25 07:21:41 (Time Zone: UTC)


Arvind Fashions (ARVINDFA) announced that Arvind Lifestyle Brands Limited (ALBL), a wholly owned subsidiary of ARVINDFA, has signed a definitive agreement for the strategic sale of assets of its Unlimited retail business to V-Mart Retail Ltd. for an all cash consideration of Rs1.5bn. Unlimited operates a chain of 74 value fashion retail stores across South and West India and as a part of the transaction, it will sell the assets of these 74 retail stores along with 'Unlimited' brand to V-Mart at its book value and will thus, recover the entire capital employed in the business. We believe the loss making Unlimited was a key drag on the company's operational performance. This divestment will enable the company to focus on its six high conviction brands, strengthen its balance sheet by repaying debt and improve company-wide profitability and return ratios. Factoring in the divestment of assets of Unlimited, we increase our FY22E-FY23E pre-Ind AS 116 EBITDA by 5-10% and upgrade the stock to ADD with DCF-based target price of Rs230/sh (earlier: Rs132/sh). Key risks: Slower recovery in discretionary spends and increasing competition.

- Unlimited operates a chain of 74 value fashion stores. The stores are present across South and West India. It retails fashion apparel and accessories for men, women and children at affordable prices. ALBL will sell the assets of the 74 retail stores including warehouses, inventory etc, along with 'Unlimited' brand to V-Mart at its book value. This transaction, subject to the necessary approvals, is likely to get executed in Q2FY22. For FY21, turnover from these 74 stores stood at Rs2.9bn, which accounted for 13% of consolidated revenue of the company.

- ALBL is likely to receive a cash consideration of Rs1.5bn which is based on the book value of the assets being sold. This will enable it to fully recover the capital employed in the Unlimited business. In addition, contingent payments will be received by ALBL based on certain milestones achieved by V-Mart over the next few years post the acquisition. ALBL intends to use the cash proceeds for repayment of debt and for working capital purposes.

- Focusing on its six high conviction brands: Sale of assets of Unlimited is in-line with the company's strategy of focusing on 6 high conviction brands which include US Polo Assn., Tommy Hilfiger, Arrow, Flying Machine, Calvin Klein and Sephora. Divestment of the loss making Unlimited and sharpening of its portfolio of offerings will result in higher profitability for the company.

- Net debt to EBITDA will come down below 3x by FY23E with this sale. Net debt may decline to Rs8bn in FY22-23E with the sale of Unlimited. The company had earlier passed on an enabling resolution to raise further up to Rs4bn (to fund working capital needs), although it has no immediate plan to raise funds.


Source: Equity Bulls

Click here to send ur comments or to feedback@equitybulls.com


Disclaimer:The article above is a gist / extract of the original report prepared by the research firm / brokerage firm. This article is not to be considered as an offer to sell or a solicitation to buy any securities. This article is meant for general information only. www.equitybulls.com, its employees or owners or the research firms, its employees or owners won't be responsible for any liability that may arise from information, errors or omissions in these articles. www.equitybulls.com or its employees or owners / the research firms or its employees or clients or owners may from time to time hold positions in securities referred in this article. For detailed research reports, please contact the concerned research firm directly.


Other Headlines:

Automobile Sector - Monthly Quick View - Aug'21 - Mixed Performance across Segments - Reliance Securities

Axis Securities initiating coverage on ICICI Securities

Company Update - Minda Corporation - Q1FY22 - ICICI Direct

Quant Pick - PVR Ltd - ICICI Direct

Quant Pick - ONGC - ICICI Direct

Peak in the headline wholesale inflation is behind us - WPI August 2021 - Acuité Ratings

Sansera Engineering - IPO - Strong Outlook with Steady Cash Flow - Reliance Securities

APL Apollo Tubes - Journey from a semi-commodity player to a branded one - HDFC Securities

Nazara Technologies Ltd - Upbeat in medium-term, Uncertain over Long-term - YES Securities

IPO Review - Sansera Engineering Ltd - ICICI Direct

Overall index is still 0.3% lower than the pre-pandemic levels - IIP July 2021

YES SECURITIES on Monthly General Insurance & Mutual Funds Data

India urban logistics spaces expected to cross 7 million sq. ft by 2022: JLL

Neogen Chemicals - Breaking into the next orbit with a bang - HDFC Securities

Gladiator Stocks - Bharti Airtel Ltd - ICICI Direct

Gladiator Stocks - V-Guard - ICICI Direct

Balkrishna Industries - Industry export growth accelerates - ICICI Securities

HDFC Life Insurance - Exide Life Acquisition - Maintain ADD - YES Securities

Gladiator Stocks - Grindwell Norton - ICICI Direct

Gladiator Stocks - Godrej Properties - ICICI Direct

Monthly Auto Volumes - August 2021 - ICICI Direct

Stock Tales - Easy Trip Planners - ICICI Direct

IPO Review - Vijaya Diagnostic Centre Ltd - ICICI Direct

AU Small Finance Bank - Attrition at top level remains key challenge; business momentum sustained in Jul/Aug'21 - ICICI Securities

Gladiator Stocks - State Bank of India - ICICI Direct

Gladiator Stocks - PNC Infratech - ICICI Direct

Vijaya Diagnostic Centre Ltd - IPO Note - YES Securities

Consumer Durables Sector - Lockdown mars performance yet again - Institutional Research Desk at HDFC Securities

75% of the employees today want to be in office at least once a week as compared to 52% in October 2020: JLL

Gladiator Stocks - Safari Industries - ICICI Direct

Gladiator Stocks - Interglobe Aviation - ICICI Direct

IPO Review - Ami Organics Ltd - ICICI Direct

Q1FY22 GDP - 31st Aug 2021 - Acuité Ratings & Research

Avanti Feeds - Higher input prices hurt margins - ICICI Securities

Company Update - Restructuring - Aarti Industries - ICICI Direct

Q1FY22 Company Update - MM Forgings - ICICI Direct

Company Update - Arvind Fashions - ICICI Direct

Zomato - Can margins and multiples surprise? - ICICI Securities

Ujjivan Small Finance Bank - Top management change and lumpy provisioning concern to weigh on valuation in near term - ICICI Securities

Bharat Dynamics - Guided missile systems to drive orderbook and profit growth - ICICI Securities

Economy - Continued accommodation necessary despite inflationary risks: MPC minutes - ICICI Securities

InterGlobe Aviation - Annual report analysis: Liquidity management remains the mainstay in anticipation of traffic recovery - ICICI Securities

General insurance - Health remains dominant growth driver; Strong all-round performance by Bajaj Allianz - ICICI Securities

Earnings Wrap Q1FY22: Resilient earnings, limited impact of second Covid wave - ICICI Direct

Fine Organic Industries Results Review - In-line performance - HDFC Securities

Power Plus Sector Update - July witnessed strong ~10% generation growth - HDFC Securities

Information Technology Sector Update - 'Hit Refresh' - HDFC Securities

Maintain ADD on JK Cement - Healthy performance - HDFC Securities

Maintain BUY on Star Cement - Margin recovers on pricing gain - HDFC Securities

Maintain BUY on Sadbhav Engineering - Long road to recovery - HDFC Securities


Website Created & Maintained by : Chennai Scripts
West Mambalam, Chennai - 600 033,
Tamil Nadu, India

disclaimer copyright © 2005 - 2020