Arvind (ARVND IN) - Margin pressure continues - CSEC Research

Margin pressure continues

- Revenue up 10% YoY (+5.5% QoQ) at INR 24,648 mn. Textile revenue which accounts for 60% of the cons. revenue grew by 15% to INR 14.74bn. Brand and Retail bussiness which accounts for 34% of the cons. revenue grew 22% YoY to INR 8,290mn.

- In FY17, Denim revenue de-grew by 1.3% YoY to INR 18.41bn due to higher exposure to trade channel (volume grew by 10.6% YoY), Woven revenue grew 10.1% YoY to INR 22.12bn (volume grew 8.5% YoY), Garments revenue grew 28% YoY to INR 11.25bn, Others (Voiles, knits & fabric retail) revenue grew by 14% YoY to INR 8.56bn.

- Brand & Retail revenue grew 22% YoY in 4QFY17; Unlimited revenues grew by 29% (SSS: +30.2%) as the company has done with restructuring excercise. Power Brands (excl. Tommy Hilfiger) revenue grew 21% YoY to INR 5,150mn (SSS:5.4%).

Valuation: At CMP the stock is quoting at EV/EBITDA of 11.2XFY18E and 9.1XFY19E respectively. We rate Arvind as an BUY with a target price of INR 456 per share based on FY19E estimates, indicating an upside of 15%. Risk: Delay in Turning around of Megamart and other business; unfavorable currency movement; adverse cotton price movement; delay in capacity expansion; slowdown in domestic and export markets.

Shares of ARVIND LTD. was last trading in BSE at Rs.396 as compared to the previous close of Rs. 407.65. The total number of shares traded during the day was 432149 in over 10420 trades.

The stock hit an intraday high of Rs. 404.95 and intraday low of 393.6. The net turnover during the day was Rs. 171808521.

Source : Equity Bulls

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