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Research
Arvind Ltd (ARVND IN) - Strong B&R performance, margin pressure continues - Earnings update - CSEC Research
Posted On : 2017-11-15 03:49:17( TIMEZONE : IST )
- Revenue up 12.8% YoY (+6.2% QoQ) at INR 26,285 mn. Textile revenue which accounts for 55% of the cons. revenue grew by 1% to INR 14.38bn. Brand and Retail bussiness which accounts for 39% of the cons. revenue grew 34.6% YoY to INR 10,320mn.
- EBITDA at INR 2,123mn, down 8.6% YoY (+2.6% QoQ). EBITDA margin fell by 189bps YoY to 8.1%; due to 399bps YoY fall in the textile margin owing to currency appreciation and increase in cotton price. Brand and Retail margin increased by 210bps YoY to 6.1% due to margin improvement in Unlimited and Speciality Retail. Power brand margin fell by 10bps YoY to 13.4%.
- Tax expense fell by 12.3% YoY to INR 237mn and ETR stood at 26.8% up 70bps YoY. Other income grew by 15.8% YoY to INR 256mn. Reported PAT de-grew by 13.8% YoY to INR 618mn. Adj. PAT de-grew by 15.1% YoY to INR 662mn.
- Company has announced de-merger of B&R business into Arvind Fashions Ltd and Engineering business into Anup Engineering as these business have matured and financially self-sufficient to drive growth. Shareholders of Arvind will be entitled to 1 equity shares of Arvind Fashion for every five shares of Arvind and 1 equity share of Anup Engineering for every 27 shares in Arvind.
Valuation: At CMP the stock is quoting at EV/EBITDA of 14.4XFY18E and 11.4XFY19E respectively. We rate Arvind as an OUTPERFORMER with a target price of INR 456 per share based on FY19E estimates, indicating an upside of 10%.
Risks: Delay in Turning around of new 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.411.05 as compared to the previous close of Rs. 420.15. The total number of shares traded during the day was 98091 in over 1367 trades.
The stock hit an intraday high of Rs. 422.9 and intraday low of 408. The net turnover during the day was Rs. 40596728.
