Result Update: Arvind Ltd - BUY - TP Rs.500 - Kotak

Arvind reported decent Q1FY19 results with margin in apparel business improved on yoy basis.

Key Highlights

- Consolidated net revenues for the quarter grew by 10.3% yoy to Rs 28.6 bn driven by 2% growth in textiles, 14% growth in branded apparel, 10% growth in advanced materials and 51% growth in engineering business.

- Textiles business grew at slower pace due to decline in fabric volume led by denim segment which declined by 15% yoy due high base of last year. Growth in Branded apparel business was driven by strong performance of power brands and value retail business under brand "Unlimited".

- EBITDA margins for the quarter grew by 50 bps yoy to 8.6% resulting in EBITDA growth of 17.7% yoy. This was driven by 190 bps improvement in EBITDA margins of branded apparel and other segment reporting positive margins.

- The company has maintained revenue and margins guidance across all businesses.

Valuation & outlook

- We have maintained our estimates for Arvind on consolidated basis. We believe that the demerger would unlock value of each of the businesses post listing expected in near future.

- The stock is presently trading at FY19E/20E PE of 25.8/16.7 based on EPS of Rs. 16.3/25.2 respectively. We maintain Buy on Arvind with unchanged SOTP based target price of Rs 500.

Shares of ARVIND LTD. was last trading in BSE at Rs.393.7 as compared to the previous close of Rs. 396.4. The total number of shares traded during the day was 95089 in over 1236 trades.

The stock hit an intraday high of Rs. 399.75 and intraday low of 392.15. The net turnover during the day was Rs. 37557344.

Source : Equity Bulls

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