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  • Stock recommendation: Arvind Ltd - BUY - TP Rs.500

    Publish date: 7th August, 2018

    Result Update

    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 the engineering business.
    • Textiles business grew at a slower pace due to decline in fabric volume led by denim segment which declined by 15% yoy due to the high base 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 a consolidated basis. We believe that the demerger would unlock the 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.


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