MOSL: ARVIND (Neutral)-Beat on all fronts-On track with margin expansion in Brands & Retail
Arvind: Beat on all fronts; On track with margin expansion in Brands & Retail
(ARVND IN, Mkt Cap USD1.6b, CMP INR420, TP INR454, 8% Upside, Neutral)
- Revenue, EBIDTA, PAT exceed estimate: Revenue increased 10% YoY to INR28.6b (est. of INR26b) in 1QFY19, led by Brands & Retail business (up 14% YoY to INR10.1b; INR890m unadjusted – stated higher due to Ind-AS adjustment + one-time impact from agreement changes). Textiles business too grew by 2% YoY to INR15.6b. EBITDA grew 18% YoY to INR2.5b (est. of INR2.3b), with the margin expanding 50bp YoY to 8.6% (est. of 8.9%). Adj. PAT increased 19% YoY to INR0.7b (est. of INR0.6b).
- Brands & Retail LTL growth suffers, but recovery on the cards; garments to grow over 35% in FY19: Textiles business grew by a muted 2% YoY to INR15.6b due to weakness in denims segment (due to a high base) and a decline in volumes in fabrics segment by 1m. However, volumes grew by 10% YoY in wovens segment and by 20% YoY to 7.9m in garments segment. Brands & Retail – a key focus area for ARVND with 16 brands – grew by 14% in 1QFY19, despite a tough environment. ARVND witnessed 5.8% de-growth across brands on LTL basis due to a high base – end of season sale (EOSS) was brought ahead last year. However, we note that ARVND has witnessed an improvement in July LTL growth (10%+ YoY).
Arvind Mills is primarily engaged in manufacturing and marketing of textiles, mainly denim, khakis, shirting, knits, shirts, jeans, trousers and knitting garments, in India.
Motilal Oswal Financial Services Ltd. is a reputed name in Financial Services and Online Trading with group companies providing services such as Private Wealth Management, Retail Broking and Distribution, Institutional Broking, Asset Management, Investment Banking, Private Equity, Commodity Broking, Currency Broking, Principal Strategies & Home Finance.
Motilal Oswal Securities is a group company of Motilal Oswal Financial Service Limited which started as a stock trading company and has blossomed into well diversified firm offering a range of financial products and services. Motilal Oswal has built a reputation as the source for best stock trading company and this has taken a wealth of experience, knowledge and expertise, constantly working in tandem, over the years.
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