MOSL: ARVIND (Neutral)-Pressure on Textiles-Brand & Retail to drive growth
​ARVIND: Pressure on Textiles; Brand & Retail to drive growth
(ARVND IN, Mkt Cap USD1.5b, CMP INR365, TP INR375, 10% Upside, Neutral)
- Branded Apparels segment drives growth: ARVND’s revenue grew 17.6% YoY to INR24.7b (est. of INR23b) in 1QFY18, led by growth of 39.6% YoY in Branded Apparels. EBITDA stood at INR2,070m (est. of INR2,212m) v/s INR2,445m in 1QFY17. EBITDA margin contracted 320bp YoY to 8.4% (est. of 9.6%) on account of higher raw material costs (+290bp YoY). Adj. PAT declined to INR623m (est. of INR639m) from INR734m in 1QFY17.
- Textiles facing impact from currency appreciation, higher cotton prices: 1QFY18 witnessed margin contraction of 320bp to 8.4% as cotton prices rose sharply by 22% YoY. Cotton prices are expected to soften on account of better acreage, but currency appreciation continues to pose a threat to Textiles margins, as exports form a major portion of this business. ARVND exports 50% of its overall textiles, which are hedged ~40-45% over a period of one year.
- Brand & Retail to drive growth: GST transitional phase witnessed heavy destocking in June 2017, with the wholesale channels down 80% YoY in 1QFY18. However, with the wholesale channel coming back on track post GST and the onset of festive season, growth is expected to recover. In FY18, ARVND expects margin expansion of ~150bp in Brand & Retail, with growth of 15-20% in Power brands on account of distribution and category expansion.
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.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.