INSUBCONTINENT EXCLUSIVE:
NEW DELHI: Shares of Arvind Fashions, the de-merged business of Arvind, got listed at Rs 591.75 on BSE
The scrip gained 5 per cent over its listing price to trade at Rs 621.30 in the early trade
The retailer has a strong portfolio of fashion brands, which predominantly focuses on men casuals and denims
It has good retail presence in value fashion (Unlimited) and prestige beauty (Sephora).
“After establishing its power brands, Arvind
Fashions is developing sub-brands and extensions to grow market share and retail presence
Its largest brand, US Polo Association, is the best example of category expansion driving revenue growth,” Anand Rathi Financial Services
noted.
Axis Capital has initiated coverage on the scrip with a fair value of Rs 1,400 based on 17 times Mar 2021 EV/Ebitda
This is at 20 per cent discount to its target multiple for Aditya Birla Fashion and Retail, its closest listed peer.
Arvind Fashions is
targeting to be cash-flow positive by FY19 and free cash-flow neutral/positive by FY20, powered by profit growth, lower working capital and
controlled capex, Anand Rathi Financial Services noted.
Source: Anand RathiThe company has reported a 26 per cent growth in revenue and a 37
per cent growth in Ebitda over FY16-18
It posted Rs 13 crore in net profit against a net loss of Rs 39 crore in FY16 and Rs 21 crore in FY17.
The management is expecting a 17 per
cent growth in revenue over FY18-22, to Rs 800 crore
It expects the EBITDA margin to expand 100bps every year and the return of capital employed to come in excess of 25 per cent.
“We bake in
16 per cent revenue CAGR and 34 per cent Ebitda CAGR over FY19-21E aided by 210 basis points expansion in Ebitda margin (led by operating
leverage/cost efficiency-led gains in power brands and both specialty retail and emerging brands turning profitable as a portfolio),” Axis
Capital said.
In May 2018, approval was obtained from shareholders regarding the composite scheme involving the demerger and amalgamation of
capital in Arvind and Arvind Fashions
Shareholders of the former were to be issued one share in Arvind Fashions for every five shares in Arvind, and one in Anup Engineering for
every 27 shares in Arvind
Shares of Anup Engineering (formerly Anveshan Heavy Engineering) were listed on March 1
