A snapshot of Arvind Fashions

Stock Data

Ticker: ARVINDFASN

Exchange :NSE and BSE

Industry: Retail and Fashion

The share price of Arvind Fashions as on 29 Aug, 2022 2:31 PM IST is Rs 274.95. The price has declined by 3.50% based on the previous closing price of Rs 289.05.The share has reached 52 Week high at Rs 364.40 while 52 week low is Rs 217.90. The shares are traded at a very high P/E ratio of Rs 406.48.The company has a debt equity ratio of 0.07. The company has an Interest Cover Ratio of -0.87.

Price Performance

The price has declined by 3.39% in last 1 day. It has increased by 3.6% in last 1 week. In last 1 month the price has declined by 6.88%. The price increased by 15.87% in last 3 months. In last 6months, the price has increased by 2.56%  and in last 1 year the price increased by 2.46%.

Financial Snapshot– Revenues increased by 40% to Rs. 920 Crores. The power revenue brand USPA and Tommy Hilfiger has shown double-digit EBITDA margins. EBITDA has shown growth of 52% to Rs. 94 Crores. Gross margin improvement of 640 bps (Y-o-Y) to 49.4%.

The company has shown a negative sales growth of -65.07% in last 1 year and –33.2% in last 3 year. The profit growth is -1114.93% in last 1 year and -203.63% in last 3 years. The ROE has declined by -3.8% in last 1 year compared to 0.21% in last 3 years. The ROCE is -1.58% in last 1 year. It was 2.14% in last 3 years.

Shareholding

Category	30-Jun-22	31-Mar-22	31-Dec-21	30-Sep-21
Promoter	36.88	36.92	36.93	36.96
Pledge	7.97	7.97	7.97	5.32
FII	7.63	7.87	7.86	7.84
DII	11.68	11.24	11.02	10.85
Mutual Funds	10.82	10.42	10.27	10.1
Others	43.81	43.97	44.19	44.35

The Promoter holding stood at 36.88% as on 30^th June 2022.It holds a pledge of 7.97. The FII holding is 7.63% as on 30^th June 2022 compared to 7.87 as on 31^st Mar-2022. The DII holding stood at 11.68% and the mutual funds increased to 10.82%. For others the holding is 43.81%.

Company Description– Arvind Fashion Limited is an Indian textile manufacturer and the flagship company of the Lalbhai Group. The company was incorporated in 1931. It has its headquarters in Ahmedabad, India. The products include cotton shirting, denim, knits and bottom weight (khaki) fabrics. Arvind Fashion is a major player of fashion in the India market. It has both global and international presence. It deals with renowned brands, both international and indigenous, like US Polo Assn., Arrow, Tommy Hilfiger, Calvin Klein, Flying Machine and Sephora, it has presence across lifestyle brands and prestige beauty.  

Business Outlook – The company anticipates a strong consumer demand across channels and categories. They expect  that it will continue the same momentum for rest of the year leading to significant improvement in our return on capital employed (ROCE). The company targets inventory terms of more than 4 times in FY23 leading to free cash flow generation.

Peer Comparison

COMPANY	MCAP  Cr	P/B	P/E	EPS  Rs.	ROE%	ROCE%	EV/EBITDA
Aditya Birla Fashion	28,324.89	9.62	74.91	4.03	-35.32	-6.57	16.11
Bata india	24,197.24	12.51	83.00	22.68	-4.94	-0.52	31.07
Shoppers Stop	6,704.78	56.35	124.53	4.91	-173.96	-41.83	11.48
Arvind Fashions	3645.03	1.58	406.33	0.68	-3.8	-1.58	96.51

As per the industry perspective, if we make a comparison of all these companies in the retail sector we will see that none of the companiesare giving a good return and they are traded at a very high P/E ratio. All the companies in the retail sector should concentrate more in improving the P/E ratio, ROE and ROCE.

Industry Analysis-According to the Retailers Association of India the overall retail sales last month grew by 12 per cent as compared to the pre-pandemic levels. The apparel sales in India is expected to reach $75.2b (INR5.8t) in 2022. The main reason of this growth is increasing income of the common people and preference towards western brands. According to the data analysis ethnic wear market is set to grow at 10% CAGR during2022.