Buy Arvind; target of Rs 68: Sharekhan

Sharekhan's research report on Arvind

Q3FY2021 revenue recovered to ~80% led by a strong recovery in Denim and garments segment, which stood at 81% and 89%, of pre-COVID levels. Textile business’ EBIDTA margins reverted to FY2020 levels of 12.5%, while advanced material prices stood at 14%, resulting in a 79 bps improvement in the OPM to 10.7%. Better operating leverage and higher margins from AMD would mitigate impact of a sharp increase in input prices in the near term. Debt reduced by Rs. 300 crore in last nine months.

Outlook

We broadly maintained our earnings estimates for FY2022/23. We maintain our Buy recommendation with PT of Rs. 68.