Textile company Arvind's first quarter consolidated net profit fell by 2 percent year-on-year to Rs 88.3 crore on higher tax expenses, according to average of estimates of analysts polled by CNBC-TV18. Analysts expect tax rate of 29 percent during the quarter against 12 percent in the year-ago period.
Revenue is likely to increase 11.1 percent to Rs 1,969.3 crore compared to Rs 1,772.6 crore year-on-year.
Operating profit (ex-forex) may grow 14 percent on yearly basis to Rs 250.5 crore and margin may see expansion of 30 basis points to 12.7 percent, led by slight improvement in the textiles segment due to low cotton prices.
Textile segment revenue growth is expected to be (muted) 5-7 percent on account of low cotton prices and limited volumes while majority of the revenue growth may come from brands & retail segment (20-25 percent).
Key thing to watch for would be performance of brands & retail segment (as it has a massive thrust on this segment due to high margins low capital business).
The company has been slowly shifting its focus towards brands & retail segment, which contribution to topline increased from 22 percent in FY10 to 30 percent in FY15. It expects this to go to 35 percent in FY18.
It has been investing heavily in this segment (its loss in Q4FY15 was Rs 13.5 crore). Operating profit margin in the B&R segment is expected to decline Y-o-Y due to launch expense of GAP store and inventory liquidation.
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