Buy Arvind Fashions; target of Rs 685: Anand Rathi

Anand Rathi is bullish on Arvind Fashions has recommended buy rating on the stock with a target price of Rs 685 in its research report dated February 08, 2025.

Broker Research

February 10, 2025 / 11:57 IST

Buy

26 Aug, 2025 12:21

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Anand Rathi's research report on Arvind Fashions

Despite muted demand, Arvind Fashions posted 11% retail LTL growth y/y, with double-digit LTL growth for all its five brands. The retail channel outshone (15% growth y/y), driven by higher ad-spend, store expansion and celebrity collaborations. LTL PAT (post-minority interest) doubled y/y to Rs587m in 9M FY25, while working capital was stable with stock turns of >4x. RoCE rose to 19% (TTM) from 16% in FY24, backed by greater profitability. Adjacent categories outpaced overall growth, with women's wear sales doubling and innerwear growing in mid-teens. Arrow is progressing towards mid-to-high singledigit EBITDA margins, while Flying Machine's rebranding gains traction; both are set to turn PAT positive in the medium term. Targets 12-15% sales growth in the medium term with a 100bp annual EBITDA margin expansion.

Outlook

We lower our FY25-27 revenue/EBITDA estimates ~2%/3% due to weak demand, with a higher EPS cut due to IND AS 116-led depreciation/ interest. Expecting 12%/20%/53% revenue/EBITDA/EPS CAGRs over FY24-27, we retain our Buy rating, with a TP of Rs685 on 11x FY27e EV/EBITDA (earlier Rs717 on 11x FY27e EV/EBITDA).

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