Sharekhan's research report on Arvind
Arvind Limited (Arvind) posted strong Q1FY2023 performance. Revenue and EBITDA grew 64% and 99% y-o-y, respectively, ahead of expectations, driven by strong revenue growth in core textile/advanced material business (on low base) and better operating leverage resulting in higher margins. Slowdown in the demand environment in the US and Europe and higher inventory with global retailers will impact export demand in Q2/Q3. Domestic demand is expected to remain strong. Overall, we expect muted Q2FY2023. Cotton price correction provides some relief. Long-term debt on books has reduced by Rs. 56 crore in Q1. Overall, net debt stood higher at Rs. 1,809 crore due to higher inventory levels. Management is confident of reducing debt by the end of the fiscal.
The stock has corrected by 17% in the last three months and currently trades at 7.8x/6.0x its FY2023E/FY2024E earnings. We maintain Buy with a revised PT of Rs. 125.
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