Buy Arvind; target of Rs 480: Chola Securities

Chola Securities' research report on Arvind

Arvind Ltd is the flagship company of the Lalbhai Group, established in 1931. Arvind’s business is broadly classified into Textiles, Brand & Retail and others. Textiles, Brand & retail and others which accounts for 55%, 39% and 6% of the revenue respectively. In India, Arvind sells international brands such as Arrow, US Polo Associate, Tommy Hilfiger (JV brand), Calvin Klein (JV brand), IZOD, Elle, Cherokee, GANT, Hanes, Billabong, Wonderbra, Ed Hardy, Geoffrey Beene, Nautica etc. Company has a strong distribution network of 1,262 stores with a retail space of 2.02mn sq.ft. (Brands: 1,137 stores with 1.01mn sq.ft retail space & Unlimited: 93 stores with 0.87mn sq.ft. retail space and Specialty Retail: 32 stores with 0.13mn sq.ft).

Outlook

We introduce FY20E estimates Revenue/EPS 14% / 34.7% YoY. At CMP the stock is quoting at EV/EBITDA of 10.9XFY19E and 8.9XFY20E respectively. We roll over our valuation to FY20E; We rate Arvind as a BUY with a target price of INR 480 per share based on FY20E estimates, indicating an upside of 27%.