Arvind Fashions - FY24 Annual Report Analysis; Maintaining A Buy: Anand Rathi

Anand Rathi Report

Its FY24 annual report highlighted Arvind Fashions Ltd.’s steps for growth with premiumisation being a core theme across brands. It is focusing on launching high-quality seasonal collections, which lower discounts and aid full-price sell-throughs. Adjacent categories account for more than 15% revenue of some brands with double-digit growth.

It is prioritising expanding its retail footprint with ~150 exclusive brand outlets added annually and broad base the rollout of innovative retail formats (Club A, Stride).

Better stock management and higher retail channel mix reduced gross working capital YoY. The return on capital employed rose to ~11% (FY23: 10.6%), driven by efficient working capital management, better stock control and flexible sourcing methods.

Revenue/profit after tax of the 50% joint venture PVH Arvind Fashion rose ~22%/36% YoY to Rs 12.4 billion/1.4 billion. We are enthused about the company and expect 12%/22% sales/Ebitda CAGRs over FY24- 26.

We expect the RoCE to rise to 20.2% by FY26. To reflect the better operations, we raise our target multiple to 13 times FY26e EV/Ebitda (from 12x). We retain our Buy recommendation, with a Rs 689 target price (earlier Rs 632).

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