Arvind Fashions Q1 - Steady Growth In Tough Market Condition, Operating Margins Remain Strong: Systematix

Systematix Report

Arvind Fashions Ltd. Q1 FY25 was in-line with our expectations with steady revenue and strong margin performance. Revenue grew 10.2% YoY led by healthy 15% growth in wholesale channel and 1.5% like-to-like in retail despite tough market conditions. Growth was driven by market share gains despite the decision to postpone end of season sale. Gross margin expanded 83 basis points YoY to 55.2% led by focus on full price sell-thru and product cost efficiencies.

Consequently, Ebitda margin improved 131 bps YoY to 12.1% led by decline of 74 bps in other operating expenses while employee cost grew by 26 bps. profit before tax grew 67% YoY to Rs 236 million while profit after tax from continuing operations stood at Rs 138 million compared to a loss of Rs 46 million in Q1 FY24.

On channel wise performance, there was broad based growth across all channels, online D2C business grew 60% YoY and wholesale channel grew 15% YoY on account of seasonality alignment.

Gross exclusive brand outlets addition stood at 29 EBOs during the quarter, taking the EBO count to 944 EBOs. Gross working capital days remained stable with focus on inventory turn leading to improvement of three days. Net debt stood at Rs 2.25 billion.

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