Highlighting the reasons for being bullish on Arvind Fashions shares, Anand Rathi research report says, "Arvind Fashions ended FY22 ahead of our estimates and on track to its target of profitable growth, working capital optimisation, de-levered B/S and rising cash-flows. Ahead, management expects revenue to grow 12- 15% (net of the Covid-19 impact), driven by 200 stores added and healthy comparable growth."
"With better full-price sales and operating leverage, it expects margins to increase. It will continue to focus on further debt reduction and better inventory turns, leading to more cash-flows. Our revenue estimates are unchanged. We have lowered our FY23e/FY24e EBITDA ~4%/2% from earlier."
On what will drive this robust growth, the brokerage said, "Q4 FY22 revenue rose ~34% y/y to Rs9.2bn. Power brands grew ~32% y/y to Rs7.3bn and emerging brands, 43% to Rs1.9bn. Comparable growth in Feb-Mar’22 was 20%. Department stores grew 2x y/y and online, 20%+."
On suggestion to positional investors in regard to Arvind Fashions shares, Anand Rathi report said, "With FY22 targets achieved, consistence performance with profitable revenue growth and increasing return ratios are key monitorable. We retain our Buy rating, at a ₹453 TP, based on 11x FY24e EV/EBITDA."
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
