Initiating Coverage: Arvind Ltd - BUY - TP Rs.500 - Kotak

Arvind Ltd promoted by Lalbhai family, is a leading textiles company with presence in textiles, branded apparel and engineering business. Its branded apparel business has a portfolio of 15 international licensed brands (such as US Polo, Arrow, Tommy Hilfiger, Calvin Klein, etc) and 12 in-house brands (such as Flying Machine) which are managed by qualified professionals. We expect all its brands to be profitable in FY19E, resulting in 230 bps improvement in EBITDA margins of the branded apparel business between FY18-20E. Further, its verticalization strategy in its textiles business by focusing on garmenting business would positively impact the RoCE of the business. We believe that Arvind being a major player in branded apparel business and having long history in textiles business would be benefited by rising disposable income, growth in retail sector and increasing preference towards branded apparels. We believe that the demerger of branded apparel and engineering business would unlock value of each of the businesses post listing. We initiate coverage on the stock with BUY recommendation and SOTP based target price of Rs 500.

Shares of ARVIND LTD. was last trading in BSE at Rs.430 as compared to the previous close of Rs. 403.15. The total number of shares traded during the day was 239751 in over 3569 trades.

The stock hit an intraday high of Rs. 432 and intraday low of 403. The net turnover during the day was Rs. 100979110.

Source : Equity Bulls

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