Arvind Ltd

Arvind has been in the limelight lately, mainly on the back of it picking up 49% stake held by the Murjani Group in Calvin Klein in India. With this, Arvind and PVH Corp are expected to drive Calvin Klein’s business in the country. This is being viewed as extremely positive for the stock as this acquisition gives it more brands which in turn will help improve its retail margins. The company already has almost all the top notch denim brands – US Polo, Tommy Hillfiger, Ed Hardy, Flying Machine and now Calvin Klein, meaning that it now caters to brands priced right from Rs.750 to as high as Rs.10,000. This apart, the company is working on launching its own brand by 2015. It is going in for expansion of its garment capacity by another 6-7 million in a year and half of which 50-70% will be on stream by 2015. Its current capacity is between 10 and 11 million. Currently, Arvind has 35% share in India's apparel sales, with 1,000 retail stores.

On the financial front, the company posted a consolidated net profit at Rs.102 crore, up 35% (YoY) on a 28% jump in net sales at Rs.1792 crore. EBITDA came in at Rs272 crore, up 46% but the best expansion was in the EBITDA margin, which spurted up by a whopping 190 bps to 15.2%. This performance was spurred on by textiles and retail segments. The textile segment showed a 24% growth, driven by 20% growth in denim, 21% in woven fabrics and 35% in garment manufacturing. This segment contributes over 65% to the total income of the company. The other segment which did well was retail, which showed a 30% growth, contributing 30% to the overall topline. The company has ended 9MFY14 with a net profit at Rs.260 crore, which has already surpassed that of FY13 net profit of Rs.248 crore; clearly, with one more quarter to go, it will end FY14 on a much higher and exuberant note. The company is eyeing revenue of Rs 5,000 crore from its brands and retail business alone in the next five years which is currently at Rs 2,000 crore of total revenue.