Hold Arvind; target of Rs 95: Sharekhan

Sharekhan's research report on Arvind

As anticipated, Arvind Limited (Arvind) posted yet another muted Q3FY2023 numbers as revenues decreased by 13% y-o-y to Rs. 1,980 crore. . Textile business revenues were down by 19.2% y-o-y with denim/garments volume down 61%/20% y-o-y. AMD business outshined with 20%+ revenue growth. EBIDTA margins stood stable at 9.4% for 3rd consecutive quarter. Margins will improve with correction in the key input prices. The company will accrue savings of Rs. 25-30 crore on energy costs through recent investment done. Demand in export and domestic markets remained muted. The same is expected to be slightly better in Q4. However, substantial improvement in textile business volume growth will be gradual. AMD business will maintain 20%+ growth.

Outlook

The stock currently trades at 6.6x/5.3x/4.0x its FY2023E/FY2024E/FY2025E earnings. With concerns hovering around the core textile business, we maintain Hold recommendation on the stock with revised PT of Rs. 95.

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Arvind - 30 -01-2023 - khan