Author Topic: Arvind Ltd - BUY  (Read 15287 times)

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chetan

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Arvind Ltd - BUY
« on: October 01, 2010, 07:20:05 PM »
Ventura securities has initiated Coverage with the following Rating,

We initiate coverage on Arvind as a BUY with a Price Objective of Rs 81 over a period of 15-18 months. At CMP of Rs 44.1, the stock is trading at 9.2x and 5.6x its estimated earnings for FY2011E & FY2012E representing a potential upside of ~83.7%. Arvind is one of the largest fabric producers in India with 200  million metres of fabric producing capacity. With ~100 mn metres fabric capacity expansion getting operational in phases over FY2010- FY2013 and robust growth in Brands & Retail business, the earnings are expected to grow at CAGR of 74.3% during FY11-13. Monetization of its 500 acres land bank is expected to result cash flows of nearly Rs 1000 crore over a four year period which would be used to fund the capex and retire part of the debt.

With strong revenue growth of 17% CAGR over FY2010-2013 and overall EBIDTA margin expansion of 170 bps to 14.2%, we expect earnings to grow at a CAGR of 74.3% over the same period and ROCE to expand to 15.7% from the present 7.4%. We value the stock at Rs 84 (using the DCF method) representing a potential upside of ~83.7% from the CMP of Rs 44..

sunil

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Re: Arvind Ltd - BUY
« Reply #1 on: October 13, 2010, 11:53:26 AM »
ENAM also has a BUY Recommendation with the following note,

Arvind is the largest textile brand in India. We believe the company would be a key beneficiary of the much spoken about J-Curve effect in India’s consumption. Turnaround of the garment division along with land monetisation to de-leverage the balance sheet remains the key trigger. At CMP of Rs. 45 the stock trades at less than 1x P/BV and a P/E of 6.3x its FY12E EPS. Considering the constant improvement in Arvind’s RoE profile going forward, we believe the
stock should have a fair value of Rs. 70 (target PE of 10x FY12E EPS).