Arvind Fashions: Up 18% in last one year, Sytematix sees another 40% upside in the stock; here's why
Arvind Fashions with a ‘buy’ call. It is a focused player with a strengthened balance sheet and attractive valuations, it said. The brokerage has a target price of ₹515 for the stock, indicating an upside of over 40 percent.
The stock has risen over 18 percent in the last 1 year but only 5 percent in 2023 YTD, giving positive returns in 6 of the 10 months so far in this current calendar year. It rose the most in June 2023, up over 24 percent and shed the most in February 2023, down over 13 percent. The stock is still almost 6 percent away from its 52-week high of ₹389.45, hit in November 2022.
Meanwhile, it has advanced 41 percent from its 52-week low of ₹261, hit in March 2023. Arvind Fashion is a leading player in the lifestyle space, with a strong portfolio of fashion brands across categories and price points like US Polo Association (USPA), Arrow, Tommy Hilfiger (Tommy), Calvin Klein (CK), Flying Machine and Sephora. A combination of capital raises, portfolio rationalisation, and margin improvement have helped the company recover from its painful past, noted the brokerage.
With USPA forecast to cross ₹2000 crore revenue in FY24E and Tommy + CK achieving the ₹1000 crore mark in FY23, with double-digit EBITDA margins, these three brands seem to be in autopilot mode currently. Currently, the company’s focus is on scaling up its Arrow and Flying Machine brands, as these hold significant potential for both growth and margin improvement, added the report. "ARVINDFA’s steadfast focus on achieving only profitable revenue growth may cause it to grow a tad slower than peers in the near term, but we expect the company to retain its top position among peers in terms of cash generation and EBITDA/PAT growth.
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