Fundamental Analysis of Arvind Fashions Ltd

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Company profile of Arvind Fashions Ltd:

  • Company Name: Arvind Fashions Ltd.
  • Industry: Textiles – Readymade Apparels
  • House: Lalbhai Group
  • Year of Establishment: 2016
  • CompanyWebsite:https://www.arvind-fashions.com
  • Head office: Ahmedabad, Gujarat
  • Listed on: 8th March 2019
  • Face value at listing: 4

Premium and Super-premium segments of Arvind Fashions Ltd:

  • Arvind Fashions Ltd. is the number 1 player of denim/casuals in India. One out of every five casual wear bought in branded premium men’s casual/denim Market if from Arvind’s Portfolio.
  • Total sales of premium brands like Tommy Hilfiger, Calvin Klein, Arrow, U.S. Polo Assn., GAP, Flying Machine and Aeropostale etc is around Rs. 40 Billion.
  • Arvind Fashions Ltd has a really strong portfolio which is delivering significant growth over the years.
BrandGrowth
U.S. Polo. Assn.
(casual wear brand)
CAGR 33%
Flying Machine
(denim brand)
CAGR 35%
Arrow
(Sports)
CAGR 34%
Calvin KleinNumber 1 and 2 in super-premium denim/casuals
GAP, Aeropostale and Ed HardyDominant position in premium men's casual/denim

Value Segment of Arvind Fashions Ltd:

  • Arvind Fashions Ltd. is growing in the value-sensitive market with its ‘Unlimited’ segment.
  • The branded Value fashion market is growing at 24% est. to become $ 12 Bn by 2020.
  • The ‘Unlimited’ segment is built on unique differentiators. It is growing at 6-7% EBITDA FY22
  • ‘Unlimited’ includes strong brands in its portfolio. Ruggers, Newport, Cherokee, Karigari, Excalibur, Anahi and Elle to name a few.
  • Arvind Fashions sells premium products like Boomerang Jeans at value prices thanks to its product superiority leveraging fiber by Arvind Ltd.

Other leading categories

  • Other categories of Arvind Fashions ltd which can either become number 1 or 2 soon are Premium Innerwear, Premium Kidswear, and Prestige Beauty.
  • Fast growing premium innerwear market is estimated to be $2.8 Bn by 2022. Arvind Fashions Ltd has a portfolio of Premium Innerwear which covers all the price segments in the premium market. U.S. Polo Assn., Calvin Klein and Hanes etc.
  • Apart from that Arvind Fashions Ltd. has an exclusive license to sell Kidswear from established international brands like the US. Polo Assn., GAP kids, The children’s place, Tommy Hilfiger (Childrenswear), Flying Machine Boyzone etc. Premium Kidswear Market is estimated to be $ 5.1 Bn by 2022.
  • The Prestige beauty market which is estimated to be $1.5 Bn by 2022 is also served by Arvind Fashions Ltd through ‘Sephora’.

Strengths of Arvind Fashions Ltd

  • Arvind Fashions Ltd has more than 250+ designers and merchants. Company’s marketing team studies Consumer buying behavior so well that it has a track record of creating best India-specific designs for International brands. Responsible denim, Stitchless shirts etc.are some examples of how AFL promotes innovation in the company. Men, Women, Kid and Innerwear Arvind Fashions Ltd has Multi-category expertise in product designing.
  • Arvind Fashions Ltd has a strong supply change management system and Automated replenishment system which gives it strong internal capabilities to increase its productivity.
  • AFL uses updated technology like Artificial Intelligence design optimization and Customer-centric store assortment which are analytically driven to cater customer needs properly.
  • Technology is used everywhere from designing to buying to selling which makes Arvind Fashions Ltd ahead of its competitors.
  • The Nnnow.com e-commerce-website, Arvind Stores, the vendor/supplier relationship, etc. are the key value drivers of this segment of AFL.
  • It has 189 dedicated Lifestyle stores in the top 25 Malls in India. AFL is present in more than 140 second and third-tier cities

Growth Opportunities for Arvind Fashions Ltd.

  • In power brands like U.S.polo Assn., Flying Machine, Arrow and Tommy Hilfiger company is growing 18% of CAGR growth it has tremendous opportunity to multiply the revenue in these brands from 1.6 (TH) times to 4 times (FM). Up to 45% CAGR is possible by 2022.
  • In tier 2 cities potential to achieve growth is 20% CAGR and in tier 3 cities it can deliver a whopping 35% CAGR by 2022.
  • Replication of Sephora.com model has huge potential upside as it became profitable in its very 2nd year of launching thanks to customer loyalty.
  • Arvind Fashions Ltd started domestic production under GAP brand which is increasing its Gross Margin. The opening of more shop in shop, Online, Kids Franchisee, Stores can contribute to growth and profitability further.
  • Unlimited has expanded stores network to 200 stores. It has great potential to give 25% CAGR in the specialty retail segment due to the differentiation of products it offers.
  • Emerging brands like Aeropostale, The children’s Place, Ed Hardy, Calvin Klein can give 7% CAGR by 2022.

Updates on Arvind Fashions Share Price on 20th March 2019

In this post on the Fundamental Analysis of Arvind Fashions Ltd. I already mentioned that this stock will give a Multibagger return to Investor who buy it immediately after listing date. From 590.95 to 916.50 Arvind Fashions Ltd share has given 55% returns to the investors in just 10 trading days. That is a tremendous returns. Arvind Fashions Ltd stock is moving upwards circuit to circuit. After it crosses 1000 we might see some profit booking in the stock. Stocksbaazigar gave short term target of 950 and mid-term target of 1200 in this stock. Arvind Fashions Ltd is a portfolio stock and the share price will reach to a premium which will match to the premium of Aditya Birla Fashions Retail Ltd. very soon. Stay invested.

Fundamental Analysis of Arvind Fashions Ltd by Stocksbaazigar

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