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Motilal Oswal Report
Arvind Fashion Ltd. has seen a tumultuous phase since its listing around three years ago at ~Rs 460 and is now down 40%. The last two years have been particularly challenging due to Covid-19. This has triggered four rounds of equity raise, including the Flipkart backing, which has reduced its leverage.
The business has become much leaner, in addition to the company's decision to cast aside the long tail of loss-making brands and sell the value retail chain 'Unlimited'. We see a change in the management philosophy from 'chasing growth to 'chasing profitable growth'.
Arvind Fashions now focuses on six key brands (contributing ~70% to revenue) – USPA, Arrow, Tommy Hilfiger, and Flying Machine among the power brands and CK and Sephora under emerging brands (~10% revenue) – with a revenue scale of Rs 30 billion in the pre-Covid base and the ability to do high-single digit to low-double-digit margins.
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