ICICI Direct: Arvind Fashion’s Balance Sheet Concerns Linger In Uncertain Demand Environment
Spools of thread at the Arvind Ltd. Santej manufacturing plant in Gujarat. (Photographer: Rajendra Giri/BloombergQuint)

ICICI Direct: Arvind Fashion’s Balance Sheet Concerns Linger In Uncertain Demand Environment

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ICICI Direct Report

Disruptions due to Covid-19 elevated woes in an already challenging FY20 for Arvind Fashion. Revenues for the quarter fell 39% YoY to Rs 710.5 crore. As per management estimates, the company lost sales worth approximately Rs 300 crore due to Covid-19 disruptions.

The company has adopted multiple initiatives to sharply rationalise fixed overheads, going forward. It expects cost reduction of ~35% in FY21E, with 15% reduction to be structural in nature. Expected cash infusion Rs 660 crore may provide some cushion but higher anticipated losses will restrict debt reduction ability.

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IDirect_ArvindFashion_CoUpdate.pdf

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