ICICI Securities: Arvind Fashion Q1 Review - Leverage To Remain High Despite Fund Raise
Spools of thread at the Arvind Ltd. Santej manufacturing plant in Gujarat. (Photographer: Rajendra Giri/BloombergQuint)

ICICI Securities: Arvind Fashion Q1 Review - Leverage To Remain High Despite Fund Raise

BQ Blue’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages. These reports offer BloombergQuint’s subscribers an opportunity to expand their understanding of companies, sectors and the economy.

ICICI Securities Report

Key takeaways from Arvind Fashions Ltd.’s Q1 FY21 result:

1. 77% network is operational in August 2020 with overall sales at 46% of same month last year;

2. Expects 8-10% improvement in sales recovery every month;

3. Online channel consumer offtake increased by 30%;

4. Targeting structural cost reduction of Rs 1.2 billion-1.5 billion per annum;

5. Expects Ebitda and cash breakeven in Q3 FY21 and Q4 FY21 respectively on exit-month basis; and

6. Net debt declined by Rs 3.3 billion in quarter-to-date to Rs 9.7 billion as of August 2020-end post fund raise of Rs 6.6 billion.

However, net debt to Ebitda is still likely to remain high at approximately 4 times even in FY22E, in our view.

Factoring slower demand recovery, we cut our FY21-22E revenue by 2-6%.

Click on the attachment to read the full report:

ICICI Securities Arvind Fashions Ltd. Q1FY21 Result Update.pdf


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