Buy Arvind; target of Rs 43: Sharekhan

Sharekhan's research repor on Arvind

Q2FY2021 revenue growth recovered to ~66%, q-o-q better due to healthy export demand and a q-o-q improvement in domestic demand. Denim, woven and garment volumes recovered to 80%, 60% and 66%, respectively, of the corresponding quarter. Advanced material division (AMD) is back to pre-COVID levels. Cost-saving measures to aid better margins in FY2022 coupled with higher margins from AMD. Arvind to strengthen balance sheet by further reducing debt of ~Rs. 100 crore.

Outlook

We maintain our Buy rating on stock with an unchanged PT of Rs. 43 as it trades at discounted valuation of 4.5x its FY2023E earnings and 3.5x its FY2023E EV/EBITDA (at a discount of ~30% since its listing last year).

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