Arvind: At An Inflection

Transcription

1 Arvind: At An Inflection

2 Arvind- A A Changing Picture Arvind s Revenue is expected to grow at CAGR of 17% to Rs. 10,000 cr by March 31, 2016 About 36% of Arvind s Revenue will come from its fast growing B 2 C Business Revenue CAGR 17% Other s 3% Brands & Retail 29% Revenue Mix 2013 Textiles 68% Other s 5% Brand s & Retail 36% Revenue Mix 2016 Textiles 59% While Textile will continue to be significant part of Arvind s Revenue, Arvind s non denim business will grow very rapidly 120% 100% 80% 60% 40% 20% 0% Textile Revenue 55% 67% 45% 33% Other Textiles Denim 120% 100% 80% 60% 40% 20% 0% Total Revenue 68% 80% 32% 20% Revenue from others Denim

3 Arvind- A Changing Picture While Arvind s revenue may double over 3 years, its ROCE and leverage position is likely to significantly improve due to Re-investment of Operating Cash Flows Cash flows from divestment of real-estate cash flows expected over next 5 years is Rs. 900 crores Cash flows more or less equally spread every year. Scale Advantage 18.00% 16.00% 14.00% 12.00% 10.50% 13% ROCE 12%** 14% 16% 17% Debt: equity % % **Earnings reduced due to strike in Q1-2013

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13 Arvind has an Unmatched Portfolio of Owned & Licensed Brands and Retail Formats in the Fashion Industry Product Brands ( Licensed) Retail Brands JV Brand Product Brands (Owned)

14 Arvind s pursuit of Multi-Brand, Multi-Price Point and Multi-Channel Strategy over the last 5 years has grown the Business at a CAGR of 38% Income Pyramid in 2015 (households mn.) Bridge to Luxury Globals (3) Affluent India 1 Premium Brands Strivers & Seekers (61) Upper Middle Class Value Retail Aspirers (106) Middle Class India 2 Arvind Portfolio Caters to Addressable Market of 170 Mn Households

15 Arvind has one of the best Distribution Strengths in the Apparel Industry No. of Counters / Doors No. of Retail Stores in India No. of Towns Retail Space No. of Retail Stores International Dubai South Africa Department Store Counters India Middle East South Africa Mn. Sq. ft Multibrand Outlets: India 700

16 Arvind has already taken leadership position in Premium Menswear market Competition Now Future Premium Menswear No. 1 Louis Philippe Van Heusen Allen Solly Brooks Brothers Pink Kenneth Cole Apparel Specialty Retail Balanced Portfolio with Future Growth Drivers Keep the Portfolio always Future Ready

17 Arvind has already taken leadership position in Premium Kids-wear market Kids wear No. 1 Best Portfolio in the Industry Propose to add one large international brand in near future

18 Arvind has some white spaces in youth and denim market Competition Now & Future Denim & Youth International Brands Leverage Can Make Us No. 1

19 India s Retail play- Now & in future Bridge to Luxury Department Store Arvind Premium Department Store Kids Fast Fashion Specialty Retail Youth Family Value Discount Will be Among the Top 5 Players in the Apparel Retail Landscape

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21 Leveraging these strengths Arvind is geared to be a Rs Crs Brands & Retail Business over the Next Five Years Arvind Plans to Achieve This through a Combination of 1. Organic Growth Current Business: Rs Crs Rs Crs 2. Inorganic Growth Acquisition New Brand Launches Rs Crs Joint Ventures

22 Arvind s Earnings :At Inflection Point Textile Margins to improve as multiple product groups become large Apart from denim, woven fabrics, garments and technical textile to scale up rapidly Arvind s earnings likely to improve substantially over next 3 years Margin improvement Consistency Brands business attaining maturity stage leading to Improved operating leverage resulting in margin improvement Mega Mart retail chain stabilising after the derailment caused by imposing of excise duty Real-estate revenue and profits likely to kick in from next FY

23 Near term outlook is positive FY 2014 Revenue 20% + EBIDTA margin may marginally improve PBT to sharply improve Capacity expansion in woven fabrics completed Garment plant in Bangladesh being set up Established brands to continue growth momentum Several new brands and retail formats acquired Scale advantage MegaMart margins steadily improving Currency hedge almost getting over Real-estate profits likely to kick in Cost of increase in borrowing may significantly get off set by reduction in interest cost Depreciation to increase at a lower pace than EBIDTA

24 Arvind Likely to Outperform Market Unique opportunity to ride Indian consumption and Indian Manufacturing Story Largest portfolio of domestic & foreign licensed apparel brands One of the largest yet very flexible fabric manufactures in the world Large land bank available for monetization to fund growth Highly talented and committed professional management team According to some analysts, Arvind is likely to outperform the market Based on their 2014 forecast, Arvind is currently trading at: EV/EBIDTA multiple of 5.2 PAT Multiple of 7 and Book Value multiple of 0.9 Arvind may get re-rated Share of B 2 C business, which trades at times EV/EBIDTA multiple is increasing Arvind s textile business is more robust than ever before with several product groups gaining size and contributing significantly to revenue and profits

25 Thank You