Arvind Fashion Share: Leading lifestyle brand company, Arvind Fashion, has recently received a ‘BUY’ rating from the brokerage firm Systematix. This endorsement stems from the firm’s belief in the strong balance sheet of Arvind Fashion and its reasonable valuation in the retail sector. Moreover, the company is keenly focusing on profitable revenue growth, making it an attractive option for investors seeking small-cap stocks.
Over the past six months, Arvind Fashion’s share has shown a robust growth of approximately 24%. Systematix, in its recent coverage, has initiated a buy recommendation on the stock with a target price of ₹515 per share. Considering the share price closed at ₹366 on 18th October 2023, there’s a potential upside of about 41%. In the last year, the stock has provided a return of around 10%, and in 2023 alone, it has already surged by 4-5%.
Arvind Fashion share stands tall in the lifestyle space, boasting a diverse portfolio that includes brands spanning across various categories and price ranges. Some of its notable brands include the US Polo Association (USPA), Arrow, Tommy Hilfiger, Calvin Klein, Flying Machine, and Sephora. The company has managed to overcome previous challenges through capital infusion, portfolio rationalization, and improvements in margins.
Systematix’s target price of ₹515 is based on 10x FY25E EV/EBITDA, translating to a 47x FY25E P/E multiple. Despite its promising trajectory, Arvind Fashion faces some significant challenges ahead. There are concerns related to long-term demand stagnation, increasing competition, the company’s inability to scale certain focus brands, issues in margin/working capital, and attrition. Potential investors should weigh these risks before making a decision.
