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Arvind Ltd

BUY

- 1 of 22 - Tuesday 25th July, 2017

This document is for private circulation, and must be read in conjunction with the disclaimer on the last page.

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Target Price ₹ 624 CMP ₹ 369 FY20E EV/EBITDA 8.1x

Index Details

Arvind Ltd (Arvind) is expected to be one of the biggest beneficiaries of

GST, as the tax arbitrage enjoyed by the unorganized sector (~75% of

market) is expected to be eliminated in the post GST regime. We expect

aggressive market share gains to play out over the forecast period FY17-

20. Further, its garmenting foray in Ethiopia, high growth of brand

portfolio and expanding retail footprint of Unlimited are expected to

propel top line growth and profitability.

We initiate coverage on Arvind as a BUY with a SOTP price objective of

Rs.624, representing a potential upside of 69.1% from the CMP of Rs. 369

over a period of 30 months.

Our optimism stems from the following:

The textiles segment is expected to grow at a CAGR of 9% to Rs.

7,440 crore on the back of an expected increase in the fabric

conversion rate to ~20-22% from the present ~7-8%.

The garmenting capacity expansion (10-12 mn pieces) in Ethiopia

will boost the overall capacity and support its verticalisation

strategy. Significant manufacturing incentives and duty free access

to international customers in Europe and USA will boost the

garmenting business revenues to Rs. 2,092 crore by FY20 (CAGR

of 23%).

The strong portfolio of iconic brands across all market segments,

with a clear set of priorities, is poised to capture the “brand

conscious” Indian apparel industry. Further, an extensive

distribution network, with more than 1900 KA counters covering

1.6mn sq. ft. of retail area, across the country is expected to drive

the brands and retail business revenue growth by 22.7% CAGR

over FY17-20 to Rs. 5,334 crore in FY20.

Sensex 32,245

Nifty 9,967

Industry Textile

Scrip Details

Mkt Cap (₹cr) 9,461

BVPS (₹) 138.1

O/s Shares (Cr) 25.8

Av Vol (Lacs) 7.4

52 Week H/L 426/286

Div Yield (%) 0.6

FVPS (₹) 10

Shareholding Pattern

Shareholders %

Promoters 42.9

Public 57.1

Total 100.0

Arvind vs. Sensex

050100150200250300350400450

0

5000

10000

15000

20000

25000

30000

35000

SENSEX Close (Unit Curr)

Key Financials (₹ in Cr)

Y/E Mar

Net Revenue

EBIDTA PAT Adj. EPS

EPS Growth (%)

RoE (%) RoCE

(%) P/E(x)

EV/EBIDTA

2017 9235.5 943.4 320.1 12.4 - 10.3 10.3 29.8 13.0

2018E 10471.5 1135.8 434.1 16.8 35.6 11.6 12.0 22.0 10.9

2019E 11862.3 1504.3 636.5 24.6 46.6 15.1 15.0 15.0 8.5

2020E 13502.7 1579.0 680.1 26.3 6.8 14.1 14.0 14.0 8.1

- 2 of 22- Tuesday 25th July, 2017


Company Background:

Incorporated in 1931, Arvind Ltd is the flagship company of the Lalbhai Group and is

India’s leading vertically integrated textile company. Apart from the textile space, Arvind

has developed a strong portfolio of marquee brands which include Arrow, US Polo,

Flying Machine, Tommy Hilfiger, Calvin Klein, etc. The company also operates value

retail stores “Unlimited”, which is one of the largest retail chains in India.

Corporate Structure of Arvind

Source: Company, Ventura Research



Key investment highlights:

Indian textile industry growth to continue

Over the years, the textile industry has continued to maintain its importance in the

country’s development. The industry not only contributes ~4 percent to the GDP of the

country but also contributes ~14 percent to the industrial production, thereby employing

~45 million people (the textile industry is the largest source of development in the

country).

Apart from manufacturing capabilities, India has a heads-on advantage in terms of raw-

material availability. The country’s geography is well suited for cotton production and

other raw-materials required.

Key facts of the Indian textile and apparel industry:

India accounts for 63 percent of the market share of textiles & garments

With a production of 6,106 mn kgs, India was the largest producer of cotton in 2016-17.

India has the highest loom capacity (including handlooms) with 63 percent of the world’s market share.

India is the 2nd largest producer of manmade fibre & filament, with production of around 211 mn kgs in 2016-17.

The Indian textile industry is likely to continue its growth, buoyed by both strong domestic

consumption as well as export demand. The textile industry is currently estimated at

around $137 billion and is expected to grow at a CAGR of 7.4 percent to $226 billion by

2021.

Indian textile industry to grow at a CAGR of 7.4%

0

50

100

150

200

250

2009 2010 2011 2014 2015 2016 2023E

(Rs. in crore)

Source: IBEF (Textiles & Apparel) – May 2017, Ventura Research



The growth in the industry is expected on back of the following factors:

Robust demand - The demand is expected to grow on the back of rising income

levels and favourable demographics. Further, an increase in the penetration of

organized retail will drive the overall textile demand.

Competitive advantage – India has an advantage as it has ample availability of raw-

materials such as cotton, wool and silk. India also enjoys a comparative advantage

in skilled labour and cost of production.

Increasing Investments – Huge investments are being made by the government

under the Scheme for Integrated Textile Parks (SITP) & Technology Upgradation

Fund Scheme (TUFS) to encourage more private equity and to train workforce.

Policy Support – The government has allowed 100% FDI (automatic route) in the

Indian textile sector to facilitate expansion in the industry. Further, free trade

agreements with ASEAN countries and the European Union will boost exports.

Mature textile business – A significant contributor to revenue

Arvind is the largest cotton textile manufacturer in India with a 132mn meter capacity of

woven fabric. The company, with a capacity of 108mn meters, is also one of the largest

denim manufacturers globally. With denim and woven fabric operating at fairly high

utilization, 93% & 95% respectively, growth of this segment is expected to be spear

headed by the garmenting division.

Garmenting – Part of a verticalisation strategy

The company diversified into garmenting in FY01, as part of its verticalization strategy.

Thereon, the company has steadily added capacity in garmenting from 19mn pieces in

FY10 to 23mn pieces in FY16. This segment has witnessed a healthy revenue CAGR of

18% over FY12-16. We expect this healthy growth to continue on the back of the

following:

Details of Arvind’s textile capacity

Particulars Capacity

(in mn meters)

% share in textile

revenue (FY17)

Denim 108 31%

Woven 132 38%

Garments 29** 19%

Voiles 40 6%

Knits 9400* 5%

* in tons ** in mn pieces

Source: Ventura Research



Addition of capacity in Ethopia: The company, in FY17, had an annual capacity of

29 mn pieces and plans to ramp up to 40mn pieces in the next few years. To support

its expansion plans, the company is expected to commence another 10-12mn pieces

capacity at a capex of ~Rs. 150 crores in Ethopia, given that a number of sops are

being provided by the Ethopian government. (enumerated below)

Duty free access and relative proximity to its international customers in Europe.

The facility has been provided by the local government of Ethopia, and thereby

required no investment in land and building.

Ethopia enjoys a significant cost advantage over India in terms of labour and

power costs.

The labour cost in Ethopia is ~70 dollars per month, whereas the average cost

in India is ~135 dollars - implying a significant cost advantage.

In the case of power, the average cost in Ethopia is Rs. 2 per unit whereas in

India the average cost ranges between Rs. 7 to 8 per unit, thereby giving a

significant cost advantage.

Increase in fabric conversion: The company presently converts ~7-8% (in FY17) of

its fabric to garments, which it plans to increase to ~20-22% in the next 4-5 years.

This increase in conversion will enable the company to improve its overall textile

segment margins.

Expected % increase in conversion of fabric to garment

0%

5%

10%

15%

20%

25%

FY17 FY20E

% of fabric output sold as garment

~ 7-8%

~ 20-22%




On the back of a planned capacity expansion and an increased fabric conversion,

we expect the garmenting vertical revenue to grow at a CAGR of 23% over FY17-20

to Rs. 2,093 crore in FY20.

Denim and woven operating at full capacity

Arvind is one of the largest manufacturers of denim globally and one of the few players

with high capacity utilization in an industry beset by over capacity. The company’s strong

expertise at every step of the denim fabric manufacturing value chain (i.e. spinning,

dyeing, weaving, finishing) and high-end design capabilities has enabled it to maintain its

utilization.

Further, the company is also strategically trying to balance its textile business by reducing

its dependence on denim and enhancing its capacity in the more lucrative woven (i.e.

shirting fabric) and garmenting businesses. The company currently has a denim capacity

of 108mn meters, which is operating at full utilization and the company has no plans for

expansion.

Garments volume & realization trend

430

440

450

460

470

480

490

500

0

5

10

15

20

25

30

FY13 FY14 FY15 FY16

mn pieces Avg. Realisation (in INR)

SourceS Source: Ventura Research

Garmenting revenue to grow at 23% CAGR

0

500

1000

1500

2000

2500

FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E

(Rs. in crore)




The company also has a woven capacity of 132mn metres, which is operating at high

utilization levels.

Arvind also has a knit manufacturing capacity of 9400 tons, offering basic knits including

jersey, pique, rib & interlock and specialty knits, including yarn-dyed, auto stripers to

global brands such as Marks & Spencer, Zara and Josepha Banks.

Woven volume & realization trend

145

150

155

160

165

170

175

0

20

40

60

80

100

120

140

FY13 FY14 FY15 FY16 FY17

mn metres Avg. Realisation (in INR)


Denim revenue to grow at 8% CAGR

0

500

1000

1500

2000

2500


(Rs. in crore)


Denim volume & realization trend

160

165

170

175

180

185

190

80

85

90

95

100

105

110


mn pieces Avg. Realisation (in INR)


Woven revenue to grow at 5% CAGR

0

500

1000

1500

2000

2500

3000


(Rs. in crore)




Further, the company intends to focus on “advanced material” (erstwhile technical textile)

which offers specialized products having industrial application such as filtration, belting,

coating and dying. This business is currently at a nascent stage. However, the

management expects to grow it to ~Rs. 1000 crore in the next 2 years.

Based on the above, we expect the textile segment revenue to grow at 9% CAGR to

Rs. 7,440 crore in FY20 from Rs. 5,734 crore in FY17.

Revenues to grow at a CAGR of 9%

0

1000

2000

3000

4000

5000

6000

7000

8000

9000


Denim Wovens Garments Voiles Knits

(Rs. in crore)


Voiles revenue to grow at 6% CAGR

0

50

100

150

200

250

300

350

400

450

500


(Rs. in crore)


Knits revenue to grow at 6.5% CAGR

0

50

100

150

200

250

300

350

400

450


(Rs. in crore)




Indian apparel market presents a gargantuan growth opportunity

Wazir Advisors’ analysis of the “Per-capita Expenditure on Apparel” (PEAP) reveals that

India has the lowest PEAP of US$ 45, which is less than 5% of the highest PEAP of US$

978 in USA. This vast difference suggests a huge opportunity for growth of the Indian

apparel market. Further, India’s apparel market, estimated at USD 59bn in 2015, is

expected to grow ahead of China’s and other developed economies to scale to USD

180bn (12% CAGR) by 2025. Given the significant upside potential, the heavy

investments undertaken by Arvind to grow its power brands should ensure a faster

apparel revenue growth than the industry.

Per-capita expenditure on Apparel in 2015 India’s Apparel market size projection – 2025

Source: Wazir Advisors- The Road to 2025, Ventura Research

Source: Wazir Advisors- The Road to 2025, Ventura Research

Further, within the apparel industry, the branded apparel market is expected to grow at a

comparatively faster CAGR of 12% over the period compared to the unbranded market,

which is expected to grow at a CAGR of 8%. This would result in the share of the

branded apparel market increasing from 25% in FY15 to 34% in FY21. This rapid growth

in the industry is expected based on the following:

Young population: The median age of the Indian population is 26 years, with

maximum population lying in the age bracket of 15-60years. It is further expected that

India will add another 140 mn people in this consuming age group by 2020. This

population has more aspiration and has higher spending power.

Higher disposable income: According to the Indian census report, the number of

households with an annual income of USD 7000 or more is going to treble from about

30 million today to 100 million by 2020. There will be approximately 400 million

individuals in the middle to high income bracket by 2020.

0

200

400

600

800

1000

1200

0 100 200 300 400

India China EU USA

Apparel market in US$ bn

0

20

40

60

80

100

120

140

160

180

200

2015 2025



Growing media influence: The role of technology has changed the way people

receive/share information. From social networking sites to electronic channels,

information travels at the speed of light. The changing lifestyle and “western” culture

has also influenced consumer demands and aspirations. People are willing to

consume and develop a lifestyle akin to a developed world’s consumer.

Implementation of GST: The excise duty on apparel was ~5.5%. Further, the

organized players such as Arvind had to pay service tax on various services availed

during the course of business, such as works contract, rent, etc. of which no input tax

credit could be availed, thereby taking the effective tax rate to ~10-10.5%.

Under the previous tax regime, the unorganized sector (~75% of the ~137 USD bn

market) enjoyed a tax arbitrage due to tax evasion. However, the implementation of

GST, being a single tax regime, would not only solve the problem of set off but would

also eliminate the tax arbitrage enjoyed by the unorganized players, thereby

benefiting the organized players.

Strong portfolio of iconic brands across all market segments

Arvind is equipped with probably one of the best industry-wide brand portfolio (both

owned and licensed).

Strong portfolio of brands across all market segments


Proven track record in launching and building brands




This strategically built brand portfolio, which includes a blended combination of mass

brands, entry level brands and premium brands, enables the company to capture the

customers present across various price points in the market.

The growth trajectory of the brands business will be driven by three clear sets of

priorities set by the management:

a. Consolidate the existing business

Build on the power brands through category and channel expansion

Specialty retail to quickly gain strength due to strengths of brands

Enhance returns through operational efficiency

b. Strategically manage portfolio

Monitor evolution and performance of recent launches

Take calculated bets on new opportunities

Maintain financial discipline while making new investments

c. Powerful Omni/Digital play

Ensure seamless customer journeys across all channels/touch points

Extensive distribution network supporting brands

Arvind has a strong distribution network of ~1,014 stores with a total retail space of 1.62

million square feet in India, which enables it to reach to a large number of customers and

a huge potential market to sell its products. The company has been aggressive in retail

space expansion and has grown at a CAGR of 10%.

Extensive distribution network across India

No. of stores Sq ft. (mn) No. of stores Sq ft. (mn) No. of stores Sq ft. (mn) No. of stores Sq ft. (mn) No. of stores Sq ft. (mn)

Brands 487 0.50 698 0.72 811 0.76 764 0.67 897 0.77

Specialty Retails 197 0.71 166 0.74 140 0.83 111 0.82 117 0.86

Total 684 1.21 864 1.46 951 1.59 875 1.49 1,014 1.63

Exclusive KA counters

2016-17

532 19451567989692

Particulars2012-13 2013-14 2014-15 2015-16




Strong store network growth Consistent growth in retail space

487

698811 764

897

197

166

140 111

117

0

200

400

600

800

1000

1200

2012-13 2013-14 2014-15 2015-16 2016-17

Brands Specialty Retails Total

(no. of stores)

1.21

1.46 1.59

1.49

1.63

-

0.20

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2012-13 2013-14 2014-15 2015-16 2016-17

Retail space

(in mn sq ft.)



Future expansion of its distribution network entails:

Focus on specialty retail stores: The management is keen on developing a

“Specialty retail” channel. Formats under the specialty retail would include multi-

offerings under Unlimited, TCP, GAP and Sephora. The company is focusing on

setting up more speciality retail stores, which would contribute more to the brand &

retail revenue in FY18. The management expects to break even from this segment

by the end of the next fiscal.

Unlimited reinvented version of Megamart: Unlimited is a reinvented and

relaunched version of the earlier Megamart. By doing this, the company has

repositioned Megamart from a discount store to value retail store with a bigger

proportion of private labels such as Newport and Excalibur. The company has also

closed down several small stores and opened a few large format stores resulting in a

reduction in number of stores to 86 from 197 in FY12-13.

However, in FY17, Unlimited has witnessed an improving performance on all fronts.

The revenue grew 16% YoY and a 27.8% Like to Like (LTL) growth was witnessed,

which gives confidence about the success of the model.

Nnnow.com- a powerful omni channel portal: Nnnow.com is the official online

channel for Arvind’s brands such as Arrow, US Polo, Flying Machine, etc. This

channel enables digitization of Arvind’s brand stores and provides distinctive online

experience such as:-



Authentic brand shops

Curated ensembles

Global brands

Based on the above, we expect the brands and retail business revenue to grow

at 22.7% CAGR over FY17-20 to Rs.5,334 crore in FY20 from Rs. 2,898 crore in

FY17.

Revenues to grow at CAGR of 22.7%

0%

1%

2%

3%

4%

5%

6%

7%

8%

0

1000

2000

3000

4000

5000

6000

FY13 FY14 FY15 FY16 FY17 FY18E FY19E FY20E

Revenue EBIDTA EBIDTA margin

(Rs. in crore)




Financial Performance

Arvind’s consolidated revenue in Q4FY17 grew 10.4% YoY to Rs.2,464.8 crore from

Rs. 2,232.8 crore in Q4FY16. Growth was fuelled by a 22% YoY growth in its brands

& retail segment, which came in at Rs.829.2 crore and 8% YoY growth in its textiles

segment. The consolidated EBIDTA margin declined by 242 bps to 9.1% in Q4FY17

mainly due to an increase in cotton prices and INR appreciation, which impacted the

textile segment margins, although the brands & retail segment witnessed an

improvement in the EBIDTA margin to 7.1%.

During FY17, Arvind’s net sales stood at Rs. 9,235.5 crore, registering a robust

growth of 15.3% YoY. However, the EBIDTA margin decreased 180 bps YoY to 10%.

The consolidated PAT increased by 1.2% YoY to Rs.320.1 crore.

Financial Performance (Rs in crores)

DESCRIPTION Q4FY17 Q4FY16 Mar-17 Mar-16

Net Sales 2464.8 2232.8 9235.5 8010.6

Other operating income 0.0 0.0 0.0 0.0

Net Sales & Other Operating Income 2464.8 2232.8 9235.5 8010.6

Growth % 10.4% 15.3%

Total Expenditure 2241.3 1976.2 8307.4 7059.5

EBIDTA 223.5 256.6 928.2 951.1

EBIDTA Margin% 9.1% 11.5% 10.0% 11.9%

Depreciation 82.7 62.9 297.1 240.5

EBIT (Excl. OI) 140.8 193.7 631.1 710.6

Other Income 35.5 19.0 93.2 82.1

EBIT 176.3 212.7 724.3 792.7

Interest 58.5 90.0 288.4 358.6

Exceptional Items -8.9 0.0 -18.1 1.4

PBT 108.9 122.7 417.8 435.4

PBT Margin% 4.4% 5.5% 4.5% 5.4%

Tax 13.1 26.7 99.7 124.6

Profit After Tax 95.8 96.0 318.2 310.8

Profit Margin 3.9% 4.3% 3.4% 3.9%

Net Profit (after Extrodinary Items) 95.8 96.0 318.2 310.8

Minority Interest -3.8 0.1 -6.2 -2.0

Shares of JV 1.1 1.8 1.9 5.4

Consolidated Net Profit 93.2 97.9 313.8 314.2

So Source: Company, Ventura Research



Financial Outlook

As outlined elsewhere in the report, net revenues are expected to grow at a CAGR of

13.5% to Rs. 13,503 crore in FY20 on the back of ~9% CAGR in the textile business

and ~22.7% CAGR in the brands and retail business. Further, we expect the EBIDTA

to grow at a 3 year CAGR of 18.7% to Rs. 1,579 crore in FY20; the EBIDTA margin is

expected to expand to 11.8% in FY20 on the back of improving profitability in the

brands and retail segment. The PAT is expected to grow at a 3 year CAGR of ~28.6%

to Rs. 680.1 crore in FY20.

Further, the return ratios ROE & ROCE are also set to improve to ~14.1% (+382 bps)

& ~14% (+375 bps), respectively, by FY20.

Expect topline growth of 13.5% CAGR EBIDTA to grow at 18.7% CAGR

0%

5%

10%

15%

20%

25%

30%

35%

0

2000

4000

6000

8000

10000

12000

14000

16000


Net Revenue Net Revenue growth %

(Rs. in crore)

0%

2%

4%

6%

8%

10%

12%

14%

16%

0

200

400

600

800

1000

1200

1400

1600

1800


EBIDTA EBIDTA margin %

(Rs. in crore)


Source:, Ventura Research



Improving return ratios Improving solvency ratios

9%

10%

11%

12%

13%

14%

15%

16%


ROE ROCE

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

1.4

1.5

2.0

2.5

3.0

3.5

4.0


Debt to EBIDTA Debt to Equity


Source:, Ventura Research

Healthy working capital ratios

15

25

35

45

55

65

75

85

95

105


Inventory days Trade Receivable days Trade Payable days

(in no. of days)




Key Risks

Raw material forms a significant part of costs

Raw material, mainly cotton/cotton yarn, constitutes a significant (~30-35%) portion of

total cost. Over the past few years, the cotton prices have been quite volatile. Any

significant further increase in the prices can impact the company’s profitability. However,

prices are expected to moderate given the abundant rainfall and expected increase in

production to 345 lakh bales in the crop season 2016-17, compared to 338 lakh bales in

crop season 2015-16. Further, with good rainfall in the current year, acreage under cotton

has also improved substantially, which should lead to subdued pricing in FY19 too.

Foreign exchange fluctuation risk

Arvind’s textile business is considerably dependent on exports (~26% of total revenue in

FY17). Hence, any unfavourable movement in the currency might impact the financial

performance of the company.

Historical movement of cotton prices

39%

40%

41%

42%

43%

44%

45%

46%

85

90

95

100

105

110

115


Avg. Cotton Rate (Rs/kg)

Movement of raw material cost as % of sales (RHS)




Valuation

We initiate coverage on Arvind as a BUY, with a SOTP-based price objective of Rs. 624,

representing an upside of 69% over a period of 30 months from the CMP of Rs. 369.

We have valued the company using the Sum of The Parts (SOTP) methodology. We

have valued the Textiles at an EV/EBITDA of 11.0X FY20 and Brands & Retail segment

at an EV/EBITDA of 15.5X FY20.

Arvind SOTP valuation matrix

Multiple EV (Rs in crs)

11.0 12,925.0

15.5 6,525.5

Total EV 19,450.5

Less: FY20 Net Debt (3,332.1)

Market Capitalisation 16,118.4

No. of shares outstanding 25.8

Total value per share (in Rs.) 623.9

CMP (in Rs.) 369.0

Potential upside 69.1%

Textiles

Brands & Retail

FY20E EBIDTA - Rs 1175 cr

FY20E EBIDTA - Rs 421 cr

SOTP Valuation Basis




1 Yr Fwd P/E Band 1 Yr Fwd P/B Band



0

100

200

300

400

500

600

3/31/2013 3/31/2014 3/31/2015 3/31/2016 3/31/2017

CMP 5X 11.45X 17.9X 24.35X 30.8X

0

50

100

150

200

250

300

350

400

450

500

4/1/2010 4/1/2011 4/1/2012 4/1/2013 4/1/2014 4/1/2015 4/1/2016 4/1/2017

CMP 1X 1.52X 2.04X 2.56X 3.08X

1 Yr Fwd EV/EBITDA Band


0

2000

4000

6000

8000

10000

12000

14000

16000

4/1/2013 4/1/2014 4/1/2015 4/1/2016 4/1/2017

EV 5.5X 7.75X 10X 12.25X 14.5X



Peer comparison

Y/E March Sales EBITDA PAT EBITDA

Margin (%)

PAT Margin

(%)

ROE(%) ROCE(%) P/E P/BV EV/

EBITDA

Arvind Ltd

2016 8010.6 951.1 316.1 11.9% 3.9% 11.8 11.9 30.1 3.6 13.7

2017 9235.5 943.4 320.1 10.2% 3.5% 10.3 10.3 29.7 2.7 13.1

2018E 10471.5 1135.8 434.1 10.8% 4.1% 11.6 12.0 21.9 2.4 11.0

2019E 11862.3 1504.3 636.5 12.7% 5.4% 15.1 15.0 14.9 2.1 8.5

Raymond

2016 5140.6 506.3 84.8 9.8% 1.6% 5.1 9.3 57.1 1.5 13.3

2017 5353.3 422.7 25.5 7.9% 0.5% 1.5 7.0 152.4 2.3 18.3

2018E 5792.7 536.2 131.4 9.3% 2.3% 7.4 11.0 36.8 2.6 13.2

2019E 6431.0 641.7 173.9 10.0% 2.7% 9.2 12.4 27.8 2.4 10.5

KKCL

2016 453.1 104.1 67.9 23.0% 15.0% 22.0 31.6 32.0 7.3 19.5

2017 488.4 99.6 85.3 20.4% 17.5% 26.0 25.4 25.1 6.0 21.0

2018E 563.0 122.0 90.8 21.7% 16.1% 22.4 27.0 23.6 6.0 17.2

2019E 655.7 144.1 107.0 22.0% 16.3% 25.5 30.0 19.3 6.1 14.1

Nandan Denim

2016 1156.7 191.1 63.3 16.5% 5.5% 21.2 20.8 9.5 1.8 5.5

2017 1220.4 189.9 56.7 15.6% 4.6% 23.6 14.9 11.2 1.5 6.1

2018E 1315.0 234.0 93.0 17.8% 7.1% 23.5 20.4 7.1 1.3 5.0

2019E 1442.0 271.0 118.0 18.8% 8.2% 23.3 21.9 5.5 1.1 4.0

Aditya Birla Fashion and Retail Ltd

2016 6017.8 396.8 -104.1 6.6% -1.7% -16.2 12.4 39.1

2017 6453.3 437.5 53.5 6.8% 0.8% 5.6 8.2 221.6 12.4 35.4

2018E 7663.0 586.4 145.8 7.7% 1.9% 13.1 10.8 100.1 9.4 26.7

2019E 8882.6 764.0 273.6 8.6% 3.1% 20.7 14.6 50.7 7.9 20.5

Shopper's Stop Ltd

2016 4464.5 198.2 2.04 4.4% 0.0% 0.4 6.10 125.3 5.9 19.0

2017 4935.2 199.3 -24.45 4.0% -0.5% -4.9 5.70 128.0 6.4 18.9

2018E 5574.1 243.6 24.9 4.4% 0.4% 1.0 6.90 123.7 5.9 15.2

2019E 6233.2 334.0 72.66 5.4% 1.2% 11.0 11.60 43.3 5.4 11.4

Vardhman Textiles

2016 6636.9 1401.8 578.6 21.1% 8.7% 16.0 17.9 7.7 1.2 5.9

2017 6066.8 1717.4 981.4 28.3% 16.2% 24.2 25.3 8.1 1.8 4.8

2018E 6526.5 1369.4 713.3 21.0% 10.9% 15.3 13.9 9.2 1.3 6.0

2019E 7265.5 1602.3 861.7 22.1% 11.9% 16.4 19.1 7.6 1.2 5.2

Trent Ltd

2016 2353.3 136.9 59.55 5.8% 2.5% 4.20 4.40 90.48 3.61 60.91

2017 1833.9 125.7 85.4 6.9% 4.7% 5.70 5.00 151.09 5.73 66.33

2018E 2954 237.9 126 8.1% 4.3% 8.40 10.40 63.1 5.48 34.14

2019E 3542.2 300.3 169.7 8.5% 4.8% 10.40 12.60 42.23 4.87 27.12




Financials & Projections

Y/E March, Fig in ` Cr FY16 FY17 FY18E FY19E FY20E Y/E March, Fig in ` Cr FY16 FY17 FY18E FY19E FY20E

Profit & Loss Statement Per Share Data (Rs)

Net Sales 8010.6 9235.5 10471.5 11862.3 13502.7 Adj. EPS 12.2 12.4 16.8 24.6 26.3

% Chg. 2% 15% 13% 13% 14% Cash EPS 21.6 23.9 29.6 38.5 41.3

Total Expenditure 7059.5 8292.2 9335.7 10358.0 11923.7 Book Value 102.5 138.1 152.4 174.5 198.4

% Chg. 3% 17% 13% 11% 15%

EBDITA 951.1 943.4 1135.8 1504.3 1579.0 Capital, Liquidity, Returns Ratio

EBDITA Margin % 11.9% 10.2% 10.8% 12.7% 11.7% Debt / Equity (x) 1.3 0.8 0.8 0.8 0.7

Other Income 82.1 78.0 87.8 89.7 92.6 Current Ratio (x) 1.0 1.0 1.1 1.2 1.1

PBDIT 1033.1 1021.4 1223.7 1593.9 1671.6 ROE (%) 11.8 10.3 11.6 15.1 14.1

Depreciation 240.5 297.1 329.1 356.6 386.6 ROCE (%) 11.9 10.3 12.0 15.0 14.0

Interest 358.6 288.4 291.3 346.0 326.9 Dividend Yield (%) 10% 20% 20% 20%

Exceptional items 1.4 -18.1 0.0 0.0 0.0 Valuation Ratio (x)

PBT 435.4 417.8 603.2 891.3 958.1 P/E 30.1 29.8 22.0 15.0 14.0

Tax Provisions 124.6 99.7 162.9 245.1 268.3 P/BV 3.6 2.7 2.4 2.1 1.9

Reported PAT 310.8 318.2 440.3 646.2 689.9 EV/Sales 1.6 1.3 1.2 1.1 0.9

Minority Interest 2.0 6.2 8.6 12.7 13.5 EV/EBIDTA 13.6 13.0 10.9 8.5 8.1

Share in JV 5.4 1.9 2.4 3.0 3.7 Efficiency Ratio (x)

PAT 316.1 320.1 434.1 636.5 680.1 Inventory (days) 86 93 93 95 97

PAT Margin (%) 4% 3% 4% 5% 5% Debtors (days) 35 32 34 35 36

RM / Sales (%) 43% 46% 47% 48% 49% Creditors (days) 55 57 57 57 58

Balance Sheet Cash Flow Statement

Share Capital 258.2 258.4 258.4 258.4 258.4 Profit Before Tax 440.8 417.8 603.2 891.3 958.1

Reserves & Surplus 2388.2 3309.8 3679.3 4251.2 4866.7 Depreciation 240.5 297.1 329.1 356.6 386.6

Minority Interest 55.6 151.4 160.1 172.7 186.2 Working Capital Changes & Other Adj. 88.3 (64.7) (147.2) (451.8) (205.9)

Long Term Borrowings 1530.0 801.6 763.0 1151.0 688.1 Tax Paid (119.2) (106.7) (162.9) (245.1) (268.3)

Long Term Provision 28.7 40.7 47.8 51.1 49.2 Operating Cash Flow 650.3 543.5 622.3 551.1 870.6

Other Non Current Liabilities 98.0 117.1 134.0 152.8 176.2 Capital Expenditure (555.8) (438.1) (511.3) (561.9) (612.5)

Total Liabilities 4358.7 4679.1 5042.5 6037.3 6224.8 Other Investment Activities 53.4 469.1 86.3 92.2 96.0

Gross Block 5703.1 6082.8 6582.8 7132.8 7732.8 Cash Flow from Investing (502.5) 31.0 (425.0) (469.7) (516.5)

Less: Acc. Depreciation 2243.5 2540.6 2869.8 3226.4 3613.0 Changes in Share Capital - - - - -

Net Block 3476.8 3542.2 3713.1 3906.4 4119.8 Changes in Borrowings 285.6 (853.6) 200.2 694.0 (129.0)

Capital WIP 146.8 226.2 237.5 249.4 261.8 Dividend, Interest & Others (436.5) 272.2 (355.9) (410.6) (391.4)

Non Current Investments 69.7 74.2 84.2 94.2 104.2 Cash Flow from Financing (150.9) (581.5) (155.7) 283.4 (520.5)

Long Term Loans & Advances & OA 823.4 741.3 769.2 837.6 878.5 Net Change in Cash (3.0) (7.0) 41.5 364.8 (166.3)

Net Current Assets -158.0 95.1 238.5 949.7 860.5 Opening Cash Balance 69.7 66.7 59.6 101.1 465.9

Total Assets 4358.7 4679.1 5042.6 6037.3 6224.9 Closing Cash Balance 66.7 59.6 101.1 465.9 299.6



Disclosures and Disclaimer Ventura Securities Limited (VSL) is a SEBI registered intermediary offering broking, depository and portfolio management services to clients. VSL is member of BSE, NSE and MCX-SX. VSL is a depository participant of NSDL. VSL states that no disciplinary action whatsoever has been taken by SEBI against it in last five years except administrative warning issued in connection with technical and venial lapses observed while inspection of books of accounts and records. Ventura Commodities Limited, Ventura Guaranty Limited, Ventura Insurance Brokers Limited and Ventura Allied Services Private Limited are associates of VSL. Research Analyst (RA) involved in the preparation of this research report and VSL disclose that neither RA nor VSL nor its associates (i) have any financial interest in the company which is the subject matter of this research report (ii) holds ownership of one percent or more in the securities of subject company (iii) have any material conflict of interest at the time of publication of this research report (iv) have received any compensation from the subject company in the past twelve months (v) have managed or co-managed public offering of securities for the subject company in past twelve months (vi) have received any compensation for investment banking merchant banking or brokerage services from the subject company in the past twelve months (vii) have received any compensation for product or services from the subject company in the past twelve months (viii) have received any compensation or other benefits from the subject company or third party in connection with the research report. 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Similarly, this document does not have regard to the specific investment objectives, financial situation/circumstances and the particular needs of any specific person who may receive this document. The securities discussed in this report may not be suitable for all investors. The appropriateness of a particular investment or strategy will depend on an investor's individual circumstances and objectives. Persons who may receive this document should consider and independently evaluate whether it is suitable for his/ her/their particular circumstances and, if necessary, seek professional/financial advice. And such person shall be responsible for conducting his/her/their own investigation and analysis of the information contained or referred to in this document and of evaluating the merits and risks involved in the securities forming the subject matter of this document. 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