Arvind Ltd's Q2FY19 consolidated net profit rises 26%yoy to Rs82cr : In-line with Estimates

The company’s consolidated revenue stood at Rs1,792.91cr, up 13% yoy but down 1% qoq.

Nov 01, 2018 09:11 IST India Infoline Research Team

Arvind Ltd Q2FY19

Consolidated Results Q2FY19: (Rs. in cr)

Q2FY19 YoY (%)
Revenue 1,792.91 13.1
EBITDA 182.28 29.7
EBITDA Margin (%) 10.2 131
Net Profit (adjusted) 81.57 25.9
***EBITDA margin change is bps

Arvind Ltd’s revenue grew by 13.1% yoy and declined by 0.9% qoq to Rs1,793cr. EBITDA came in at Rs182cr, up 29.7% yoy and down 9.4% qoq. EBITDA margin expanded by 131bps yoy and contracted by 95bps qoq to 10.2%. Company’s adjusted Net profit stood at Rs82cr, up 25.9% yoy and 12.9% qoq. Net profit came in-line with the expectation of Rs82cr.

• Revenue from Textile (Rs1,490cr) and Advance material division (Rs145cr) grew by 6.6% and 16.3% yoy respectively.
• Revenue growth of textile business is driven by ~15% growth of garment division.
• On October 26, 2018, NCLT has approved the demerger of branded apparel and engineering business. The demerger would be effective from January 01, 2018. Hence, both the businesses have been classified as “Discontinuing Operations.” Therefore, only profit after tax related to these businesses have been directly added to the profit of textile business. Higher revenue and EBITDA is pertaining to its textile business only.
• Without the effect of demerger, revenue and EBITDA for the quarter stand at Rs3,053cr and Rs277cr, up 12% and 27% yoy respectively.
• Branded apparel business reported revenue of Rs1,227cr, up 13% yoy (adjusting for the IndAS changes). Revenue from engineering business grew by ~2% to Rs48cr.
• EBITDA margin for textile, branded apparel, advance materials and engineering division stood at 12.4% (up 13.1% yoy), 6.2% (up 5.6% yoy), 9.8% (up 1.6% yoy) and 38.2% (up 22.9% yoy) respectively.
• Textile margins are impacted by reduced draw back rates.
• Advance material margins improved due to positive operating leverage and higher unit realisation.  
• Higher margin of Branded apparel segment is driven by emerging brands and speciality retail. Online sale of division grew by 48% yoy. Quarter started with double digit LTL growth in July, a tepid August and negative LTLs in September, resulting in lower than planned growth for the company.
• Power Brands – Arrow, US Polo Association, Flying Machine and Tommy Hilfiger - grew by strong 13% yoy. 
• Debt-equity as on Q2FY19 stood at 1x. (1x yoy).
• Finance cost grew by 28.7% yoy to Rs54cr.
• Company expects textile and branded apparel business to grow by ~10% and ~20% going forward. Advance material is also expected to grow by ~24%, while Engineering business growth guidance is 10-12%. 

Technical View:

Arvind Ltd is currently trading at Rs. 344.35, up by 0.7 points or 0.2% from its previous closing of Rs. 343.65 on the BSE.
The scrip opened at Rs. 343.70 and has touched a high and low of Rs. 355.30 and Rs. 336.90 respectively. So far 52,53,088 (NSE+BSE) shares were traded on the counter. The stock is currently trading above its 200 DMA.

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