March 2019 - Stocksbaazigar

Fundamental Analysis of Arvind Fashions Ltd

20th March 20199th March 2019 by stocksbaazigar

Company profile of Arvind Fashions Ltd: Company Name: Arvind Fashions Ltd. Industry: Textiles – Readymade Apparels House: Lalbhai Group Year of Establishment: 2016 CompanyWebsite:https://www.arvind-fashions.com Head office: Ahmedabad, Gujarat Listed on: 8th March 2019 Face value at listing: 4 Premium and Super-premium segments of Arvind Fashions Ltd: Arvind Fashions Ltd. is the number 1 player of denim/casuals in India. One out of every five casual wear bought in branded premium men’s casual/denim Market if from Arvind’s Portfolio. Total sales of premium brands like Tommy Hilfiger, Calvin Klein, Arrow, U.S. Polo Assn., GAP, Flying Machine and Aeropostale etc is around Rs. 40 Billion. Arvind Fashions Ltd has a really strong portfolio which is delivering significant growth over the years. Value Segment of Arvind Fashions Ltd: Arvind Fashions Ltd. is growing in the value-sensitive market with its ‘Unlimited’ segment. The branded Value fashion market is growing at 24% est. to become $ 12 Bn by 2020. The ‘Unlimited’ segment is built on unique differentiators. It is growing at 6-7% EBITDA FY22 ‘Unlimited’ includes strong brands in its portfolio. Ruggers, Newport, Cherokee, Karigari, Excalibur, Anahi and Elle to name a few. Arvind Fashions sells premium products like Boomerang Jeans at value prices thanks to its product superiority leveraging fiber by Arvind Ltd. Other leading categories Other categories of Arvind Fashions ltd which can either become number 1 or 2 soon are Premium Innerwear, Premium Kidswear, and Prestige Beauty. Fast growing premium innerwear market is estimated to be $2.8 Bn by 2022. Arvind Fashions Ltd has a portfolio of Premium Innerwear which covers all the price segments in the premium market. U.S. Polo Assn., Calvin Klein and Hanes etc. Apart from that Arvind Fashions Ltd. has an exclusive license to sell Kidswear from established international brands like the US. Polo Assn., GAP kids, The children’s place, Tommy Hilfiger (Childrenswear), Flying Machine Boyzone etc. Premium Kidswear Market is estimated to be $ 5.1 Bn by 2022. The Prestige beauty market which is estimated to be $1.5 Bn by 2022 is also served by Arvind Fashions Ltd through ‘Sephora’. Strengths of Arvind Fashions Ltd Arvind Fashions Ltd has more than 250+ designers and merchants. Company’s marketing team studies Consumer buying behavior so well that it has a track record of creating best India-specific designs for International brands. Responsible denim, Stitchless shirts etc.are some examples of how AFL promotes innovation in the company. Men, Women, Kid and Innerwear Arvind Fashions Ltd has Multi-category expertise in product designing. Arvind Fashions Ltd has a strong supply change management system and Automated replenishment system which gives it strong internal capabilities to increase its productivity. AFL uses updated technology like Artificial Intelligence design optimization and Customer-centric store assortment which are analytically driven to cater customer needs properly. Technology is used everywhere from designing to buying to selling which makes Arvind Fashions Ltd ahead of its competitors. The Nnnow.com e-commerce-website, Arvind Stores, the vendor/supplier relationship, etc. are the key value drivers of this segment of AFL. It has 189 dedicated Lifestyle stores in the top 25 Malls in India. AFL is present in more than 140 second and third-tier cities Growth Opportunities for Arvind Fashions Ltd. In power brands like U.S.polo Assn., Flying Machine, Arrow and Tommy Hilfiger company is growing 18% of CAGR growth it has tremendous opportunity to multiply the revenue in these brands from 1.6 (TH) times to 4 times (FM). Up to 45% CAGR is possible by 2022. In tier 2 cities potential to achieve growth is 20% CAGR and in tier 3 cities it can deliver a whopping 35% CAGR by 2022. Replication of Sephora.com model has huge potential upside as it became profitable in its very 2nd year of launching thanks to customer loyalty. Arvind Fashions Ltd started domestic production under GAP brand which is increasing its Gross Margin. The opening of more shop in shop, Online, Kids Franchisee, Stores can contribute to growth and profitability further. Unlimited has expanded stores network to 200 stores. It has great potential to give 25% CAGR in the specialty retail segment due to the differentiation of products it offers. Emerging brands like Aeropostale, The children’s Place, Ed Hardy, Calvin Klein can give 7% CAGR by 2022. Updates on Arvind Fashions Share Price on 20th March 2019 In this post on the Fundamental Analysis of Arvind Fashions Ltd. I already mentioned that this stock will give a Multibagger return to Investor who buy it immediately after listing date. From 590.95 to 916.50 Arvind Fashions Ltd share has given 55% returns to the investors in just 10 trading days. That is a tremendous returns. Arvind Fashions Ltd stock is moving upwards circuit to circuit. After it crosses 1000 we might see some profit booking in the stock. Stocksbaazigar gave short term target of 950 and mid-term target of 1200 in this stock. Arvind Fashions Ltd is a portfolio stock and the share price will reach to a premium which will match to the premium of Aditya Birla Fashions Retail Ltd. very soon. Stay invested. Fundamental Analysis of Arvind Fashions Ltd by Stocksbaazigar

Arvind Fashions Ltd

9th March 2019 by stocksbaazigar

Arvind Fashions Ltd Listed Arvind Ltd, India’s leading textile company got demerged on 26th November 2018 into Arvind Ltd (demerged entity), Anup Engineering and Arvind Fashions Ltd. On the 27th November, Arvind Ltd share was trading at 311 Rs per share. On 28th Nov after ex-date, the stock opened at 91 Rs per share and since then we are seeing a gradual decrease in the share price of Arvind Ltd. as most of the debts are now with this parent company. On the other hand, Investors who wanted to get benefited by the corporate action are highly disappointed to see a listing of Arvind Fashions Ltd at the half of the estimated price. Listing fiasco of Arvind Fashions Ltd Analysts suggested that Arvind Fashions Ltd should list between Rs 1200 to 1400 per share. But on 8th March 2019, it listed on Rs. 591.75 per share. For every five shares of Arvind Ltd. investors got 1 share of Arvind Fashions Ltd. formerly known as Arvind lifestyles ltd. So ideally, the base price should have been (311*5) around 1500. Instead, it was taken as 311.5, a share price before the demerger date. Anup Engineering listed at the proper price but Arvind Fashions Ltd disappointed the Investors. The stock closed on the upper circuit of 621.3 by 10 a.m. on listing day i.e. 8th March 2019. Investors are aware of this listing fiasco. Some expert thinks that Price Discovery mechanism happens only once and therefore on Monday 11th March, stock prices won’t get adjusted to 1200+ range. But there are few exceptions who believes that Stock Exchanges will re-adjust the price so that Investors won’t feel cheated. It is important to understand that stock has demerged into 3 different companies now and not in 2. Hence, it may not be a listing fiasco, as some of the Investors are claiming. One thing is confirmed that Arvind Fashions Ltd share will move upwards from here circuit to circuit till it reaches its True price/ Intrinsic price. What should Investors do now? Retail Investors who aren’t aware of this may sell the stocks in a loss in a day or two after listing. It is an opportunity for others to take Fresh positions in the Arvind Fashions Ltd shares. The trick to buy stocks which opens at the upper circuit is very simple. On the trading day (T-day) you have to place an order at 4.99% from the closing price of (T-1) previous trading day during Pre-open session i.e. 9:00 a.m. to 9:07 a.m. to take a chance. If you are lucky, you will get an entry in the stock. But one has to be very careful about newly listed stocks as they are very volatile and can show irregular fluctuations in the share price. History of Arvind Ltd Arvind Fashions Ltd is the fastest growing company of Lalbhai Group. Arvind Ltd (founded as Arvind Mills) is India’s largest Denim Maker established by Padma Bhushan Kasturbhai Lalbhai in Gujarat during British Raj. This group has diversified businesses in different sectors wiz. Textiles, Chemicals, Retail, Engineering, Real estate, Beauty Products etc. Arvind Ltd. took great benefit of Swadeshi Movement during the Independence struggle and became one of the largest Khadi, Dhoti, Saree maker in India. Kasturbhai started with one textile company inherited from his Father in 1917 and then went ahead to buy 12 more textile mills from his competitors (mostly relatives) till 1931. His involvement in freedom struggle and friendship with Gandhiji helped him gain good political and social stand in the Society which indirectly helped his Lalbhai Group. Kasturbhai believed in giving back to Society. Ahmedabad University, IIM Ahmadabad etc. are standing on the lands donated by the Trust of Kasturbhai Lalbhai. There was a phase in Kasturbhai’ s life when Arvind Ltd was under tremendous debt and faced allegations of tax evasion and misappropriation in accounts. He got a clean chit after few years but lost his energy and his health during the legal battle. He retired from business in 1977. In January 1980, he died at the age of 85 in Ahemadabad. Second Innings of Arvind Ltd. The second Inning of Arvind Ltd was started by a new Generation of Lalbhai family. India’s first ever home-grown denim brand Flying Machine was born in 1980. In years to come, Arvind Ltd became the fourth largest manufacturer of Denim Clothes in the World. In 1993, Arvind Ltd introduced International brand ‘Arrow’ to India by opening their flagship stores. By 1995 they introduced Mass Market concept to India through their MegaMart. The year 1995 was a landmark year in the company history thanks to the launching of Ruf n Tuf jeans which was an instant hit in the 90s. Akshay Kumar was the brand ambassador of Ruf n Tuf brand. Arvind Ltd brought brand Excalibur and Wrangler to India in 1997 and 1999 respectively (which are now part of ‘Unlimited’). The association with Globally branded apparells kept increasing in New Millenium too. Arvind Ltd brought Tommy Hilfiger (2004), GANT sportswear (2006), Cherokee (2007), US Polo Association (2009), Nautica, Elle (2012), Ed Hardy, Hanes Innerwear (2013), Calvin Klein (2014), The children’s place, GAP (2015) etc. to India through exclusive licencing and joint ventures. Arvind Ltd. brought Shoe brands like Arrow, USPA, Flying Machine (2015) and Aeropostale (2017) to India. It also launched its own Men’s wear brands like Creyate (2014) and True Blue (2016) in this decade. In the 2016 company entered Online retailing through its e-commerce website nnnow.com On the 8th March 2019, the demerged entities of Arvind Ltd wiz Arvind Fashions Ltd and Anup Engineering listed on the stock exchanges. Shareholder of Arvind Ltd were allotted One share of Anup Engineering (formerly Anveshan Heavy Engineering) for every 27 shares of Arvind Ltd while One share of Arvind Fashions Ltd for every 5 shares of Arvind Ltd.

Fundamental Analysis

4th March 2019 by stocksbaazigar

Stock Analysis: Stock Analysis is the evaluation of a particular trading instrument, an investment sector, or market as a whole. Stock Analysis attempts to determine the future activity of an instrument, sector or market. Stock Analysis is a method for investors and traders to make buying and selling decisions. By studying, evaluating past and current data, investors and traders attempt to gain an edge in the markets by making informed decisions. Fundamental Analysis and Technical Analysis are the most important types of Stock Analysis Definition of Fundamental Analysis Fundamental Analysis is a method of evaluating a security in an attempt to assess its intrinsic value, by examining related economic, financial, and other qualitative and quantitative factors. Fundamental Analysis is a stock valuation methodology that uses financial and economic analysis to predict the movement of stock prices. It is a holistic approach to study a business. It attempts to study everything that can affect the security’s value, including macroeconomic factors (like overall economy and industry conditions) and individually specific factors (like the financial condition and management of companies). Objectives of Fundamental Analysis The main objective of fundamental analysis is to determine the ‘intrinsic value’ of a stock. Intrinsic value or True value is the calculated value of a company, where the market price of the stock tends to revert. Therefore it is also known as ‘Price target’. To project the business performance. To make a right Buying/Selling decision. Quality and Quantitative Analysis Fundamental Analysis involves Qualitative Analysis & Quantitative Analysis of a Business. Qualitative is related to quality of a company’s management, it’s brand recognition, patents or proprietary technology. Etc. Quantitative is anything which is measurable. Quantitative data of financial statements, revenue, profit, assets, ratios etc. Two approaches of Fundamental Analysis There are two approaches the fundamental analysis Top-down approach Bottom-up approach In the Top-down approach Macroeconomics of the Market is studies first. Followed by Industry/ Sector analysis is done in which the company under analysis . The analysis of Company is done in the end. The bottom-up approach is exactly the reverse of the Top-down approach. Top-down approach in fundamental analysis. Typical Analysis of the stock has three steps 1) Macroeconomic environment analysis Initially the firm’s macroeconomic environment is analyzed to project the future employment, inflation, income regulation, taxes etc. The macro analysis is done not only for the domestic market but also for the international markets that affects the firm’s operations. 2) Industry Analysis Industry/ Sector analysis in the next step Top-down approach of Fundamental analysis after Macroeconomics of the environment is analyzed properly Every sector/industry has a different level of sensitivity towards the changes in the macroeconomics aspects. 3) Company Analysis Only after a thorough analysis of the macroeconomic environment and the industry in which the company is operating, analysts proceed with Company Analysis. A SWOT analysis of a company, financial health determination etc, estimation of growth, management performance etc. is carried out using different tools.