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Over the last few years Arvind showed solid growth in fundamentals

22-05-2014 • About Arvind ($ARVIND) • By InTwits

Arvind is a fast-growing stock in Textiles industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.

Growth story

Arvind showed fast growth in the last financial year. The company's revenue surged on 29.7% in FY2014. The growth also happened in EBITDA of 33.4% for the same period.

In the last 3 years Arvind showed fast revenue growth of 18.9% from FY2011 to FY2014 annually. EBITDA surged on 21.0% from FY2011 to FY2014 annually.

Arvind ($ARVIND) financials for the last 5 years

mln. INR FY2010 FY2011 FY2012 FY2013 FY2014
Revenue growth, %-56.5%20.6%7.5%29.7%
SG&A, %
EBITDA growth, %29.1%14.5%15.9%33.4%
EBITDA margin, %4.37%13.0%12.3%13.3%13.7%
Net Income5001,6494,3592,4843,539
Net Income margin, % 0.533%4.04%8.85%4.69%5.16%
CAPEX/Revenue, %1.76%5.53%9.42%6.96%6.48%
Net Debt/EBITDA5.3x3.7x3.4x3.3x3.0x
ROIC, %6.8%9.9%11.3%11.2%13.7%
ROE, %4.2%11.1%23.4%11.6%14.6%

Profitability and return on investment

Margin expansion supported EBITDA growth. EBITDA margin increased slightly on 0.400 pp from 13.3% to 13.7% in FY2014. In the longer period the company's EBITDA margin increased on 0.700 pp from 13% in FY2011 to 13.7% in FY2014.

Arvind shows attractive ROIC at 13.7% for the last 12 months which assumes stable development model. During the last three years it surged - it was 9.85% in FY2011. For the last three years the average ROIC was 12.1%.

Net Income margin surged on 0.500 pp from 4.70% to 5.20% in FY2014. If we look for the longer period Net Income margin surged on 1.20 pp from 4% in FY2011 to 5.20% in FY2014.

Arvind operates at ROE of 14.6%. For the last three years the average ROE was 16.6%.

Capital expenditures (CAPEX)

To fuel this fast growth Arvind had to invest in CAPEX.The company's CAPEX/Revenue was 6.48% in FY2014. Arvind's CAPEX/Revenue surged on 0.952 pp from 5.53% in FY2011 to 6.48% in FY2014. It's average CAPEX/Revenue for the last three years was 7.62%.

Leverage (Debt)

Arvind has medium debt level at 3.0x Net Debt/EBITDA to maintain high growth. In the last 3 years Arvind showed big decline in leverage of 0.65x from 3.69x in FY2011 to 3.04x in FY2014.

Peers in Textiles

Below we provide Arvind benchmarking against other companies in Textiles industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Gujarat Cotex ($GUJCOTEX)625.9%-6.2%-66.0%176.2%
Suryalata Spinning Mills ($SURYALA)-43.8%3.5%6.7%37.4%
Patspin India ($PATSPINLTD)-34.4%0.2%8.5%32.0%
Rswm ($RSWM)-37.0%0.2%24.2%17.9%
Vtm ($VTMLTD)-32.8%-10.5%22.7%17.8%
Median (18 companies)-34.4%3.5%7.6%11.8%
Arvind ($ARVIND)-56.5%20.6%7.5%29.7%

Top companies by EBITDA margin, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Nitin Spinners ($NITINSPIN)4.6%23.7%10.5%19.7%19.3%
Grasim Industries ($GRASIM)10.6%23.4%22.3%21.4%16.9%
Sutlej Textiles & Industries ($SUTLEJTEX)5.4%15.2%10.8%11.8%14.3%
Bengal Tea & Fabrics ($BENGALT)9.1%14.8%-0.3%12.6%13.7%
Vtm ($VTMLTD)5.8%21.5%11.7%17.3%13.3%
Median (15 companies)5.8%16.2%8.6%11.9%12.9%
Arvind ($ARVIND)4.4%13.0%12.3%13.3%13.7%

Top companies by CAPEX/Revenue, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
SRF ($SRF)6.4%0.0%0.0%18.7%20.0%
Grasim Industries ($GRASIM)2.6%7.8%17.7%21.7%11.6%
Nitin Spinners ($NITINSPIN)0.1%0.2%1.9%2.6%8.0%
Sutlej Textiles & Industries ($SUTLEJTEX)1.2%2.3%3.4%1.8%5.6%
Raymond ($RAYMOND)1.9%4.5%6.8%5.2%2.8%
Median (8 companies)1.4%4.5%3.9%4.4%4.2%
Arvind ($ARVIND)1.8%5.5%9.4%7.0%6.5%

Top companies by ROIC, %

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Nitin Spinners ($NITINSPIN)4.2%13.8%6.0%19.5%21.5%
Sutlej Textiles & Industries ($SUTLEJTEX)16.0%9.5%13.6%19.8%
Maral Overseas ($MARALOVER)4.6%14.1%16.0%
Rswm ($RSWM)6.8%17.4%2.2%15.2%15.5%
Sangam (India) ($SANGAMIND)7.4%15.1%9.8%14.7%12.2%
Median (31 companies)7.4%11.0%3.4%11.1%11.6%
Arvind ($ARVIND)6.8%9.9%11.3%11.2%13.7%

Top companies by Net Debt / EBITDA

 FY2010 FY2011 FY2012 FY2013 FY2014
Top 5
Prime Urban Development India ($PRIMEURB)0.8x4.1x9.4x
SRF ($SRF)1.8x1.2x1.5x2.2x4.0x
Raymond ($RAYMOND)6.1x3.3x3.7x4.6x3.7x
Rswm ($RSWM)5.9x3.5x10.3x3.7x3.3x
Sangam (India) ($SANGAMIND)4.3x3.1x4.0x2.6x3.1x
Median (20 companies)3.2x3.3x4.1x3.5x0.5x
Arvind ($ARVIND)5.3x3.7x3.4x3.3x3.0x