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What is the story about?
Arvind Fashions Ltd. (AFL), India's leading casual and denim apparel company, reported results for the March quarter on Wednesday, May 6.
The company reported a net profit of ₹47 crore during the quarter, compared to a net loss of ₹93 crore it reported during the same quarter last year. The net loss reported by the company last year is due to a one-time deferred tax asset charge of ₹120 crore, which was booked at a subsidiary level.
During the quarter, the company has also recognized a one-time incremental provision of ₹23.32 crore towards as an impact of the new labour codes.
Revenue for the quarter went up by 14.8% on a year-on-year basis to ₹1,364.8 crore.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter increased by 19.2% from the year-ago quarter to ₹189 crore from ₹158.6 crore earlier, while margins expanded by 60 basis points to 13.9% from 13.3% earlier.
The company acknowledged the ongoing uncertainty from West Asia geopolitical tensions, which are creating inflationary pressures on petroleum-derived inputs, shipping costs, and select raw materials, as well as pressure on the rupee.
To mitigate the same, the company is leaning on India-based sourcing, front-loading inventory ahead of anticipated price increases, and doubling down on cost controls while implementing selective price hikes to protect growth.
The company has guided for double-digit revenue growth, EBITDA and PAT margin expansion through operating leverage and a richer channel mix, a further improvement in Return on Capital Employed (RoCE) through working capital discipline and free cash flow generation.
Store expansion will also continue through the franchise-owned, franchise-operated approach, with online seen a key growth driver.
Shares of Arvind Fashions gained as much as 6% after the earnings announcement, currently trading 4.9% higher at ₹457.9. The stock is still down 10% on a year-to-date basis.
The company reported a net profit of ₹47 crore during the quarter, compared to a net loss of ₹93 crore it reported during the same quarter last year. The net loss reported by the company last year is due to a one-time deferred tax asset charge of ₹120 crore, which was booked at a subsidiary level.
During the quarter, the company has also recognized a one-time incremental provision of ₹23.32 crore towards as an impact of the new labour codes.
Revenue for the quarter went up by 14.8% on a year-on-year basis to ₹1,364.8 crore.
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter increased by 19.2% from the year-ago quarter to ₹189 crore from ₹158.6 crore earlier, while margins expanded by 60 basis points to 13.9% from 13.3% earlier.
West Asia Crisis Impact On Arvind Fashions
The company acknowledged the ongoing uncertainty from West Asia geopolitical tensions, which are creating inflationary pressures on petroleum-derived inputs, shipping costs, and select raw materials, as well as pressure on the rupee.
To mitigate the same, the company is leaning on India-based sourcing, front-loading inventory ahead of anticipated price increases, and doubling down on cost controls while implementing selective price hikes to protect growth.
Arvind Fashions Guidance
The company has guided for double-digit revenue growth, EBITDA and PAT margin expansion through operating leverage and a richer channel mix, a further improvement in Return on Capital Employed (RoCE) through working capital discipline and free cash flow generation.
Store expansion will also continue through the franchise-owned, franchise-operated approach, with online seen a key growth driver.
Shares of Arvind Fashions gained as much as 6% after the earnings announcement, currently trading 4.9% higher at ₹457.9. The stock is still down 10% on a year-to-date basis.
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