Shares of Arvind Fashions have surged up around 14% in the last 30 days, and analysts at Nuvama see the stock continue gaining momentum

The Arvind Fashions Analyst: Palash Kawale for Nuvama initiated coverage on the stock with a “buy” rating and a target price of ₹660. The target indicates an around 49% upside from the stock’s last closing price of ₹443.05.

The Arvind Fashions Thesis: The brokerage highlighted that Arvind Fashions boasts a robust portfolio featuring renowned brands such as U.S. Polo Assn., Arrow, Tommy Hilfiger, Calvin Klein, and Flying Machine. The company is engaged in the design, sourcing, marketing, and sale of a diverse range of branded men’s, women’s, and kids’ ready-made apparel, footwear, innerwear, and accessories through Exclusive Brand Outlets (EBOs), Multi-Brand Outlets (MBOs), Large Format Stores (LFS), and various e-commerce platforms.

As per the brokerage firm, the management’s strategic initiatives, including capital raises, portfolio rationalization (shedding non-performing and non-core brands), and margin improvement, have successfully turned around the business. The analysts predict a Revenue/EBITDA compound annual growth rate (CAGR) of 12%/22% (excluding Sephora) over the period from FY23 to FY26.

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This growth will be fueled by an expanding retail footprint and further margin expansion. The company’s impressive portfolio of marquee brands, coupled with a lean balance Sheet and substantial room for margin enhancement has made the analyst optimistic about its future prospects.

The analyst in the late note, said that Arvind Fashions’ decision to prioritize portfolio rationalization and operational efficiency over aggressive growth has yielded superior margin and return ratios. The premium brands in its portfolio, including USPA, Arrow, CK, and TH, are expected to capitalize on the ongoing premiumization trend in India. The management’s strategic focus on portfolio extension and entry into growing adjacent categories is anticipated to be a robust lever for both growth and margin expansion.

Price Action: Arvind Fashion’s share price was up 4.05% to trade at ₹461 on Wednesday afternoon.

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