Equirus has initiated coverage on Arvind Fashion Limited (AFL) with a ‘Long’ rating and a target price of ₹753/share, indicating a potential upside of 49.1% from the current market price (CMP) of ₹505.00.
Key Highlights:
- Profitability Improvement: AFL’s profitability is expected to improve significantly as the corrective actions taken over the past three years begin to yield results.
- Efficient Expansion: The company’s asset-light expansion strategy and improved working capital efficiency are set to enhance its financial performance.
- Strong Financial Metrics:
- Return on Equity (RoE) and Return on Capital Employed (RoCE) are projected to reach 18.5% and 19.9%, respectively, by FY27E.
- Cumulative pre-IND AS Free Cash Flow to Firm (FCFF) is estimated at ₹2.5 billion by FY27E.
- Attractive Valuations: At 10.5x FY27E EV/EBITDA, current valuations appear favorable, considering the company’s growth potential.
Equirus views Arvind Fashion’s corrective measures and strategic focus as key drivers for long-term growth and profitability, making the stock an attractive investment at current levels.
Disclaimer: The above analysis is based on inputs provided and is for informational purposes only. It does not constitute financial advice. Readers are advised to consult their financial advisors before making any investment decisions.
