Arvind Fashions gains 4.5% after Q4 net profit surges 32% despite demand slump

The company has set a goal to expand the EBITDA margin by 100 basis points every year. For FY24, the company expects the margin to be around 13 percent

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Arvind Fashions share price gained over 4.5 percent on May 31 as the company managed to grow its topline and bottomline in the fourth quarter despite sluggish demand after the festive season.

The textile player’s net profit rose 32 percent on-year to Rs 29.5 crore for the quarter ended March 2023 and revenue from operations jumped 24 percent to Rs 1,140 crore. On the operating front, its EBITDA jumped 70 percent to Rs 124 crore and margins improved to 10.9 percent.

At 1pm, the stock was quoting at Rs 285 on the NSE with trading volumes of 467,286, about 3.5 times the 20-day average.

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“We experienced strong growth due to focus on internal efficiency and the re-energization of brands. This allowed us to navigate the challenging market conditions effectively,” Executive Director Kulin Lalbhai said in an interview with CNBC-TV18.

Lalbhai also mentioned that the sluggish demand is expected to persist for another quarter. Despite this, the company remains optimistic about the future and expects the EBITDA to continue improving from the current levels.

They have been working on scaling up certain brands, such as Arrow, which are anticipated to contribute to higher EBITDA going forward.

The company has set a goal to expand the EBITDA margin by 100 basis points every year. For FY24, the company expects the margin to be around 13 percent.

In 2023 so far, Arvind Fashions share price has declined over 17 percent and the one-year return is a meagre 7 percent. It trades at a trailing price-to-earnings ratio of 101x. According to analysts, increased competitive intensity and slower-than-expected improvement in profitability of emerging brands.

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