Ventura : Buy Arvind Limited for 130% appreciation

Ventura Says that


We initiate coverage on Arvind as a BUY with a Price Objective of Rs 119.9 over a period of 15-18 months. At CMP of Rs 52.0, the stock is trading at 7.9x and 4.7x its estimated earnings for FY2011E & FY2012E representing a potential upside of ~130.5%. Arvind is one of the largest fabric producers in India with 200 million metres of fabric producing capacity.


With ~100 mn metres fabric capacity expansion getting operational in phases over FY2010-FY2013 and robust growth in Brands & Retail business, the earnings are expected to grow at CAGR of 74.3% during FY11-13. Monetization of its 500 acres land bank is expected to result cash flows of nearly Rs 1000 crore over a four year period which would be used to fund the capex and retire part of the debt.


Key Investment Highlights


1. Significant expansion of textile capacity to foster long term growth
2. Brands and Retail business to witness accelerated growth
3. Monetization of land bank to aid capex and debt reduction plans



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