Arvind Ltd. sets aggressive growth plans
Retail conglomerate Arvind Ltd. is planning to scale up its textiles business to Rs 10,000 crore by 2023, from Rs 6,000 crore now by investing Rs 1,500 crore over the next three years. Company aims on:
- Adding more verticals which leads to more garmenting,
- Ramping up advanced materials division which is into specialized textiles,
- Adopting newer technologies that will help scaling up operations,
- Scaling up the brand Arvind which is worth Rs 400 crore now to Rs 1,000 crore, and
- Doubling its workforce of 43,000 over the next few years to achieve its ambitious growth plan.
Why is this important
Arvind currently works with several top global brands like GAP, Levi’s and Zara and is present in 10,000 retail touch-points and 200 exclusive outlets. However, only 10% of the fabric that is produced is being garmented now. With ambitious plans laid out, company intends on improving the number atleast by 40 – 50%.
Moreover, Arvind doesn’t need to dig into reserves as it has sufficient cash flows from regular business to meet its investment needs. They plan to grow the technical textiles division and get into newer fabrics more and more, focusing on athleisure and activewear and scaling up the brand Arvind.
How will the stock be impacted
Ambitious growth plans laid out by Arvind Ltd. (CMP: 413, Mcap: 10,680.9 crores, FY20E P/E of 16.2 x) shows clear management focus on growing the business. Besides, using cash flows from regular business for investment shows great potential of the company to generate meaningful returns for its shareholders without additional capital requirement.