"Arvind is a speculative stock," Rajan Shah, chief investment officer, Angel Broking said. "The textile industry is out of flavour," he said.
Arvind reported a stagnant net profit of Rs 5 crore for the fourth quarter ended March 2008 compared to same period last year. It registered net sales of Rs 658.37 crore for the quarter under review as against Rs 486.21 crore during the quarter ended March 2007.
The company's net profit for FY08 slid by 77 per cent to Rs 119.56 crore as against Rs 27.36 crore during the previous financial year. Arvind's net sales for FY08 increased by 23 per cent to Rs 2,271 crore compared to Rs 1,848 crore a year ago.
Another analyst tracking the company said that Arvind has posted lackluster results and margin pressure is expected to continue due to the weak denim business. He observed that the company's initiatives of selling non-strategic assets will take its time to reflect on the books. The company's stock was down 2.53 per cent at Rs 50 on the BSE.
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Sanjay Lalbhai, managing director Arvind, said, "The sharp appreciation of the rupee should have brought the input costs down and reduce energy bills. Instead the commodity prices have gone through the roof while the global economy is on the roll because of US sub prime crisis and the weakening dollar. The denim cycle looms large but things should adjust in the fourth quarter".
The Ahmedabad-based company plans to sell its non- strategic assets including land in next three years to repay debt and raise funds for expansion. It aims to raise as much as Rs 700 crore from developing or selling between 5-6 million square feet of land in the city. Currently it owes as much as Rs 1400 crore in debt which is about the same size of its networth.
Arvind is targeting Rs 4000 crore revenue in next two years, led by the branded apparel and retail business. It expects 40 per cent growth in the branded apparel business with Rs 700 crore target by FY2009-10. The value retail format MegaMart is pegged to be worth Rs 2000 crore by 2012.