Arvind Ltd posts 20% jump in net profit at Rs 78 crore before exceptional items

Consolidated EBIDTA was up by 2% at Rs 232 cr for Q2, FY 2016-17 as against Rs 228 crore in the comparable quarter previous year

Arvind Ltd, one of India's largest integrated textile and branded apparel players, has posted 20 per cent growth in its consolidated net profit (before exceptional items) at Rs 78 crore for the quarter ended September 30, 2016 as compared to Rs 65 crore in the corresponding period last year.

The company's consolidated revenue jumped by 19 per cent to Rs 2,331 crore for the July - September quarter of 2016 as against Rs 1,957 crore for the same quarter of the previous year.

Consolidated EBIDTA was up by 2 per cent at Rs 232 crore for Q2, FY 2016-17 as against Rs 228 crore in the comparable quarter previous year.

 

Profit after tax after exceptional items, which consisted of retrenchment compensation, was Rs 72 crore for July - September quarter of 2016 as compared to Rs 71 crore in the corresponding quarter of the previous year.

"Our textile business, which recorded 9 per cent growth in revenue, continues to deliver a strong performance as we continue to pursue a calibrated growth strategy. The brands business continues to demonstrate strong growth with 33 per cent growth in the first quarter. Our established power brands consolidated their market positions. We believe that we will have continued growth momentum in the second half of the current financial year," said Jayesh Shah, Director and Chief Financial Officer, Arvind Ltd.

Arvind's share price jumped by 11.79 per cent trading at Rs 401.90 a piece on the BSE on strong quarterly numbers and reports of reducing its debt by divesting 10 per cent stake in its brand business subsidiary Arvind Lifestyle Brands to Multiples, the private equity firm founded by Renuka Ramnath.

At an enterprise value of Rs 8000 crore, the deal is valued at Rs 740 crore which would be used by Arvind to reduce its debt. Post this deal, effective November 2016, the overall debt on the group level of the conglomerate would decline to Rs 2500 crore.

"Arvind has completed a deal under which 10 per cent stake in Arvind's brand business arm has been acquired by Multiples promoted by Renuka Ramnath. Our brand business has been growing at a phenomenal rate over the years. So, the value of our brand business subsidiary is worked out at Rs 8000 crore," said Sanjay Lalbhai, chairman and managing director, Arvind Ltd.

Arvind's brand portfolio is among the strongest in India and has many power brands that have growth at a phenomenal pace. The business clocked a turnover of Rs 2,300 crore for the financial year 2015-16 and is one of the fastest growing businesses in the country with a compounded annual growth rate (CAGR) of 25 per cent over the last three years.

The unmatched portfolio includes global marquee brands such as Calvin Klein, Tommy Hilfiger, US Polo Assn, Ed Hardy, Hanes, Arrow, Gant, and Nautica among others.

"The transaction reflects the confidence of the investor community in the overall business strategy, the robustness of the platform and quality of our leadership team. The deal is an important milestone in our journey to be a fashion, apparel, and accessories powerhouse," said Lalbhai.