Forward integration on track - ICICI Directcontent.icicidirect.com/mailimages/IDirect_VardhmanTextiles_Q4FY16.pdf · May 11, 2016 ICICI Securities Ltd | Retail Equity Research Result

May 11, 2016

ICICI Securities Ltd | Retail Equity Research

Result Update

Forward integration on track... • Vardhman Textiles’ (VTL) revenues came in below our expectations.

However, adjusted profitability came in line with our expectations • Revenues de-grew 1% each YoY and QoQ to | 1436 crore, lower

than our estimate of | 1509 crore. For FY16, standalone revenues de-grew 2.7% YoY to | 5587 crore. The EBITDA margin at 18.9%, improved 50 bps YoY and was above our estimate of 18.5%

• PAT grew 141% YoY to | 217.5 crore (I-direct estimate: | 127 crore). The high PAT growth was driven by | 90 crore of other income, comprising dividend from subsidiaries. Excluding other income, PAT was at | 127 crore in line with our estimates

Divestment of 40% stake in JV Vardhman Yarns & Threads VTL operated its sewing thread business with a strategic JV partner American & Efird, Inc (A&E) where it held a 51% stake. In its quest to focus more on the yarn & fabric business it has divested 40% stake for a consideration of | 396 crore in its sewing thread business, valuing the company at | 990 crore. It plans to use these funds for its second leg of expansion plans post 2018. Expansion of fabric segment to aid margin improvement VTL is looking to spend ~ | 600 crore over the next three to four years to add 225 looms to its current capacity of 1316 looms. This is expected to result in an expansion in its fabric capacity by 45 million metre to the existing processing capacity of 110 million metre. The major chunk of fabric expansion would be in the Baddi plant. It plans to augment its value added fabric segment capacity as it is less sensitive to cyclical cotton prices. Also, going forward, overall margins are likely to expand with higher share of the fabric segment. However, the impact of these expansions is likely to be fully visible in FY18, boosting revenue growth. VTL’s high value cotton fabric caters to leading Indian & international brands like Van Heusen, Peter England, Wills, Benetton, H&M, GAP, etc. As per the management, as on FY16, fabric contributes ~45% of overall revenues of which 30% comes from exports. Diversified textile conglomerate with strong presence across value chain VTL over a period of time has emerged as one of the largest fully integrated textile players in India from a commodity based spinning company. Its core business comprises spinning, weaving & processing with current capacity of ~1 million spindles and 1320 looms with fabric capacity of ~110 million metre. It has also ventured into new businesses like sewing threads and acrylics through the JV route with global players. Strong management track record with healthy balance sheet VTL is a unique company in the highly capital intensive, cyclical textile space, especially spinning that managed to control its net debt/equity continuously under 1x despite capacity expansion (since FY12). As on FY15, net D/E was 0.24x. In last four years, it has done a capex of ~| 1600 crore in upgradation of its spinning facility & expansion of processing & weaving segment from 900 looms in FY12 to 1316 looms in FY16. Prudent expansion plans, lower debt to bear fruit from FY18E onwards We expect a higher share of fabric revenues to result in margin improvement, which would eventually drive overall profitability of VTL in FY17/18. Also lower depreciation and interest cost in FY17, FY18 would aid profit growth. We have revised upwards our FY17, FY18 earnings estimates. We have revised our target price to | 910 (valuing the company at 4x FY18E EV/EBITDA) with a HOLD recommendation.

Vardhman Textiles (MAHSPI) | 980 Rating matrix Rating : HoldTarget : | 910Target Period : 12 monthsPotential Upside : -7%

What’s changed? Target Changed from | 885 to | 910EPS FY17E Changed from | 121.3 to | 129.3EPS FY18E Changed from | 133.8 to | 124.3Rating Unchanged

Quarterly performance

Q4FY16 Q4FY15 YoY (%) Q3FY16 QoQ (%)Revenue 1,389.9 1,407.8 -1.3 1,436.2 -3.2EBITDA 262.3 258.3 1.5 279.5 -6.1

EBITDA (%) 18.9 18.4 52 bps 19.5 -59 bpsPAT 217.5 90.2 141.1 128.3 69.5

Key financials (| crore) FY15 FY16 FY17E FY18E

Net Sales 6,786 6,637 6,258 6,776

EBITDA 1,118 1,315 1,317 1,503 PAT (after MI) 401 579 808 777 EPS (|) 64.1 92.6 129.3 124.2

Valuation summary

FY15 FY16 FY17E FY18E

P/E 15.3 10.6 7.6 7.9

EV/EBITDA 7.0 6.1 5.2 4.3 Target EV/EBITDA 6.5 5.7 4.8 3.9

Price to book 1.8 1.6 1.3 1.1

RONW (%) 11.9 15.0 17.3 14.5

ROCE (%) 9.9 11.7 17.6 16.8 Stock data Particular Amount

Market Capitalisation (| Crore) 6,145.0 Debt (FY15) (| Crore) 2,209.0 Cash (FY15) (| Crore) 309.4 EV (| Crore) 8,044.6

52 week H/L 1028 / 604 Equity Capital (| Crore) 62.5

Face Value (|) 10 Price performance

1M 3M 6M 12MVardhman Textiles 19.6 23.8 37.0 60.0Arvind 8.6 2.5 0.9 16.0Siyaram Silk Mills 6.8 2.2 15.3 11.6

Research Analysts

Bharat Chhoda [email protected] Nirav Savai [email protected]

ICICI Securities Ltd | Retail Equity Research Page 2

Standalone Variance analysis Q4FY16 Q3FY16E Q4FY15 YoY (%) Q3FY16 QoQ (%) Comments

Revenue 1,389.9 1,489.0 1,407.8 -1.3 1,436.2 -3.2

Q4FY16 revenues declined 1.3% each YoY and 3.2% QoQ to | 1389.9 crorelower than our expectations of | 1489 crore. Lower revenue YoY was mainlyon account of lower cotton prices

Other Operating Income 45.6 20.5 41.0 11.4 8.6 431.6

Raw Material Expense 694.2 744.5 733.4 -5.3 705.1 -1.5Employee Expense 101.5 111.7 87.8 15.6 113.6 -10.7Manufacturing & Other Expense 331.9 357.4 328.3 1.1 338.0 -1.8

EBITDA 262.3 275.5 258.3 1.5 279.5 -6.1

EBITDA Margin (%) 18.9 18.5 18.4 52 bps 19.5 -59 bps

EBITDA grew moderately by 1.5% YoY to | 262 crore, lower than ourestimate of | 275 crore. EBITDA margins were at 18.9%, in line with ourestimates of 18.5%

Depreciation 97.3 93.5 132.3 -26.5 88.2 10.2

Depreciation costs had increased steeply in FY15 as the company providedfor depreciation under the new Companies Act, which lowered the effectivelife of certain assets. The depreciation reduced in Q4FY16 owing torationalisation of depreciation. The management has guided at lowerdepreciation for FY16, FY17

Interest 24.6 24.4 28.6 -14.2 18.8 31.0Interest expense comprised net expense after deducting interest income of |10.38 crore from deposits/bonds in Q4FY16

Other Income 90.2 0.0 0.0 - 0.0 -

PBT 276.3 178.0 138.4 99.7 181.1 52.6Tax Outgo 58.8 51.1 48.2 22.1 52.8 11.3PAT 217.5 126.9 90.2 141.1 128.3 69.5 Higher PAT was driven by other income & lower depreciation

Source: Company, ICICIdirect.com Research Change in estimates

FY17E FY18E(| Crore) Old New % Change Old New % Change Comments

Revenue 7,134.3 6,257.7 -12.3 7,684.2 6,776.0Revenue decline in FY17E/18E is on account of VTL selling its 40% stake insubsidary Vardhman Yarn & Thread business

EBITDA 1,466.0 1,316.8 -10.2 1,587.0 1,503.3

EBITDA Margin (%) 20.5 21.0 49 bps 22.2

We expect the EBITDA margin to improve in FY18E. This would be drivenby better margin in the processed fabric and increased proportion of fabrics in total revenues

PAT 758.2 808.1 6.6 836.4 776.6

Higher PAT in FY16 is mainly due to 40% stake sell in VYT for | 296 crore.However, PAT is likely to decline from FY18E onwards on account of lossof revenue & profits from VYT

EPS (|) 121.3 129.3 6.6 133.8 124.2

Source: Company, ICICIdirect.com Research Assumptions

FY15 FY16 FY17E FY18E FY16 FY17E FY18EYarn SegmentVolume (MT) 176,317 200,280 204,286 212,457 200,280 204,286 212457Avg. Realisation (|/kg) 259 220 231 236 220 231 243Fabric SegmentVolume (Lakh meters) 2,814 3,092 3,278 3,506 3,092 3,278 3,506 Avg. Realisation (|/ meter) 100 101 106 115 101 106 112

EarlierCurrent

Source: Company, ICICIdirect.com Research


ern

Consolidated Variance analysis Q4FY16 Q4FY15 YoY (%)

Revenue 1651.0 1660.4 -0.6Consolidated revenues marginally declined by 0.6% YoY due to lower revenue growth in VTL onaccount of lower cotton prices

Other Operating Income 51.6 55.2 -0.1

Raw Material Expense 770.4 832.8 -7.5%

Employee Expense 128.8 111.6 15.5%

Manufacturing & Other Expense 421.1 419.0 0.5%

EBITDA 330.7 297.0 11.4%

EBITDA Margin (%) 19.9 17.9 200bps Consolidated EBITDA margin improved 200 bps on account of lower raw material cost

Depreciation 107.4 140.8 -23.7%

Depreciation declined as it was significantly higher in FY15 owing to a change in life of fixedassets as per new Companies Act. The same has now been rationalised and is expected toremain closer to the current depreciation charge

Interest 28.1 30.3 -7%

Other Income 0.0 0.0 -

PBT 246.8 181.2 36.2%

Tax Outgo 74.8 58.3 28.3%

PAT 172.0 122.9 40.0%

Extraordinary Iterm

PAT (after extraordinary item) 172.0 122.9 40.0%

Share of Profit/(Loss) in associate 1.7 0.2 695.2%

Minority Interest 14.23 13.8 3.3%

PAT after MI,Share of P/(L) 159.4 109.3 45.9% Improved operational performance and lower depreciation led to growth in net profit



Company Analysis Higher revenues from FY18E onwards, driven by capex in fabric segment VTL’s revenues grew at a CAGR of 15% in FY09-15, driven by stellar revenues from the yarn and fabric segment. Over the years, the company has benefited from (a) capacity expansion and (b) strong export demand (specifically in FY14). The change in Chinese cotton yarn policy in 2012 had been a huge positive for Indian cotton yarn exporters to China. China had increased MSP of cotton prices to provide incentive to its farmers, resulting in a huge rally in cotton prices globally. Higher domestic cotton prices in China resulted in huge demand for Indian cotton yarn in China, which was duty free. However, in FY15, China reversed its cotton policy, resulting in a sharp fall in global cotton prices, which significantly impacted the Indian spinning industry. Post the high growth phase, FY16 was a year of consolidation for VTL. Hence, we expect revenues to grow at a CAGR of 1% in FY16-18E to | 6776 crore in FY18E. Lower growth was on account of VTL selling its 40% stake in its threads business.

Exhibit 1: Revenue trajectory

2,162 2,3882,965

3,351

4,418 4,641 4,972

1,194 1,280 1,416 1,282

6,166

1,418 1,488 1,429 1,408

6,786

1,386 1,375 1,436 1,390

6,6376,258

6,776

-

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

FY07

FY08

FY09

FY10

FY11

FY12

FY13

Q1FY

14

Q2FY

14

Q3FY

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Q4FY

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Q1FY

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Q2FY

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FY15

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Q2FY

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FY16

FY17

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FY18

E

| cr

ore

Source: Company, ICICIdirect.com Research Note: The revenue numbers for the full year are for the consolidated entity, while the quarterly numbers are on a standalone basis

The healthy topline growth was achieved on the back of 22.4% and 24.8% growth in FY09-15 in the yarn and fabric segments (including internal consumption), respectively. Going forward, due to changes in China’s cotton policy, the yarn segment is likely to witness lower growth. As exports reduce, the fabric segment is likely to continue to grow owing to growing demand for processed fabric. We expect the yarn and fabric segments to grow at a CAGR of 6.6% and 14% to | 5010 crore and | 4029 crore, respectively, in FY16-18E.

Exhibit 2: Segmental revenue trend

1029

1115

1325

1477

2041

3369

3596

4335

4567

5010

409

441

672

794

1,06

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FY15

FY16

FY17

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FY18

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| cr

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Yarn Fabric

Source: Company, ICICIdirect.com Research Note: Segment sales include internal consumption

Exhibit 3: Revenue mix

72 72 66 65 66 72 64 64 62 59 58 55

28 28 34 35 34 28 36 36 38 41 42 45

-

25

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FY07

FY08

FY09

FY10

FY11

FY12

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FY14

FY15

FY16

FY17

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FY18

E

%

Yarn Fabric

Source: Company, ICICIdirect.com Research Note: Segment sales include internal consumption


Reduced depreciation/interest with margin expansion to boost PAT growth Owing to the cyclical nature of the business, the company witnesses bumper years where operating margins swell and then normalised years. The normal operating margin range for the company is 18-22%. In FY11, the company witnessed a strong operating margin of 24.8% owing to a steep rise in yarn prices. In FY14, the operating margin improved to 23.7% owing to strong exports mainly driven by Chinese imports. The management indicated that FY15 margins were impacted owing to lower yarn realisation in the export market and cotton inventory loss. With cotton price stabilising there is lower likelihood of inventory loss, going ahead, which should lead to better margins. Also, the management expects the operating margin to be in the range of 18-22% over the next two years. We expect the EBITDA margin to move towards the higher end of the management guidance by FY18E owing to higher proportion of fabric revenues as the fabric capacity is expected to ramp up from 110 million metre to 155 million metre by FY18E. Furthermore, the company had provided higher depreciation under the new Companies Act in FY15. However, the same is likely to decline, going ahead, leading to higher profitability. We expect PAT to improve at a CAGR of 15.8% in FY16-18E. Exhibit 4: EBITDA and EBITDA margin trend

381

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-200400600800

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10.012.014.016.018.020.022.024.026.028.0

%

EBITDA EBITDA Margin


Exhibit 5: PAT and PAT margin trend

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-100200300400500600700800900

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Net Profit Net Profit Margin



Healthy return ratios with reducing debt to benefit VTL Despite the ongoing capex over the years, the company has managed to bring down the debt/equity ratio. The fact that the company has curtailed the debt/equity ratio under 2.0x is commendable considering the capital intensive nature of the business. Exhibit 6: Debt/equity trend

1.5

1.9 1.81.6

1.3 1.2 1.31.1

0.6 0.6

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-

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FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17E FY18E

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Exhibit 7: Return ratios trend

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FY07

FY08

FY09

FY10

FY11

FY12

FY13

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FY15

FY16

FY17

E

FY18

E

%

RoE RoCE



Valuation We expect a higher share of fabric revenues to result in margin improvement, which would eventually drive overall profitability of VTL in FY17/18. Also, lower depreciation and interest cost in FY17, FY18 would aid profit growth. We have increased our FY17, FY18 earnings estimates. We have revised our target price to | 910 (valuing the company at 4x FY18E EV/EBITDA) with a HOLD recommendation. Exhibit 8: Valuations

Sales Growth EPS Growth PE EV/EBITDA RoNW RoCE (| cr) (%) (|) (%) (x) (x) (%) (%)

FY15 6,786.0 10.0 64.1 (43.5) 12.4 6.0 11.9 9.9FY16 6,636.9 (2.2) 92.6 44.5 8.6 5.2 15.0 11.7FY17E 6,257.7 (5.7) 129.3 39.7 6.2 4.4 17.3 17.6FY18E 6,776.0 8.3 124.2 (3.9) 6.4 3.5 14.5 16.8



Company snapshot

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May

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Source: Bloomberg, Company, ICICIdirect.com Research Key events Date Event

Mar-08Signs joint venture agreement with American & Efird Inc, a subsidiary of Ruddick Corporation, US to manufacture, distribute and sell sewing thread for industrial and consumer markets in India and for exports to other countries

Dec-08 Board approves buyback of FCCBsJul-10 Board approves demerger between Vardhman Textiles, Vardhman Special Steel and their respective shareholders and creditorsAug-10 Decides to issue equity shares through QIP up to | 200 crore to be subscribed by qualified institutional buyersOct-10 Shareholders, creditors approve scheme of arrangement and demerger between Vardhman Textiles and Vardhman Special SteelsMay-13 Net profit rises 103% YoY in Q4FY13 on the back of strong exports, which led to margin expansionAug-13 PAT rises 163% YoY in Q1FY14 on the back of continued export demand, which aided strong topline growth and margin expansionNov-13 Continued export demand and margin expansion lead to PAT growth of 154% YoY in Q2FY14Feb-14 Owing to stringent policies, China continued to import yarn. This led to revenue growth of 31% YoY and PAT growth of 110% YoY in Q3FY14 as wellMar-14 Baring Private Equity Partners hikes stake in Vardhman Textiles by acquiring additional 1.1% stake taking its total holding in the company to 3.1%May-16 VTL sells 40% stake in its subsidary Vardhman Yarns & Threads for a consideration of | 396 crore

Source: Company, ICICIdirect.com Research Top 10 Shareholders Shareholding Pattern Rank Name Latest Filing Date % O/S Position (m)n Change (m)1 Vardhman Group 31-Mar-16 0.26 16.6 0.02 Adishwar Enterprises, L.L.P. 31-Mar-16 0.20 13.0 0.03 Devakar Investment & Trading Company Pvt. Ltd. 31-Mar-16 0.09 5.6 0.04 IDFC Asset Management Company Private Limited 30-Jun-15 0.06 4.0 0.35 Templeton Asset Management Ltd. 31-Dec-15 0.04 2.6 0.06 Adinath Investment & Trading Company 31-Dec-15 0.03 2.1 0.07 UTI Asset Management Co. Ltd. 31-Mar-16 0.02 1.4 0.08 Sundaram Asset Management Company Limited 31-Mar-16 0.01 0.8 0.09 Franklin Templeton Asset Management (India) Pvt. Ltd. 31-Mar-16 0.01 0.7 0.010 Oswal (S P) 31-Mar-16 0.01 0.7 0.0

(in %) Mar-15 Jun-15 Sep-15 Dec-15 Mar-16Promoter 61.9 61.9 61.9 61.9 62.2FII 10.3 10.3 11.5 12.4 12.1DII 13.2 13.3 12.2 11.7 11.2Others 14.7 14.6 14.5 14.0 14.5

Source: Reuters, ICICIdirect.com Research Recent Activity

Investor name Value Shares Investor name Value SharesMarshall Investment &Trading Company Pvt Ltd 5.99 0.55 State Street Global Advisors (France) S.A. -0.21 -0.02Vardhman Group 0.47 0.04 Grandeur Peak Global Advisors, LLC -0.16 -0.01Syracuse Investment & Trading Company Pvt. Ltd. 0.33 0.03 State Street Global Advisors (US) -0.06 -0.01Devakar Investment & Trading Company Pvt. Ltd. 0.32 0.03 UTI Asset Management Co. Ltd. 0.00 0.00Dimensional Fund Advisors, L.P. 0.25 0.02 Goldman Sachs Asset Management (India) Private Ltd. 0.00 0.00

Investor name Investor name

Source: Reuters, ICICIdirect.com Research

Target Price 910


.

Financial summary Profit and loss statement | Crore (Year-end March) FY15 FY16 FY17E FY18ETotal operating Income 6,786.0 6,636.9 6,257.7 6,776.0Growth (%) 10.0 -2.2 -5.7 8.3Raw Material Expenses 3,490.3 3,069.6 2,894.6 3,109.8Employee Expenses 448.4 516.7 425.5 460.8Manufacturing Expenses 1,445.4 1,735.2 1,370.4 1,431.1Selling Expenses 237.1 0.0 200.2 216.8Administrative Expenses 46.7 0.0 50.1 54.2Total Operating Expenditure 5,667.9 5,321.5 4,940.9 5,272.7EBITDA 1,118.1 1,315.5 1,316.8 1,503.3Growth (%) -23.1 17.7 0.1 14.2Depreciation 532.2 401.8 326.0 362.7Interest 124.9 97.8 82.6 56.0Other Income 166.2 86.4 305.1 81.3PBT 627.2 902.3 1,213.3 1,166.0Total Tax 176.5 272.4 339.7 326.5PAT 450.7 629.9 873.6 839.5PAT (after minority interest) 400.5 578.6 808.1 776.6Growth (%) -43.5 44.5 39.7 -3.9EPS (|) 64.1 92.6 129.3 124.2


Cash flow statement | Crore (Year-end March) FY15 FY16 FY17E FY18EProfit before Tax 627.2 902.3 1,213.3 1,166.0Add: Depreciation 532.2 401.8 326.0 362.7(Inc)/dec in Current Assets 496.3 -162.8 -42.1 -282.3Inc/(dec) in CL and Provisions 764.1 -257.2 90.5 -13.8Taxes Paid -176.5 -272.4 -339.7 -326.5Others 155.8 70.5 39.9 13.5CF from operating activities 2,399.1 682.3 1,287.9 919.6(Inc)/dec in Investments -85.1 -263.3 174.3 -47.9(Inc)/dec in Fixed Assets -228.7 -320.3 -391.2 -336.4Others -303.4 -100.0 100.7 49.0CF from investing activities -617.1 -683.7 -116.2 -335.2Issue/(Buy back) of Equity 0.0 0.0 0.0 0.0Inc/(dec) in loan funds -1,480.8 276.8 -795.7 -410.0Dividend paid & dividend tax -54.4 -71.1 -99.3 -99.9Others -124.9 -97.8 -82.6 -56.0CF from financing activities -1,660.0 108.0 -977.5 -566.0Net Cash flow 122.0 106.6 194.2 18.4Opening Cash 80.7 202.8 309.4 503.6Closing Cash 202.8 309.4 503.6 521.9


Balance sheet | Crore (Year-end March) FY15 FY16 FY17E FY18ELiabilitiesEquity Capital 62.5 62.5 62.5 62.5 Reserve and Surplus 3,312.8 3,784.0 4,607.1 5,283.7 Total Shareholders funds 3,375.3 3,846.5 4,669.6 5,346.2 Total Debt 1,892.0 2,209.0 1,270.5 861.3 Deferred Tax Liability 223.3 213.2 218.7 223.9 Other LT Liabilities 24.1 2.9 3.3 3.8 Minority Interest / Others 441.0 371.6 437.1 500.1 Total Liabilities 5,955.6 6,643.2 6,599.2 6,935.3AssetsGross Block 6,005.4 6,425.1 6,738.1 7,069.8 Less: Acc Depreciation 3,158.8 3,470.1 3,855.7 4,218.4 Net Block 2,846.6 2,955.0 2,882.4 2,851.4 Capital WIP 99.4 - 78.2 82.9 Total Fixed Assets 2,946.0 2,955.0 2,960.6 2,934.3 Investments 868.6 1,131.9 957.6 1,005.5 Inventory 1,915.8 2,056.3 1,885.9 2,042.1 Debtors 809.5 825.7 771.5 835.4 Loans and Advances 478.2 484.2 750.9 813.1 Other Current Assets 21.0 21.0 - - Cash 202.8 309.4 503.6 521.9 Total Current Assets 3,427.2 3,696.6 3,911.9 4,212.6 Creditors 1,309.8 1,151.7 1,134.8 1,102.5 Provisions 113.0 13.9 121.3 139.9 Total Current Liabilities 1,422.8 1,165.7 1,256.2 1,242.4 Net Current Assets 2,004.4 2,530.9 2,655.7 2,970.2 Others Assets 136.6 25.3 25.3 25.3 Application of Funds 5,955.6 6,643.2 6,599.2 6,935.3


Key ratios (Year-end March) FY15 FY16 FY17E FY18EPer share data (|)EPS 64.1 92.6 129.3 124.2Cash EPS 149.2 156.8 181.4 182.2BV 539.9 615.3 746.9 855.1DPS 7.4 9.7 13.6 13.7Cash Per Share 32.4 49.5 80.5 83.5Operating RatiosEBITDA Margin (%) 16.5 19.8 21.0 22.2PBT Margin (%) 9.2 13.6 19.4 17.2PAT Margin (%) 6.6 9.5 14.0 12.4Inventory days 103.0 113.1 110.0 110.0Debtor days 43.5 45.4 45.0 45.0Creditor days 70.5 63.3 66.2 59.4Return Ratios (%)RoE 11.9 15.0 17.3 14.5RoCE 9.9 11.7 17.6 16.8RoIC 14.3 19.8 22.5 24.8Valuation Ratios (x)P/E 15.3 10.6 7.6 7.9EV / EBITDA 7.0 6.1 5.2 4.3EV / Net Sales 1.2 1.2 1.1 1.0Market Cap / Sales 0.9 0.9 1.0 0.9Price to Book Value 1.8 1.6 1.3 1.1Solvency RatiosDebt/EBITDA 1.7 1.7 1.0 0.6Debt / Equity 0.6 0.6 0.3 0.2Current Ratio 2.3 2.9 2.7 3.0Quick Ratio 0.9 1.1 1.2 1.3



ICICIdirect.com coverage universe (Apparel) CMP M Cap

(|) TP(|) Rating (| Cr) FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17E FY15 FY16E FY17EKewal Kiran Clothing (KEWKIR) 1800 2025 Hold 2462 53.8 53.4 68.5 33.5 33.7 26.3 25.7 24.8 24.6 35.9 33.5 33.7 23.1 20.7 21.5

Page Industries (PAGIND) 13062 11000 Hold 13330 175.7 194.6 237.6 74.3 67.1 55.0 52.7 36.4 32.8 52.5 57.8 55.5 53.2 50.7 45.5Rupa & Company (RUPACO) 300 - Unrated 1975 8.3 9.4 10.4 36.4 31.8 28.9 21.0 17.9 15.9 16.2 17.5 18.4 20.9 20.4 20.1

Vardhman Textiles (MAHSPI) 980 885 Buy 4785 64.1 102.9 121.3 15.3 9.5 8.1 5.6 5.0 4.0 9.9 11.6 15.3 11.9 13.1 16.4

Arvind Ltd (ARVMIL) 295 370 Buy 8250 13.2 13.5 15.9 22.3 21.9 18.5 10.3 8.9 7.9 14.4 15.1 16.0 12.5 13.0 14.3

RoCE (%) RoE (%)

Sector / Company

EPS (|) P/E (x) EV/EBITDA (x)



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Forward integration on track - ICICI Directcontent.icicidirect.com/mailimages/IDirect_VardhmanTextiles_Q4FY16.pdf · May 11, 2016 ICICI Securities Ltd | Retail Equity Research Result