Arvind financial ratio analysis

2. Amey Naik - 89
Niraj Patel - 93
Prashant - 99
Sanif Sayyad –104
Anupama Telang - 115
Vishnu Radhakrishnan - 118
Vijay Yedke - 121
Team Members

3. Industry Overview
• Textile plays a major role in the Indian economy, It contributes 14 per cent to
industrial production and 4 per cent to GDP.
• With over 45 million people, the industry is one of the largest source of
employment generation in the country.
• The industry accounts for nearly 15 per cent of total exports.
• The size of India’s textile market in 2016 was around US$ 137 billion, which is
expected to touch US$ 226 billion market by 2023, growing at a CAGR of 8.7 per
cent between 2009-23E.
• As of June 2017, the central government is planning to finalize and launch the
new textile policy in the next three months. The policy aims to achieve US$ 300
billion worth of textile exports by 2024-25 and create an additional 35 million
jobs.

4. Company Overview
• Arvind is textile manufacturer and the flagship company of the Lalbhai Group.
• Manufactures cotton shirting, denim, knits and bottomweight (khaki) fabrics
• world’s fourth-largest producer and exporter of denim
• Leadership:
Sanjay S Lalbhai Chairman & Managing Director
Jayesh K Shah WholeTime Director & CFO
Punit S Lalbhai Executive Director
Kulin S Lalbhai Executive Director

5. Mumbai
Ahmedabad
Gandhinagar Pune
Bengaluru Naroda Kalol
Delhi
LOCATION

6. BRANDS

7. Indian Textile Market

8. Financial Ratios

9. Liquidity Ratios
Particulars Formula FY 2016-2017 FY 2015-2016 FY 2014-2015 FY 2013-2014
Current Ratio (Current Assets)/
(Current Liabilities) 0.98 1.03 1.05 1.12
Quick Ratio (Current Asset-
Inventories)
/(Current Liabilities)
0.50 0.60 0.64 0.68

10. Activity Ratios
Particulars Formula FY 2016-2017 FY 2015-2016 FY 2014-2015 FY 2013-2014
Inventory TurnoverCOGS/ Average
Inventory 4.58 4.75 5.02 5.07
Debtors Turnover Sales/ Accounts
Receivables 12.15 12.26 10.65 9.93
Average Collection
Period
365/ Debtors
Turnover 30 days 29.7 days 34 days 37 days
Total Asset
Turnover
Sales/ Total Assets
83.25% 76.34% 78.53% 79.14%
Debt to Equity
Ratio
Total Debt/ Total
Shareholders 0.87 0.97 0.97 0.95

11. Profitability Ratios
Particulars Formula FY 2016-2017 FY 2015-2016 FY 2014-2015 FY 2013-2014
PBT Margin Profit Before
Tax/Sales
6.42% 8.3% 9.14% 8.55%
Operating Margin EBIT/ Sales 10.35% 14.2% 15.87% 15.10%
Net Profit Margin Net Income / Sales 5.38% 5.89% 7.22% 7.56%

12. Return on Investment Ratios
Particulars Formula FY 2016-2017 FY 2015-2016 FY 2014-2015 FY 2013-2014
Return on Total
Assets
(Net Income)/
(Total Assets)
4.48% 4.5% 5.67% 5.98%
Return on Capital
Employed
(EBIT)/ (Capital
Employed)
6.08% 7.11% 9.14% 9.34%
Return on Equity (Net Income) /
(Total Equity)
10.48% 12.35% 14.62% 14%

13. Valuation Ratios
Particulars Formula FY 2016-2017 FY 2015-2016 FY 2014-2015 FY 2013-2014
Book Value Per
Share
(Total Equity)/
(Shares Outstanding) 125.39 106.43 99.77 91.47
Earning Per Share(Net Income)/
(Shares Outstanding) 10.49 12.35 14.62 14
Market to Book
Value
(Market Price) /
(Book Value) 3.54 2.57 2.63 1.90

14. Analysis
• Arvind’s average current ratio over the last 5 financial years has been 1.02 times which
indicates that the Company is comfortably placed to pay for its short term obligations.
• Company operates with manageable level of debt and will be able to ride out bad
economic cycles even if the Company’s profitability margins declines temporarily.
• In terms of profitability, the company has shown reduction in profits in the FY 2016-17,
but the same sluggishness has been observed overall in the textile industry.
• In its latest stock exchange filing dated 31 March 2017, Arvind reported a promoter
holding of 43.07 %. Large promoter holding indicates conviction and sincerity of the
promoters. We believe that a greater than 35 % promoter holding offers safety to the
retail investors.
• Overall, Arvind ltd is the leading company in the textile industry in terms of revenue,
efficiency and profitability and thus is the best bet to invest in the textile industry.