Arvind is more of an aspirational India play: Girish Pai, Nirmal Bang Institutional Equities

In an interview with ET Now, Girish Pai, Head of Research, Nirmal Bang Institutional Equities, shares his views on markets. Excerpts:

ET Now: What is the sense you are getting on Arvind Ltd, it is obvious that everything is not attractive when it comes to textiles?

Girish Pai: If you look at the numbers per se or if you take the one-offs from the picture, the numbers have been broadly in line with what we expected. Yes, the sales growth could have been a little bit better, especially on the brands and retail side, which is a driver of valuation for this company. It has come in at somewhere close to 13-14% against the management commentary of 22 to 24% growth for the full year.

Apparently the management continues to maintain 22 to 24% growth and we believe it can be delivered because one of the key factors that has been driving sales away from some of the branded players, especially Arvind is more a brand player rather than a textile player in one sense. It has been this whole ecommerce situation where a deep discounts given by ecommerce plays has led to some kind of market share shift there.

So, we think that the discounts are going to come off a bit and that is going to lead to a situation where the sales are going to pick up for players like Arvind going into the second, third and the fourth quarters of this year, where we will see a festive season coming through, so we think that the 22% to 24% growth will probably be delivered.

ET Now: You do not think they are trying to bite much more than they can chew, they have got Ralph Lauren, a GAP, a Tommy Hilfigher, CK is also with them, Debenhams has not worked, Debenhams is going back, are they trying to do multiple brand management under the same umbrella?

Girish Pai: The management has come out recently and said that they are going to be more careful about taking on a new brand and they are going to take on only those brands which can achieve sales of something like 500 crore within a certain time span, which is a good thing. They have been focussing on power brands and they want to increase number of power brands over a period of time. The story in Arvind is more about aspiration India, the demographics.

ET Now: What happens to their basic business, Arvind started as a denim company, they were a denim exporter company, they were in the fabric business that is the core, what is happening there?

Girish Pai: I really do not recall the number specifically for the quarter but I do not think that is going through any kind of serious issues from whatever I recall.