Arvind limited - a triple play of RM tailwinds & brand growth


(django) #41

Have they filed detailed scheme of de-merger yet?
Not appearing on BSE.


(django) #42

Just found that scheme of arrangement has been made available at:


#43

@django and @varadharajanr …ANVESHAN HEAVY ENGINEERING LIMITED was incorporated on Sep14, 2017 and it would be one of the company to be listed after demerger. Per say demerger documents, AEL(Anup Engineering Ltd) would become subsidiary of this company

Would appreciate if you folks or anyone else can help to understand the real purpose behind this exercise.
Also, why the Face value of shares for AFL (Arvind Fashion limited) is being revised to INR 4 from current INR 2?


(Someone) #44

As mentioned in “scheme of arrangement” document it seems demerger would help individual entities raise capital on their own. Also management has been saying so in their interviews https://youtu.be/z6KzcfLzHE4

As far as I remember there will not be any cross holding post demerger.

Guessing you already knew all this from published documents. Is there anything you doubt?


(django) #45

I don’t know.
Was wondering about it.

Without getting into much details now, I am just waiting to see at what Market Cap these 3 companies are put up after demerger.

Cheers,
django


(Karthikraja K) #46

Presently 8-10% returns expected on Demerger. But FII / NHI might rush to buy Arvind Fashion ltd due to its crisp balance sheet and strong growth. it would rerate the company.
Anup Engg is into capital goods with cash rich company. hence it can see good PE multiple. We can expect good dividends too.


(Karthikraja K) #47

My workings as below.
Below is small number crunching for the Arvind Limited demerger.

Last week, Arvind gave opportunity to add around 380 and now also.
few update on Arvind Ltd demerger

Arvind Ltd is going to demerger its branded fashion business and engineering business as below.
Ratio as follows:

1 Arvind Fashions limited for every 5 shares of Arvind limited
1 Anveshan limited (Anup engineering) for every 27 shares of Arvind limited

Present MCap of Arvind limited is 10500 crores. we can see multifold returns in 5 years from fashion business. Pl share your views.

You need to buy 135 shares of Arvind Limited to be eligible for followings post demerger.

  1. Arvind Limited - 135 shares
  2. Arvind Fashion - 27 shares
  3. Anup Engg - 5 shares

Investment at CMP: 135*380 = 51300
Returns based on possible range

Arvind Limited = 135 * 200 = 27000
Arvind Fashion = 27 * 1000 = 27000 (instead of 1250 as per last PE sale, considered discount due to huge valuation. Even at 1000, it is not cheap)
Anup Engg = 5 * 200 = 1000

Total = 55000

Returns: 7% gains ( Assumptions: Post demerger Arvins limited Mcap: 6000 crores, Anup Engg Mcap: 200 crs, Arvind Fashion: 6400crs (whereas it sales 3000 crs, expecting 2 times of its sales valuation is not cheap)

hence returns could be much lower if market sentiment is bearish. Not taken single qty. But watching closely on declines.
Quickly it ran up to 420 levels.
Note: not factored double digit margin expectations by 2020 of Arvind fashion


(srvn) #48

any update on what exactly is stopping the demerger? when is it expected to be completed? demerger could probably be the only value unlocking trigger for this…