Arvind Fashion : Value Unlock or Trap

akshat_investor · December 26, 2021, 5:05pm

Hello Vpickr’s,
While i am not a deep value investor but this one is an exception in my portfolio.
Arvind Fashion is a fashion retail chain with brands like U.S. Polo, Arrow, Calvin Klein, Tommy Hilfiger and Flying Machine. It also has the rights to operate Sephora premium beauty stores in India, it is worlds’ largest beauty retail operated by LVMH.

Market standing in India

US Polo : # 1 Casual wear brand
Arrow : Among top 5 leading formal brand
Flying Machine: Among top 3 denim brands
Tommy Hilfiger and Calvin Klein : #1 & #2 premium casual brand
Sephora : #1 Prestige beauty retailer in india

Below are some brand specific financial details:

Brand	Revenue	CAGR	# of Stores
USPA	1000	17%	350+
Tommy	400	13%	100+
Calvin Klein	250	25%	70+
Flying Machine	400	18%	250+
Arrow	500	8%	200+
Sephora	200	72%	24+

The company has leadership position across casual and denim category. The business has moved into adjacent categories of innerwear, footwear and kids wear where the growth is good. USPA has 300 Cr of sales through adjacent categories. Flying Machine is a digital first brand with strategic tieup with Flipkart. The company has an EBO footprint of 1200 stores and MBO and LFS of around 3000 stores. Innerwear is distributed through wholesale distribution channel as well.

The company is building its own digital presence and more than 30% of online sales comes through D2C.The company has been focussing on Omni channel tech stack with inventory integrated across online and offline to drive better returns and reduce capital employed.

The company did 4600 Cr in sales in 2019 before Covid hit and currently trades at 3600 Cr market cap
The market is not wrong is pricing it that way, infact even before Covid hit, the company was in trouble and Covid just dealt it a big blow.

The company invested very aggressively in new brands and store format which bled its balance sheet. ‘Unlimited’ which is a value consious retail store was a cash drain. There were challenges related to forecasting which led to huge inventory and subsequent write-offs.

Due to liquidity crunch post ILFS crisis there was huge challenge in MBO and wholesale market which impacted even larges cos. like Page. And to top it up Covid came and aggrevated the situation. The company was in loss in FY20 & FY21 with debt in excess of 1000 Cr.

So why should one study it and consider it investment worthy. While the company is not out of the woods but it has taken a lot many actions to set it on the right path which if implemented as planned can take the stock price to multiple times of where it is currently.

Action Taken

Portfolio Rationalization : Exited loss making brands like Nautica, Hanes, Gant, Elle, Izod and Gap which freed up 170 Cr capital. It also sold Unlimited stores to Vmart for 150 Cr.
Working Capital Optimization : Improvement in forecasting by deploying technology led to reduction in inventory by 400 Cr
Cost Control : Cost optimization led to saving of 100 Cr/annum
Recapitalization: Raised 860 Cr through rights issue and strategic partnership with flipkart which led to debt reduction by 300 Cr

Way Ahead
The company has invested in omnichannel strategy and is confident of achieving 15% topline growth CAGR with double digit portfolio level EBITDA and ROCE of >20%

The digital push for company is quite evident and they expect to generate 1000 Cr revenue through digital for FY22 which is a 3X growth in last 3 years, ofcourse a large part is also driven by Covid related lockdowns. Digital contributes nearly 30% of revenue and >10% of onlines sales is fulfilled from stores, example of omni channel strategy in action.

The management team is highly experienced and most of them have experience in fashion, apparel, consumer industry.
The board is formidable and has marquee independent director like Nilesh Shah (Kotak), Vallabh Bhansali, Achal Bakeri and Vani Kola.
Ashish Dhawan, one of the best value investor in India holds 5% of the company.

Investment Thesis
This is one of the company which reminds me of Mohnish Pabrai’s quote that an investment idea should hit you like a 2X4 in the head, essentially meaning it should appear no-brainer and one should not need an excel to figure out if it is investment worthy, but there is a huge gap between Mohnish and mere mortal like me, so i pulled out an excel sheet

Basis guidance i expect the company to do 4500 Cr in sales by FY25 with around 550 Cr in EBITDA. There are no direct competitors to benchmark valuations, the nearest listed ones are Aditya Birla Fashion and TCNS.
Both trade between 35-50 times on normalized EBITDA and 4 to 6 times sales. Even if i consider 25 times EBITDA and around 3.4 to 4X sales, potential market cap can be close to 14000 Cr by FY25 against current market cap of 3600 Cr which is nearly a potential of 4X in 3 years beyond which it can compound at earnings growth rate if all goes well.
I started buying it around 1900 Cr and my average buy is at 2400 Cr.

Risk

Biggest risk is reoccurence of Covid and any further lockdowns
Failure of restructuring initiatives and push back from channel partners
Competitive pressure leading to price discounting
Conflict of interest led troubles between 3rd party Ecom sites and own ecom site

Disclosure - Invested

kalpesh4430 · December 27, 2021, 7:07am

Thats is around 12.2% OPM, can you elaborate how you reached these margin’s?
historical OPM around 6%

Disc: Not invested, just started reading, trying to understand business.

akshat_investor · December 27, 2021, 9:21am

The management guided for double digit ebitda by FY24. The actions for it are reduced price markdown, as of now 50% of sales has some part of discounting, consolidating procurement to reduce cost, reduction in employee cost, have reduced employee count by 15% and so on. ABFRL was at 15% and TCNS at 20% pre covid hence i took 12% as reasonable assumption. Ofcourse a lot needs to be done to achieve it.

akshat_investor · January 16, 2022, 8:45am

Anand Rathi releases a report with expected topline of 4500 Cr in FY24 and 14% EBITDA margin which is quite close to what i am expecting. If this happens stock should rerate. Execution is critical.

KoolSIM · January 16, 2022, 2:49pm

Are these EBITDA margin assumptions on a post Ind-AS 116 basis? I presume rental expense would be high for these guys which moved below EBITDA once Ind-AS 116 numbers were adopted.

Possibly that is the difference between historical average of 6% and now assumption of 12-14%?

akshat_investor · January 16, 2022, 4:15pm

Yes, that is correct, pre Ind AS is expected to be around 8%.

metallica.kyoto · January 18, 2022, 5:28am

The stock was up by 8 percent yesterday on this news.Looks very good technically c
saucer patter emerging.

akshat_investor · January 18, 2022, 1:20pm

Operational improvement is key, since the bet is to turn into black.

akshat_investor · February 11, 2022, 3:21pm

Good nos. by Arvind Fashion, company seems to be on track to achieve what they committed. Q3 EBITDA margins already at 10.5% and inventory turns at 4X.

Next quarter expected to be muted

Souresh_Pal · September 11, 2022, 6:17am

Hello from where did you get this guidance? Based on my understanding the mgmt doesn’t give such guidance. Anyway given the present runrate that much revenue is easily attainable.

akshat_investor · September 25, 2022, 8:20am

That is from Anand Rathi’s report

maulik_dadhania · September 25, 2022, 1:33pm

Any +/- datapoint around this news?

akshat_investor · September 25, 2022, 2:42pm

In my opinion it is a good move, AFL does not have pockets to scale this, better to focus on core business.

Cshar · October 15, 2022, 5:29am

Arvind fashion has offlate become largest holding in my portfolio, did my scuttlebut and got convinced of growth going forward. If management continue good capital allocation than market is very huge with limited compitition. As middle class move to upper middle class, choice of costly branded garments will rise sharply, recession free industry, this investment can be kept for long long time without even freaking out, accumulating in all dips. See a turnover of 10000 cr in 7-8 years comfortably.

Souresh_Pal · October 15, 2022, 5:45am

yeah it’s a head I win tail I don’t loose much type of situation. also largest allocation in my pf
valuation comfort is there. Rerating can happen.

Souresh_Pal · October 22, 2022, 11:34am

Now that Ashis Kacholia sir has bought the stock and a lot of ppl will study it, let’s put some update in details after @akshat_investor has given his brilliant thesis at starting of the thread. Lets see how management is walking the talk.

AR21& Q4FY21

Our key brands eg. USPA, Tommy Hilfiger, Calvin & Sephora registered high double digit same store growth with improved share of direct to consumer revenue.
In addition, the focused categories like footwear & innerwear emerged as our next growth engines. Footwear more than doubled its revenue in 04 and grew high double digit year on year basis despite Covid impact.
Online sales are 1/3rd of revenue.
In the year gone by, there was a renewed focus to reduce fixed cost on multiple fronts in order to achieve a leaner cost structure and create a ‘Fit for Future’ organization.
• Store rentals were negotiated for the lock down periods and structural changes were made to store costs.
• Unviable stores were closed down across the brand portfolio.
• Your company also consolidated B2B (Business to Business) warehouses from 11 locations to 4 locations leading to a large structural cost saving in B2B warehouse operations.
• Corporate overheads were rationalized significantly.
Overall your company was able to save around ~500 Cr of fixed cost for the year. The efforts of theyear gone by are likely to result in structural annual cost saving of over 100 Cr on an on-going basis.
Significant progress was made in FY21 to reduce the inventory levels, especially aged inventory, across brands. We were able to reduce overall Inventory by ~400 Cr to take the inventory COGS turns up to 2.0 (annualized on H2 sales) from 1.5 last year.
Flying Machine: In FY21, AFL entered into a strategic partnership with Flipkart for Flying Machine through a joint venture. with Flipkart having a significant minority stake. This helped the brand double it’s revenues from online channel in Q4 FY21. It also provides good opportunity to expand into adjacent lifestyle categories such as footwear, watches. eyewear and backpacks to build this iconic youth brand. It is also expanding its distribution footprint in Tier3/4 towns with its value retail format FMX, to capture the small town opportunity.
USPA: Further category expansions into adjacencies such as kidswear, innerwear, footwear and accessories are emerging as large incremental opportunities.
Arrow is a heritage American brand and its core target is a customer who already buys into premium menswear brands and is keen to experience aspirational international brands.

Q2FY22

Raised Rs. 400 Crs through preferential allotment to various marquee investors and promoters, thereby strengthening the balance sheet and insulating from any near-to-medium term uncertainties
Successfully completed strategic sale of assets of ‘Unlimited’ retail business to V-Mart Retail Ltd.
Exit of discontinued businesses completed; no losses pertaining to them from Q3 FY22 onwards
With exit of discontinued brands completely behind us, our sharp focus on 6 high conviction brands will help deliver robust sales growth with significantly improved operational profitability in H2 FY22
USPA back to double digit margins (pre-IndAS)
Continued focus on working capital helped inventory reduction of Rs. 183 Crs (vs Sep’20); better footfalls led to improvement in inventory turns

AFL was able to make the most of this recovery and post a strong set of numbers with the cash break even in the continuing business.
The department store channel saw a slightly slower recovery but we do expect momentum to pick up in the channel in Quarter 3. The MBO channel also saw very robust tertiary sales due to fresh stocks and healthy footfalls. The offline recovery has seen further momentum building up post Quarter 2. This was one of the strongest Diwali seasons we have seen in many years. Customers came out in big numbers this Diwali and with a fresher and higher level of stocking in the channel we were able to post high double-digit LTL sales across our brands compared to the Diwali season which was before the COVID impact. We are also cautiously optimistic that this performance will sustain post Diwali due to a strong performance of the winter wear offering. Sales increased in Q3.
We are well on track to achieve a 1000 crores online business run rate as we exit the year. They did it.
Inventory management: Our focus on improving inventory turns has started showing results. Even though sales have gone up 113% compared to last year, inventory has come down by 60 crores from the comparable quarter last year for the continuing businesses. We are on track to exiting the year with an inventory turn of 4. They did it.
Debt guidance: With the preferential fund which came in the month of October and strong collections from the festive season, we expect the debt to further reduce and settle around 600 crores by the end of the year. Exited FY22 with 500 cr debt.
Gross Margin Guidance: The gross margin will see an uptick because of all the efficiencies that are kicking in and the inherent profitability of our power brands and exit of less profitable businesses. We believe that in short-term horizon we should move from 42% up to mid-40s. It’s 49% in Q1FY23.
Comparison of Saphora with Nykaa: I think one should not draw one to one comparison between different formats which are quite different in terms of their ASP and addressable market. Sephora operates in the prestige part of the beauty business. This is the Rs. 1500 plus ASP product. Within that product range, it actually has a very strong dominant market share. In fact, between whatever we do on the offline side plus online, Sephora does have a strong position in that market and we believe that market will continue to grow extremely well in India because as the per capita GDP goes up, there will be more and more women upgrading into that particular segment. So, Sephora will continue to operate in the prestige segment. I don’t think there would ever be a strategy to get into the mass segment because that’s not what Sephora is known for. In order to win in the prestige segment, the key aspects of the strategy that world over have worked very well is one, a very unique offering because Sephora private label as well as the exclusive brand which are launched through the Sephora franchise globally every year are the unique differentiation of Sephora. So some of the world’s most exciting new beauty brands are born in Sephora because they get the whole huge global Sephora network to scale up. Every year there will be many of these new exciting brands coming into the country and with that exclusive catalogue, it really helps cement Sephora in the place of the prestige customer. The second aspect is the retail experience, one of the things that Sephora is known for globally is not just selling products but selling experience, selling makeup experience, the in-store wow that needs to be delivered and that is possible because of again the format and the kind of animations and in-store services that are made available. There also the idea is as digitization comes into the store and as more and more, the store experience is upgraded globally, we would want to bring more and more aspects of that global rich experience to the retail format. I think if we stayed true to what Sephora is known for globally which is its unique assortment and very high experiential retail, we believe that Sephora will have a strong place in the Indian market especially in the prestige part of the which is as such the real addressable market for a format like Sephora.
You are now a leader now in the online space especially in segments you operate in. Now, how do we capitalize that like we are leader and have more brands: We actually will now be developing merchandise just for the online channels. think capitalizing online opportunity can be done with very strong portfolio of brands we have. In fact, a lot of the levers are also about getting into new categories like footwear for example where US Polo has become a #1 footwear brand. It could not have happened in the offline space but it can happen in the online space. Our footwear initiative has been largely on US Polo business and we invested ahead of time on adjacent category in our strongest brand. We are very happy with that investment because in online space, in many portals including Myntra, our footwear business has been winning awards, we are a market leader in that segment. So, this has been a wonderful addition to our portfolio.
Online vs Offline Margin: Online and offline margins are very similar in the power brands and both are sort of converging and we are looking at moving to double-digit EBITDA in the medium term both across offline and online. So, It’s a very similar percentage of margin we are seeing in both offline and online.
Franchise stoe vs COCO store: on commission side which is nearly at 7% of revenues. I would believe, a lot of our sales also comes from the franchisee route. Then what exactly is this commission, whom we are paying at 7% because none of the peers have this line item which is so high? This is the franchisee margin that we pay. We have a smaller percentage of our company stores (COCO) at 20% and we have a larger franchisee network (80%), so that line item comes through as a commission. Our store expansion will be on asset light model, that’s our stated policy. So, most of our expansion will be through the franchisee network.

Q3FY22

Q4 to be impacted (Y-o-Y) on account of COVID wave3 related lockdowns; encouraging recovery post lifting of restrictions. Expect full recovery by March.

Q4FY22

Q1FY23

Q1FY23 is our best Quarter 1 result in terms of sales and profitability with revenues growing by 40% over pre-COVID to 920 crores and an EBITDA growth of 52% compared to preCOVID levels at 94 crores. Sharp execution on the retail channel continued in this quarter as well registering around 25% like to like growth despite our conscious decision to push out the EOSS window for our brand.
Registered the highest ever full price sell through in our business across brands in Q1 and lower discounting helped deliver a sharp jump in gross margin of 49.4% for the quarter which is an improvement of 640 basis points compared to the same quarter last year.
The MBO (Multi Brand Outlet) channel witnessed robust demand as well with channel sales growing by 2.5 times pre-COVID. Our investments in omni-channel and marketplace aided strong performance in online channel with sales almost doubling compared to pre-COVID levels and a 20% growth on a significant base in Quarter 1 of last year.
Retail has become a large channel for almost half of our company’s revenue and this has been pushing our GP percentage higher because retail channel has higher gross margin.
With very high-quality focus and systematic execution, we saw retail KPIs (Key Performance Indicator) improve, like-to-like store growth of 25%. I must say our stores have never looked better. April’22 and May’22 saw 50% growth over pre-COVID periods, while June growth reduced because we decided to postpone end of season calendar to July to limit the number of weeks in a year under sale and improve our margins through lower discounting.
Online continued its growth momentum; it has nearly doubled in Quarter 1 over pre-COVID times. The online business has accounted for 25% of revenue for the company in Q1 and has grown by more than 20% on a large base. And it continues to help us serve demand in a more robust omni way. Majority of our stores are now omni enabled and omni contribute nearly 10% of store sales at the connected stores.
On the brand front:
• U.S. Polo Assn has become an even higher ranked casual brand in India and is galloping towards the top rank here.
• Tommy Hilfiger and Calvin Klein have also performed exceedingly well in terms of reduction in discounting, increase in full price sell through and have delivered double digits pre-Ind-AS EBITDA.
• This portfolio of U.S. Polo, Tommy Hilfiger and Calvin Klein is a very powerful set of brands in the market and is delivering very healthy profitability and growth for AFL.
• One more good news is that Arrow is EBITDA positive. With market revival post-COVID and improvement in supplies to different channels, Arrow has gained scale and is delivering fantastic business KPIs. We’ve also seen in the market revival of weddings, festivals, business travel and celebration of special occasions which augurs very well for further strengthening of Arrow business especially its profitability.
• In Sephora, the business is doing very well now. I mean the offline business is currently performing exceedingly well post-COVID. The segment also is doing well. On your question on online strategy, we are still working with our partners on how we should plan that out. For the time being we are in the process of expanding the retail network and the like-to-like productivities are going from strength to strength and as we work and get clarity on the other side, we will roll things out
Margin of different brands:
• Just explain one thing structurally in this business, it’s a very high operating leverage business. Now we have a portfolio of six brands. Each of them is at different levels in their journey. If a brand is typically nearing an 800- 1000 crores turnover, basically it is a brand with a high operating leverage and correspondingly the profitability is high.
• Three of our brands are already in a high double digit pre-IndAS profitability which puts them broadly in line with market profitability of large established brands. We have got a couple of brands which are still scaling up.
• So, Arrow has been in a turnaround. It had gone into negative EBITDA actually, come back into positive EBITDA. But the journey for it to get into double digit EBITDA is still a journey which will take little bit of time. It is about rescaling the brand and Shailesh mentioned a lot of positives in the KPI but it’s still a little bit of a journey. We have seen the beginning of that journey and that journey is not complete.
• Similarly Flying Machine and Sephora are still in terms of sub-scale, they are also getting into their journey of moving towards double digit profitability.
• So, large established brands have achieved the double-digit profitability and the maturing part of the portfolio is scaling up and overall, the company is also scaling up which will bring operating level. It’s a point in time in our journey where we will continue to see the benefits that will come from some of our brand scaling up and the company overall scaling
• Flying Machine and Sephora also at EBITDA level they are profitable but below EBITDA (in p&l statement) probably they might be losing some money. They need efficient scale then only the overall game will change for us and that’s what we are focusing on.
• Arrow has recently broken even in q1.
I take those top three brands they will be maybe 50% of your business as part of my rough assessment and if I give double digit margin, it’s kind of there. The only thing is something has to lose money somewhere for you to be at that kind of reported profitability levels: The absolute profitability Arrow, Flying Machine and Sephora is still very small and when we look at double digit and then somebody’s low single digit and you look at the overall portfolio, it does impact the numbers. In a way you are right that our task is to take the profitability of Arrow and Sephora and Flying Machine higher and that’s what we are all working on.
Debt & ROCE: the business continues to generate cash even with impressive growth ahead; we expect our net debt levels to remain close to the levels we ended last year at. At June end, our net debt was 427 crores. With continued tight control on inventory, business remains in the zone of 4 stock turn. With improvements in margin, we have seen return on capital employed move up in this quarter to a high single digit percentage and we will continue to step up efforts to take this ROCE to higher level in future.
Is comparison with Page Industries Right: I think if we have to say a single mantra for us to take our margin model for Power brand to a double-digit EBITDA in next 12 to 18 months is a single-minded agenda that we have. The ROCE improvement, we’ve done ROCE positive and now breaching single high digit. What we have promised we are delivering and it’s a journey, step by step we will continue to improve our profitability and that’s a single objective. Also, on stock turn, we have improved our stock turn from 3 to close to 4 now and that’s the journey again that we will keep an eye that improving stock turns from beyond 4 will be a target for us and we will work hard towards that.
Margins going ahead: Now ours is seasonal quarter, the EBITDA margin differs based on the level of wholesaling, level of discounting. It’s a very seasonal industry and Quarter 1 tends to be the weakest quarter in company in terms of the margin. In the historically also Quarter 1, we are very happy with our margins in Quarter 1 because this is historically the best margin in Quarter 1 and if I look at the remaining part of the year as we get into the festival season, our margins would be higher because it’s a seasonal business and if we are at 10.5% post IndAS then there will be many quarters likely to have a higher EBITDA margin and we are improving our EBITDA every quarter and whatever the number you took, you will see hopefully a higher percentage than that in this year itself. We are very confident of delivering, also I think if I would say midterm 12 to 18 month period for our power brand portfolio we have a clear objective of reaching double digit EBITDA in our brands. We have a slightly weaker EBITDA margin in Arrow, its EBITDA positive now. But it’s a journey ahead on that brand to improve to double digit. But U.S. Polo, Tommy Hilfiger, Calvin Klein, these are all in that zone of pre-IndAS double digit EBITDA margin and the whole portfolio will move forward and also seasonally you’ll see higher EBITDA margin as we go along in this year.
Gross Margin Trajectory:
In your business if you could give the hierarchy of margin profile in an EBO, so what EBO is the lowest vis-à-vis the wholesale? Historically retail in Quarter 1 is not the highest productivity retail quarter. Retail in Quarter 3 for example will be very profitable during the Diwali season. You have to look at it quarter specific. If you look at our historical performance over many years, you will always see Quarter 1 is cyclically the lowest bottom line quarter in the year because of the channel mix and the kind of sale pattern you usually have in Quarter 1.
This quarter yes, pushing of EOSS would have also helped the gross margin but that’s one- time, next year onwards we will not gain in that.
Basically, whichever quarters the retail sales are high the GPs will look higher but the other expenses will make up for that.
Effects of IND-AS:
• The pre-IndAS EBITDA is about 400 bps lower than the reported EBITDA
• Ind AS 116 will have a dramatic impact on Balance Sheet and P&L of the entities which can be material.
• Impact on Balance Sheet : The asset base of the company in the form of right to use asset will increase and corresponding borrowing in the form of Leasehold obligation will come. This will impact debt equity ratios.
• Impact on P&L : EBITDA will become higher as there will not be any rent expense and depreciation and interest cost will come. Due to decrease in rent expense and increase in interest expense, there will be material impact on interest coverage ratio, Return on assets and performance indicators in terms of EBITDA and EBIT.

Chins · October 29, 2022, 4:57pm

Did some work on Arvind Fashions in the last few months.

From the subsidiary annual reports, one can have a better understanding of the brands held by Arvind. Thanks Yash for pointing me to them!

The summary:

US Polo is the largest brand, at 1000+ Cr. of sales.
Arrow, Tommy, Flying Machine are around the 500 Cr. mark.
Turnaround is definitely visible through the years, but the economics of individual brands still look horrible…

I also realised that subsidiary annual reports have royalty spend as a line item. Therefore, one can measure royalty spend against the topline, to arrive at a metric which benchmarks how lucrative the licensing deal is!

Calvin Klein and Tommy

Post FY20, these two got merged into one entity. It’s jointly owned by Arvind and PVH brands, Europe.

Sephora

Flying Machine

EBITDA margins, receivables and inventory turns generally look better over the years.
Sephora has the nicest licensing deal (rumoured to be sold to Reliance Retail…)
Flying Machine is the fastest growing brand (JV with Flipkart), but with limited data.
US Polo + other small brands still have losses of 280 Cr. on the books at the end of FY22.
Arrow is dicey to pinpoint as the subsidiary is only Arrow wholesale, and it’s likely that Arrow retail is blended into the US Polo numbers.

D: Invested, in top 5 positions, no recent transactions.

Souresh_Pal · November 4, 2022, 10:11am

ABFRL posted good numbers. Arvind Fashion might also post good numbers.
https://twitter.com/saketreddy/status/1588455038141489152?t=0FR3u0am6xt8pl07lL5lEA&s=19

akshat_investor · November 4, 2022, 3:02pm

Thanks for the detailed writeup. The clinical execution by weeding off loss making business, building adjacencies, cash flow improvement projects and capital restructuring has been very good. Now is the time to see operating leverage to act in and make non linear impact on profits. Let us see how it goes.

Simrat · December 27, 2022, 12:18pm

While the story of margin expansion, deleveraging is in progress and the narrative is improving perception, one thing to remember is that major portion of PAT goes to non controlling interest which does not belong to us. For ex. in H1 FY23, actual PAT was 17 Cr and non controlling interest profit was 18 Cr implying 50% reduction from total PAT, which means that all valuation multiples are suppressed vis.a.vis. other retailers in an expected fashion.