Hi - I am glad you introduced Arvind. I had bought into it between 120 - 140 and continue to hold it.
The positives have been very clearly laid out by you - and were the reasons why I first got attracted to the stock. However as you mention their capital allocation skills are what make me nervous coupled with high levels of debt. Capital turns are low and inventory turnover is also lower than industry average, though improving.
Aside from spreading themselves too thin on the brand front (I feel they need to spend more effort in cementing their existing brand portfolio rather than introducing new brands) their foray into infrastructure/ housing seemed unnecessary. They have however hived this business off and are in the process of getting it listed under Arvind Infrastructure if I am not mistaken.
Their foray into the e-commerce space http://www.creyate.com/en/about - can add to their growth in the coming years. And Creyate is just one of the many avenues they are looking to explore in the E-Commerce space.
As you mention GAP has received a great response in Delhi - averaging 23 lakhs a day in sales from 1 store in the first month… http://economictimes.indiatimes.com/industry/services/retail/gap-closes-in-on-zara-clocks-sales-worth-rs-23-lakh-daily-on-average-in-june/articleshow/47932811.cms - though personally I think its way too expensive!
Reading this article can bring those interested up to speed on the business - http://www.outlookbusiness.com/the-big-story/lead-story/a-brand-new-spin-540 .