Normally FMCG sector is associated with the power of brands. However, there are many industries, where a strong brand plays an important role. There are enough examples of firms that have built strong brands & have been getting premium on Street. The reason, a strong brand helps a company weather storms of an economic slowdown or inflationary pressure. Also over long term the final cost of doing business is lower, margins are higher as the concept of reverse working capital comes into play when the brand is strong. Yes, there are phases where they underperform because sometimes their valuations do get stretched, but then over time earnings do tend to help in normalization of valuations.
After an almost 18 percent rise in Arvind Fashions just in January, Nuvama sees another 38 percent upside in the next 1 year. The brokerage believes the firm is perfectly positioned for a valuation re-rating. It has initiated coverage on the stock with a ‘buy’ rating and a target price of ₹660.
Arvind Fashions is well-placed to scale up brands such as Arrow, Tommy Hilfiger, Calvin Klein and Flying Machine backed by an experienced management team as showcased in the case of U.S. Polo Association (USPA).
For Monday, share market analysts from a few brokerages have assigned Buy calls on L&T Finance Holdings, Godrej Consumer Products and Arvind Fashions. Check price targets and other crucial details.