5 Indian fashion retail stocks to watch in FY23

Trend Ltd

Trent Ltd, a company that operates renowned retail brands like Westside and Zudio, has a market capitalisation of ₹70,494.94 crore. The company’s revenue has risen steadily from ₹2,531.68 crore in FY19 to ₹3,177.67 crore in FY20, then the revenue dipped to ₹2,047.53 crore in FY21, further growing to ₹3,880.73 crore in FY22 and ₹7,715.19 crore in FY23. The company’s net profit saw an impressive leap from ₹127.49 crore in FY19 to ₹154.58 crore in FY20. The net profit dipped to minus ₹51.01 crore in FY21 and rose to ₹249.63 crore and ₹554.57 crore in FY22 and FY23, respectively.

The earnings per share (EPS) increased from ₹3.84 in FY19 to ₹4.45 in FY20. The EPS dipped to minus ₹1.44 in FY21 and climbed to ₹7.02 in FY22 and ₹15.60 in FY23. The net profit margin was 5.04 per cent, 4.86 per cent, minus 2.49 per cent, 6.43 per cent, and 7.19 per cent in FY19, FY22, FY21, FY22, and FY23, respectively.

The company's five-year returns have soared by an extraordinary 530.39 per cent. Trent's market share has seen a notable increase, moving from 14.58 per cent to 36.29 per cent, indicating strong competitive positioning. When it comes to financial health, Trent has maintained a debt-to-equity ratio of 106.33 per cent, which is considerably lower than the industry average of 168.57 per cent. Additionally, the company's current ratio has been robust at 235.93 per cent, far surpassing the industry average of 103.6 per cent.

Raymond Ltd

Raymond Ltd, another major player in fashion retail and owner of brands like Park Avenue, ColorPlus, and Parx, has a market capitalisation of ₹11,289.57 crore. The company's revenue moved from ₹3,276.39 crore in FY19 to ₹3,186.39 crore in FY20, then declined to ₹1,752.41 crore in FY21. The revenue rose to ₹4,260.66 crore in FY22 and further to ₹5,779.56 crore in FY23. The net profit was ₹73.82 crore in FY19, which rose to ₹94.31 crore in FY20. In FY21, the company’s net profit plummeted to minus ₹118.49 crore. However, in a remarkable turnaround, the net profit swung from a loss of ₹395.92 crore in FY22 to a profit of ₹410.46 crore in FY23. The company’s EPS was ₹12.03 and ₹15.12 in FY19 and FY20, then dipped to minus ₹17.80 in FY21. The EPS then rebounded from minus ₹59.47 in FY22 to ₹61.65 in FY23.

The company's five-year returns stand at 186.98 per cent. Raymond's market share has increased slightly, moving from 16.03 per cent to 16.29 per cent, indicating marginal competitive gains. On the financial health front, the company has had a debt-to-equity ratio of 103.39 per cent, which is higher than the industry average of 83.72 per cent. Additionally, the company's current ratio has been at 117.69 per cent, which is below the industry average of 129.64 per cent, pointing to potential liquidity concerns.

Aditya Birla Fashion and Retail Ltd

Aditya Birla Fashion and Retail Ltd, a company that includes brands like Louis Philippe, Van Heusen, Allen Solly, and Peter England, has a market capitalisation of ₹20,264.07 crore. The company's revenue rose from ₹8,117.72 crore in FY19 to ₹8,742.53 crore in FY20. The revenue then decreased to ₹5,181.14 crore in FY21, then later rose to ₹7,824.20 crore in FY22, and ₹11,736.86 crore in FY23. In FY19 and FY20, net profit was ₹321.22 crore and minus ₹145.19 crore, respectively. Net profit recovered from a staggering loss of ₹649.64 crore in FY21 and minus ₹80.70 crore in FY22 to a profit of ₹132.52 crore in FY23. The company’s EPS was ₹4.15 and minus ₹1.88 in FY19 and FY22, respectively. The EPS saw a rise from a negative minus ₹7.95 in FY21 to minus ₹0.87 in FY22 to a positive ₹1.40 in FY23. Net profit margin was 3.96 per cent and minus 1.66 per cent in FY19 and FY20, respectively. It improved from a disheartening minus 12.54 per cent in FY21 to minus 1.03 per cent in FY22, then reached 1.13 per cent in FY23.

Over the past five years, Aditya Birla Fashion and Retail has seen returns of 34.70 per cent. The company has also successfully expanded its market share from 47.71 per cent to 53 per cent during this period. However, its financial health presents a mixed picture: while the debt-to-equity ratio stands at a high 216.51 per cent, surpassing the industry average of 168.57 per cent, its current ratio lags behind at 88.23 per cent compared to the industry average of 103.6 per cent.

Arvind Fashions Ltd

Arvind Fashions Ltd, the owner of brands like Pantaloons and Tasva, presents a mixed bag. With a market capitalisation of ₹4,380.88 crore, the company saw its revenue decline from ₹1,009.90 crore in FY19 to ₹740.57 crore in FY23. The revenue showed a mixed performance in FY20, FY21, and FY22 at ₹4,854.11 crore, ₹4,298.30 crore, and ₹4,514.01 crore, respectively. Net profit in FY19 was ₹61.51 crore, then it dipped to a net loss of ₹4.89 crore in FY20. The net profit showed signs of recovery, going from a loss of ₹59.41 crore in FY21 to a modest profit of ₹7.44 crore in FY22 and ₹9.86 crore in FY23. While the EPS was ₹10.64, minus ₹0.84, and minus ₹6.85 in FY19, FY20, and FY21, respectively, it improved to ₹0.61 in FY22 and to ₹0.74 in FY23. The net profit margin also saw a remarkable recovery from minus 19.92 per cent in FY21 to 1.33 per cent in FY23.

Over the past five years, Arvind Fashions has faced a challenging period, with a substantial negative return of minus 42.15 per cent. Additionally, the company's market share has shrunk from 3.35 per cent to 2.8 per cent. On the positive note, its debt-to-equity ratio of 181.68 per cent is actually lower than the industry average of 249.5 per cent. The company's current ratio is almost in line with the industry average, standing at 109.11 per cent compared to the industry average of 110.58 per cent.

Shoppers Stop

Shoppers Stop, a major department store chain in India has a market capitalisation of ₹7,211.33 crore. The revenue for Shoppers Stop shows significant fluctuations over the five-year period from FY19 to FY23. In FY19, the company had a revenue of ₹3,481.31 crore, which slightly decreased to ₹3,380.98 crore in FY20, indicating a modest decline. A sharp downturn occurred in FY21, with revenues plummeting to ₹1,725.09 crore, almost halving from the previous year. However, there was a noticeable recovery in FY22, as the revenue rose to ₹2,493.81 crore. The most impressive leap came in FY23, where the revenue skyrocketed to ₹3,998.36 crore, marking the highest in the five-year span and representing significant year-on-year growth.

In FY19, the company had a net profit of ₹78.75 crore, an EPS of ₹8.95, and a net profit margin (NPM) of 2.26 per cent. However, FY20 marked a downturn, with the net profit falling to minus ₹140.94 crore, the EPS to minus ₹16.02, and the NPM to minus 4.17 per cent. The situation worsened in FY21, with the net profit plummeting to minus ₹275.22 crore, the EPS reaching a low of minus ₹29.24, and the NPM dropping to minus 15.95 per cent. There was a marginal improvement in FY22 as the net profit climbed to minus ₹86.68 crore and the NPM slightly recovered to minus 3.48 per cent, but the EPS remained negative at minus ₹7.92. In a dramatic turnaround, FY23 saw the company's net profit rebound to ₹119.25 crore, with a positive EPS of ₹10.88 and an NPM of 2.98 per cent.

Over the past five years, Shoppers Stop’s share has given 44.78 per cent returns. The company has seen a decline in market share from 9.41 per cent to 7.7 per cent. Debt-to-equity ratio stands at a staggering 1815.35 per cent, substantially exceeding the industry average of 60.26 per cent. Additionally, Shopper Stop’s current ratio of 82.85 per cent fell well below the industry average of 131.84 per cent.

*Note: The investments discussed or recommended in the article may not be suitable for all investors. Investors must make their own investment decisions based on their specific investment objectives and financial position and only after consulting their financial advisors as may be necessary.

Fibre2Fashion News Desk (DP)