Arihant Capital has given Buy recommendation for Dollar Industries with a target price of Rs. 569 in its research report issued on Sep 06, 2021
Arihant Capital’s research report on Dollar Industries
Dollar Industries or DIL, over the years has transformed itself from mass market brand (86% in FY07) to a house of brands focusing mainly on mid-market and premium segment which as on FY21 contributed 43% and 24% respectively. We believe that the company is riding on key pillars to drive growth; A) Increasing penetration in its existing mass and mid market brands like ‘Dollar’ and ‘Big Boss’, B) Expanding its women’s product portfolio brand under ‘Missy’, C) Customer preference for leisure wear and active wear, which would drive athleisure’s share, given its affordable price points, D) Scaling up of premium & super premium segment under Pepe Jeans JV, E) Streamlining its Working Capital under Project Lakshya, F) Capex of INR1.05bn-1.1bn will be incurred over the next 1-1.5 years on doubling spinning capacity, the socks unit, and integration of 6 warehouse facility, and G) Investment in digital transformation to strengthen the supply chain, coupled with increasing share from online sales.
The Company is radically trying to change the way it operates by transforming itself to a value-driven, innovation inspired, asset light and brand powered company. We initiate coverage with a BUY rating at a TP of INR569 per share; valued at PE 25x and EV/EBITDA of 16x FY23E; provides an upside of 55%.