Hold Arvind; target of Rs 105: Sharekhan

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26 Aug, 2025 12:21

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Sharekhan's research report on Arvind

Arvind Limited (Arvind) posted muted Q2FY2023 numbers as revenue grew marginally by 2.6% y-o-y. Both textile division and advanced materials division (AMD) delivered subdued performance, registering 1.9% and 5.1% y-o-y growth, respectively. Denim/garments volume was down 49%/25% y-o-y. Gross margin declined by 189 bps y-o-y due to input cost inflation. However, EBITDA margin stood flat y-o-y at 9.3%, aided by improved operating efficiencies and decline in logistic cost. Correction in cotton prices will drive gross margins, but lower sales volume will keep EBIDTA margin at 8-9% in the near term. Export demand is expected to remain weak in the near term owing to weak consumer sentiments and inventory reduction by large retailers. However, domestic demand is expected to remain strong, aided by the wedding season. For FY2023, volume is expected to be similar to FY2022.

Outlook

The stock is currently trades at 7.3x/5.1x its FY2023E/FY2024E earnings. Owing to near-term headwinds, we downgrade the stock to Hold with a revised PT of Rs. 105.

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Arvind - 08-11-2022 - khan