💰 Financial Performance

Revenue Growth by Segment

Consolidated revenue grew 8% YoY to INR 8,356 Cr in FY25. The Textile segment grew 6.4% to INR 6,174 Cr, driven by volume growth of 16% in garments, 4% in shirting, and 8% in denim. The Non-Textile segment (Advanced Materials and Water) grew 11.4% to INR 2,156 Cr, supported by healthy volumes in composites and human protection fabrics.

Geographic Revenue Split

Direct exposure to the US market accounts for approximately 10% of consolidated revenue, while total revenue linked to US-related trade (including indirect exports) is estimated at 30%. The company is diversifying by adding global customers to shift orders from China and Bangladesh to India.

Profitability Margins

Operating profitability remained stable despite headwinds. PBILDT margin moderated to 10.90% in FY25 from 11.50% in FY24, primarily due to an INR 60 Cr impact from a 21-day labor strike in Q1FY25. Net Profit for FY25 stood at INR 353 Cr, a 5% margin, compared to INR 337 Cr (4% margin) in FY24.

EBITDA Margin

Consolidated EBITDA margin was 10.98% in FY25, down from 11.63% in FY24. The decline was driven by the Santej factory strike which caused an INR 60 Cr EBITDA loss. Q1FY26 EBITDA margin further compressed to 8.5% due to tariff-related discounts of INR 23 Cr and industrial action recovery.

Capital Expenditure

Planned annual capital expenditure is set at INR 400 Cr to INR 450 Cr for FY26, revised from earlier estimates to maintain liquidity. Historical capex for FY25 was approximately INR 450 Cr. Investment is focused on expanding garmenting capacities and the Advanced Material Division (AMD) to shift the mix toward higher-margin products.

Credit Rating & Borrowing

Long-term bank facilities are rated CARE AA-/Stable and IND AA/Stable. Short-term instruments are rated CARE A1+ and IND A1+. Total debt stood at INR 2,065 Cr as of March 31, 2025. Interest coverage ratio remained healthy at 4.52x in FY25, though slightly down from 4.69x in FY24.

⚙️ Operational Drivers

Raw Materials

Cotton and cotton yarn are the primary raw materials, representing the largest portion of the cost structure. Cotton prices corrected from a peak of INR 100,000 per candy in FY23 to approximately INR 60,000 per candy in FY25, stabilizing input costs.

Import Sources

Majority of cotton is procured domestically from major cotton-producing states in India like Gujarat and Maharashtra. The company also works with 445,000 farmers across 90,000 acres for sustainable cotton sourcing.

Key Suppliers

Not specifically named in the documents, but the company maintains a supplier network of over 445,000 farmers and utilizes a portal for grievance redressal for its broad vendor base.

Capacity Expansion

Current expansion focuses on the Advanced Material Division (AMD) and garmenting. A new facility by subsidiary ATPPL in Bengaluru and Ahmedabad for human protection fabric and garments is expected to commission by September 2025, funded by an INR 91 Cr term loan and internal accruals.

Raw Material Costs

Raw material costs are highly sensitive to cotton price volatility. While prices have stabilized at INR 60,000 per candy, any sudden spike directly compresses the 10-11% EBITDA margins as pricing power with global retailers often involves a lag.

Manufacturing Efficiency

Capacity utilization was impacted in Q1FY25 by a 21-day strike. System efficiencies implemented in late FY25 have helped hold working capital days steady despite higher sales volumes.

Logistics & Distribution

Not specifically disclosed as a percentage of revenue, but the company is positioning itself as a globally approved vendor to supply alternative sourcing destinations if RMG orders shift away from India due to geopolitical factors.

📈 Strategic Growth

Expected Growth Rate

12%

Growth Strategy

Growth will be achieved by increasing the share of the Advanced Material Division (AMD), which yields 15% EBITDA margins, and expanding garmenting capacity. The company is transitioning from a fabric-heavy model to a garment-integrated model to capture higher value-add and mitigate cyclicality in denim.

Products & Services

Denim fabric, woven shirting fabric, readymade garments (RMG), human protection fabrics (fire-resistant, etc.), composites, specialty garments, and water treatment solutions.

Brand Portfolio

Arvind, Arvind Advanced Materials (AAML), Arvind Technical Products (ATPPL). Key customer brands include GAP and H&M.

New Products/Services

Expansion into human protection garments and specialty composites through ATPPL is expected to contribute to the double-digit growth target for the non-textile segment.

Market Expansion

Targeting increased export market share by capturing business shifting from China and Bangladesh. The company is adding new global customers to its RMG and AMD portfolios.

Market Share & Ranking

Arvind is a leading integrated textile manufacturer in India with a dominant position in the denim and shirting fabric markets.

Strategic Alliances

Partnerships with global brands like GAP and H&M for sustainability initiatives. Real estate development rights for 'Arvind Uplands' are given to group entity Arvind Smart Spaces Limited (ASSL).

🌍 External Factors

Industry Trends

The industry is shifting toward 'China + 1' sourcing strategies. The Indian RMG sector is expected to grow as retailers seek stable alternatives to Bangladesh. Arvind is positioning itself by increasing garmenting capacity to capture this shift.

Competitive Landscape

Faces intense competition from other Indian textile giants and low-cost manufacturers in Vietnam and Bangladesh. Competition is particularly high in the cyclical denim segment.

Competitive Moat

Moat is built on deep integration (fiber to garment) and the niche, high-margin Advanced Materials business. These advantages are sustainable due to high technical barriers in AMD and long-standing relationships with global retailers like H&M.

Macro Economic Sensitivity

Highly sensitive to global consumer discretionary spending and US trade policies. A 1% decline in global RMG demand typically impacts textile volumes significantly due to the company's export focus.

Consumer Behavior

Increasing demand for sustainable and traceable textiles. Arvind's investment in sustainable cotton (445,000 farmers) and blockchain traceability directly addresses this shift.

Geopolitical Risks

Political unrest in Bangladesh and rising labor costs in China present a market share gain opportunity for Arvind's RMG sector. Conversely, US-China trade tensions and secondary tariffs create volatility in pricing.

⚖️ Regulatory & Governance

Industry Regulations

Subject to stringent environmental regulations regarding water discharge and chemical usage in textile processing. Compliance with US and EU import standards is critical for its 30% US-linked revenue.

Environmental Compliance

High focus on ESG; uses blockchain for denim traceability and works with 445,000 farmers for sustainable cotton. No material legal non-compliances reported.

Taxation Policy Impact

Not specifically disclosed, but the company is subject to standard Indian corporate tax rates and export incentives under textile schemes.

Legal Contingencies

The company faced an illegal labor strike at its Santej plant in May 2024, which lasted 21 days. The labor court declared the strike illegal on June 06, 2024. No other major pending litigation values were disclosed.

⚠️ Risk Analysis

Key Uncertainties

US tariff fluctuations could impact quarterly EBITDA by INR 10-15 Cr (approx. 5-7% of quarterly EBITDA). Volatility in cotton prices remains a primary risk to the 11% margin profile.

Geographic Concentration Risk

Approximately 30% of revenue is linked to the US market, creating a high dependency on US trade policy and consumer sentiment.

Third Party Dependencies

Dependence on global retail giants like GAP and H&M for garment volumes. In the AMD segment, there is a 20-25% dependency on the parent for fabric procurement.

Technology Obsolescence Risk

Risk is mitigated by investing in the Advanced Materials Division and adopting blockchain technology for supply chain transparency.

Credit & Counterparty Risk

Receivables are generally from large global retailers, but the company maintains a moderate current ratio, which is a noted weakness in credit reports.