ARVINDFASN - Arvind Fashions.

📊 NSE: ARVINDFASN 🏢 Trading 📅 Last Updated: 12/13/2025 18:32

💰 Financial Performance

Revenue Growth by Segment

Total revenue from operations grew 8.5% YoY to INR 4,619.8 Cr in FY25. Retail channel achieved double-digit growth driven by a 5.5% like-for-like (LTL) growth. Online channel grew by 15%+, while wholesale channels witnessed slower growth. In Q2 FY26, revenue reached INR 1,418 Cr, up 11.3% YoY, with direct channels (Retail + B2C) now accounting for nearly 50% of sales, a 500 bps increase over the previous year.

Geographic Revenue Split

Not disclosed in available documents; however, the company operates an extensive pan-India retail network with a focus on square foot expansion and franchisee-led growth in various regions.

Profitability Margins

Gross Margin improved by 210 bps to nearly 53% in Q2 FY26 due to reduced retail discounting (down 90 bps) and a richer channel mix. Operating Profit Margin stood at 8.25% in FY25 compared to 7.38% in FY24. Net Profit Margin for continuing operations was 0.74% in FY25, down from 2.50% in FY24, primarily due to a one-time deferred tax charge.

EBITDA Margin

EBIDTA Margin was 13.78% in FY25, up 100 bps from 12.78% in FY24. In Q2 FY26, EBITDA grew 18.2% YoY to INR 200 Cr, reflecting an 80 bps margin improvement despite higher advertising and employee costs.

Capital Expenditure

Planned capital expenditure is INR 100-120 Cr per annum for FY25 and FY26, primarily funded through internal accruals. The company is focusing on an asset-light, franchisee-led expansion (FOFO route) to limit capex requirements.

Credit Rating & Borrowing

CARE Ratings revised the long-term rating to 'CARE A; Stable' from 'CARE A-; Positive' in January 2024. Short-term rating is 'CARE A1'. Total debt stood at INR 390 Cr in FY25, down from INR 466 Cr in FY24. Finance costs were INR 156 Cr in FY25, including interest on borrowings of INR 76.5 Cr and lease liability interest of INR 79.4 Cr.

⚙️ Operational Drivers

Raw Materials

Finished apparel, fabric, and accessories. While specific raw material costs are not itemized, the business operates at a high gross margin of 45-53%, indicating COGS represents 47-55% of revenue.

Import Sources

Not specifically disclosed, though the company mentions supply chain impacts from BIS regulations on footwear, suggesting international sourcing or compliance requirements for specific categories.

Capacity Expansion

Current store network expansion focuses on adding ~150 stores in FY26, largely through the FOFO (Franchisee Owned Franchisee Operated) route. The company aims for higher net square foot addition in FY26 compared to FY25.

Raw Material Costs

Raw material costs are reflected in the Gross Margin of ~53% (Q2 FY26). Procurement strategies focus on inventory freshness, which is currently at an all-time high of 85%+, and efficient supply chain management to improve inventory turnover.

Manufacturing Efficiency

The company focuses on store efficiency and inventory turnover. Inventory turnover ratio improved to 4.64x in FY25 from 4.50x in FY24. Retail LTL growth of 8.3% in Q2 FY26 indicates high store-level efficiency.

Logistics & Distribution

Not disclosed as a specific percentage of revenue.

📈 Strategic Growth

Expected Growth Rate

12-15%

Growth Strategy

Growth will be achieved through a 12-15% revenue CAGR aspiration, accelerating adjacent categories (footwear, kids, innerwear), and adding ~150 stores via the FOFO route. The company plans to increase the share of direct channels (Retail + B2C) by 100-200 bps annually and leverage operating leverage to expand EBITDA and PAT margins.

Products & Services

Apparel (shirts, jeans, suits), footwear, womenswear, innerwear, kidswear, and fashion accessories.

Brand Portfolio

USPA, Arrow, Flying Machine, Tommy Hilfiger, Calvin Klein, and EdHardy/Aeropostale (discontinued).

New Products/Services

Expansion into adjacent categories like footwear (growing at high 20s%), womenswear, and kids' fashion across existing brands.

Market Expansion

Aggressive expansion of the retail network with ~150 new stores planned for FY26, focusing on increasing market share through higher advertising spend (up 20 bps in Q2 FY26).

Market Share & Ranking

Not disclosed in absolute rank, but the company claims a 'strong market position' in the apparel brand segment.

Strategic Alliances

Joint Venture with PVH (PVH Arvind Fashions Private Limited) for Calvin Klein and Tommy Hilfiger. Partnership with Flipkart (31.25% stake in Arvind Youth Brands).

🌍 External Factors

Industry Trends

The industry is shifting toward branded retail and direct-to-consumer channels. AFL is positioning itself by increasing its direct channel share to 50% and focusing on premiumization through its international brand portfolio.

Competitive Landscape

Competes with other branded apparel retailers and international fashion labels. Competition is managed through high advertising spend and a focus on 'brand salience'.

Competitive Moat

Moat is built on a 'strong brand portfolio' (USPA, Arrow) and a dominant position in the premium casual wear segment. Sustainability is driven by an asset-light expansion model and high inventory freshness (85%+).

Macro Economic Sensitivity

Highly sensitive to disposable income and consumer sentiment. A 10-12% growth is expected near-term supported by government initiatives to boost consumption.

Consumer Behavior

Shift toward online shopping (15%+ growth) and demand for 'adjacent categories' like footwear and kidswear.

Geopolitical Risks

Not specifically detailed, but global supply chain disruptions could impact the sourcing of international brands like Tommy Hilfiger and Calvin Klein.

⚖️ Regulatory & Governance

Industry Regulations

Impacted by BIS (Bureau of Indian Standards) regulations on footwear, which previously slowed growth. Compliance with Ind-AS 116 for lease accounting significantly impacts reported Capital Employed (INR 1,554 Cr).

Environmental Compliance

Shifted 80% of corporate office electricity to renewable sources. ESG risks are monitored with a whistle-blower policy in place.

Taxation Policy Impact

The company opted for the new tax regime under Section 115BAA (25.17% rate), resulting in a one-time non-cash deferred tax asset (DTA) charge of INR 120 Cr in FY25.

⚠️ Risk Analysis

Key Uncertainties

Economic down-cycles impacting discretionary spend (potential 10% margin risk). Gestation losses from a high proportion of new stores could pressure PBILDT margins if LTL growth stalls.