Buy Arvind; target of Rs 700: Emkay Global Financial

Moneycontrol • 3 days ago

Original source

Key Investment Pillars

  • Arvind's textile segment led the outperformance, with EBITDA 23% above estimates, driven by fabric realization rise and cost pass-through.
  • Advanced Materials (AMB) segment grew 81% yoy, with India business up 23% yoy, driven by human protection and industrials.
  • Management guided for 15% garment revenue growth in FY27, with denim capacity near full and plans to add fabric capacity.
  • Arvind has a strong order book in the US and expects benefits from the UK FTA.

Thesis Validation Checklist

  • Watch for sequential margin recovery, driven by favorable seasonality and trade policies.
  • Monitor expiry of RoDTEP/RoSCTL schemes and its impact on margins.
  • Track growth in AMB India and garment revenue.
  • Observe capacity utilization and expansion plans. Arvind's growth is driven by its textile and AMB segments, with a strong order book and favorable trade policies. Investors should watch for margin recovery, scheme expiry impact, and growth in key segments.