Arvind Ltd Shows Strong Financial Growth Amid Tariff Challenges

Arvind Ltd Reports Promising Financial Growth Despite Tariff Pressures In its latest earnings report for the second quarter of FY 2026, Arvind Ltd showcased significant financial progress, posting a consolidated revenue of ₹2,371 crore. This figure represents an 8.4% increase compared to the same period last year, underscoring the firm's solid performance amid ongoing challenges. Profit after tax saw an impressive jump of 70% year-on-year, amounting to ₹107 crore. The company's overall margins improved modestly by 40 basis points, bringing the total to 11%. Notably, the EBITDA rose to ₹262 crore, reflecting a 13% growth from the previous year. Volume and Margin Highlights Arvind’s textile division reported a nearly 10% margin, alongside the AMD division which achieved a 13.6% margin. This growth was supported by robust volume outputs, including 15 million meters of denim— the highest in recent years— and a woven division volume that reached 35 million meters. Additionally, the garmenting division produced 10.7 million pieces, setting a quarterly run rate of approximately ₹2,000 crore, growing at a rate of 15 to 18%. Strategic Developments and Future Plans In a strategic move, Arvind Ltd successfully demerged its AMD business into a wholly owned subsidiary, Irvin Advanced Materials Limited, a decision anticipated to further catalyze growth. The company is also pioneering sustainability with India's first supercritical CO2 dyeing facility, drastically cutting down on water, energy, and chemical consumption. Challenges Ahead Despite these achievements, Arvind Ltd faces hurdles related to high tariffs set by the US, which currently stand at 50%. These tariffs negatively affect profit margins, leading to a limited improvement in overall margins. The textile and AMD segments are particularly impacted, experiencing margin compression due to these external factors. The company has implemented a cautious approach, deferring certain non-critical capital expenditures to maintain liquidity flexibility. During the earnings call, Punit Lalbhai, Executive Vice Chairman, addressed specific queries about the tariff impact, revealing that AMD constitutes approximately ₹7 crore of the ₹23 crore total tariff impact. He emphasized that the company’s diversified business model, which includes both AMD and textiles, along with geographical diversity, helps in mitigating associated risks. Market Considerations Looking ahead, the company is refining its strategies to maintain market share despite these tariff challenges. Lalbhai stated that while there is an EBITDA margin impact, the firm is committed to margin expansion through strategic innovations and partnerships. Plans to tap into new markets such as Australia, the Middle East, and the UK are also underway, aiming to diversify Arvind’s market presence and reduce reliance on any single market. As for capacity growth, the Vanai facility is set to resume commercial operations by late Q1 or early Q2, with projections to increase garmenting capacity from 45 million pieces this year to 55 million next year. The firm is placing a strong emphasis on sustainability through a recycling initiative, ensuring that it remains proactive in adapting to future market dynamics. For a detailed view of the earnings call, the full transcript can be found here.