Arvind's Q2 Beat! Textiles & Advanced Materials Shine, Target Raised to ₹538!

Arvind Limited announced its Q2 FY26 financial results, reporting in-line revenue and EBITDA. Profit After Tax (PAT) surpassed expectations, boosted by increased other income and reduced interest expenses. The Advanced Material Division (AMD) performed notably better than analysts' estimates, while the Textiles division met expectations.

Analysts forecast a stronger second half of FY26 (H2 FY26), driven by anticipated volume increases, renegotiated vendor contracts, and the start of order inflows in the AMD segment from the US. Investments in garments and AMD are poised to fuel growth, improve margins, and enhance Return on Capital Employed (ROCE). The company's export business remains attractive, supported by Free Trade Agreements (FTAs) and a resilient domestic market.

Projections suggest an EBITDA CAGR of 16.7% and a PAT CAGR of 21.9% from FY25 to FY28. Arvind is expected to generate ₹960 crore in free cash flow over the same period. Consequently, analysts have revised their Sum-of-the-Parts Target Price (SOTP-TP) upwards to ₹538 from ₹471, maintaining valuation multiples of 10x FY28E EV/EBITDA for textiles and 15x FY28E EV/EBITDA for AMD. Earnings estimates for FY27E and FY28E were marginally pared down by 3.1% and 2.9%, respectively, to reflect the current environment.

Key risks identified include potential demand slowdowns, US tariff overhangs, and sharp volatility in input costs.

Impact: This news significantly impacts Indian stock market investors, particularly those tracking the textile and advanced materials sectors. It provides crucial insights into Arvind Limited's financial performance, future growth drivers, and revised analyst valuations, which can influence investor sentiment and stock price movements. Rating: 7/10

Terms: * EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. A measure of operational profitability. * PAT: Profit After Tax. The net profit available to shareholders after all expenses and taxes. * AMD: Advanced Material Division. A business segment focused on high-performance materials. * H2 FY26: The second half of the fiscal year 2026, typically covering January to June. * CAGR: Compound Annual Growth Rate. The average annual growth rate over a period, accounting for compounding. * ROCE: Return on Capital Employed. Measures how effectively a company uses its capital to generate profits. * FTA: Free Trade Agreement. An international accord to reduce trade barriers between countries. * SOTP-TP: Sum-of-the-Parts Target Price. Valuation derived by adding the estimated values of a company's distinct business units. * EV/EBITDA: Enterprise Value to EBITDA. A valuation multiple used to compare companies.