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Target: ₹538 CMP:₹329.15 Arvind reported in-line revenue and EBITDA in Q2FY26, while PAT outperformed on account of higher Other income and lower interest cost. The advanced material division (AMD) outperformed our estimates while textiles was in line. In our view, H2-FY26 is set to be stronger, led by better volume, renegotiated vendor contracts and order inflows beginning in the AMD segment from the US. We pare down our earnings by 3.1 per cent for FY27E and 2.9 per cent for FY28E adjusting to the current environment. We are positive on long-term prospects. Investment in garments and AMD should drive growth and improve margin & ROCE, as exports remain attractive, led by signing free trade agreements (FTA) with key countries and a resilient domestic market. We expect an EBITDA CAGR of 16.7 per cent and a PAT CAGR of 21.9 per cent during FY25-28. Arvind is set to post a free cashflow of ₹960 crore during FY25-28E. We raise our SOTP-TP to ₹538 from ₹471 on 10x (unchanged) FY28E EV/EBITDA for the textiles segment, and 15x (unchanged) FY28E EV/EBITDA for AMD based on our 2-3 per cent revised earnings estimates by FY26-28E. Key risks include demand slowdown, US tariff overhang and sharp volatility in input cost. Published on November 10, 2025
