India’s premium fashion industry has been witnessing a structural shift towards brand-led consumption, driven by rising disposable incomes, aspirational demand, and the increasing relevance of global labels. Investors have started to take note of companies leading this transformation, especially those balancing growth with premiumisation and disciplined execution.
Arvind Fashions Ltd., with a market capitalisation of Rs. 7,660.71 crore, has been a key beneficiary of this trend. The stock opened at Rs. 564.65 today, after a previous close of Rs. 566.25, and touched an intraday high of Rs. 573.95, marking a 1.35 percent move from the previous close. Over the past six months, the stock has delivered an impressive 56.81 percent return, reflecting growing investor confidence in its strateg
About The Company
The company continues to sharpen its focus on premiumisation by scaling its portfolio of power brands, including U.S. Polo Assn., Tommy Hilfiger, Calvin Klein, Arrow, and Flying Machine. The strategy emphasizes full-price sales, stronger direct-to-consumer presence, and a shift away from aggressive discounting, particularly in the online B2B segment.
Q1FY26 Operational Performance
In the first quarter of FY26, the company delivered strong revenue growth on a year-on-year basis, supported by all-round channel performance. Retail like-to-like (LTL) sales growth stood at 8.1 percent, aided by superior execution.
Gross margins expanded by 60 basis points due to reduced discounting, while EBITDA grew 20 percent year-on-year to Rs. 148 crore. Despite higher advertising spends, EBITDA margins improved by 50 basis points.
Retail channel revenues rose 15 percent with strong LTL growth and lower discounting, while online direct-to-consumer business expanded more than 30 percent year-on-year. Wholesale sales also grew more than 10 percent year-on-year.
The company maintained stable net working capital days, with inventory turns steady at around 4x. During the quarter, 29 new exclusive brand outlets (EBOs) were added, taking total net retail area to about 12.32 lakh square feet. Adjacent categories such as footwear and accessories also registered growth of over 20 percent.
Channel Performance and Mix
Direct channels continued their strong outperformance. Retail revenue rose 15 percent, underpinned by 8.1 percent LTL growth, while online B2C jumped more than 30 percent year-on-year. Wholesale channels also rebounded, while EBO count stood at 987 as of June 2025 with a net addition of about 38,000 square feet.
Channel contribution during Q1FY26 was well diversified: Retail at 44 percent, Wholesale (MBOs and department stores) at 23 percent, Online B2C at 15 percent, and Online B2B and others at 18 percent.
FY26 Growth Priorities
The company aspires to grow revenues at 12-15 percent in FY26, with accelerated growth in adjacent categories. It expects operating leverage to aid expansion of EBITDA and PAT margins. Arvind Fashions plans continued advertising investments to strengthen market share, while focusing on direct channels for improved inventory control.
For the year, the company is targeting a gross addition of around 150 stores, largely through the FOFO model, with higher net square ft. addition compared to FY25. Management also aims for stronger free cash flow generation through disciplined working capital and an asset-light approach, along with further improvements in return on capital employed (ROCE).
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Brand-Specific Momentum
U.S. Polo Assn. registered exceptional growth across channels, supported by strong marketing investments and deeper penetration through larger marquee stores. Adjacent categories under the brand also continued to perform strongly.
Arrow benefited from favourable trading dates and a robust wedding season. Product innovation, particularly Arrow Elixir, along with traction in Arrow New York, helped attract younger consumers. The brand is also accelerating EBO expansion.
Flying Machine delivered strong retail LTL growth and curated product lines for department stores, positioning itself for improved financial performance over the coming quarters.
Tommy Hilfiger capitalised on its Formula 1 collaboration, which enhanced brand visibility and drove high LTL growth, while maintaining consistent execution standards. Calvin Klein continued to benefit from the premiumisation trend, posting industry-leading sell-throughs and LTL growth despite a challenging demand backdrop.
Analyst Perspective: Anand Rathi Report
A recent report by Anand Rathi, dated July 29, 2025, highlighted the company’s FY26 capex is projected at around Rs.1bn (Rs250m per quarter). Importantly, the company will remain focused on scaling its five core brands without diversifying into new businesses or acquisitions. Operating cash flows will support debt reduction and brand growth, with emphasis on maintaining inventory freshness.
A significant leadership transition was also announced. Amisha Jain will assume charge as Managing Director & CEO from August 13, 2025. She brings over 25 years of leadership experience across technology, consumer, and retail sectors, including her tenure at Levi’s.
Footwear remains a high-margin, high-growth adjacent category, with the company targeting a scale-up from Rs. 3bn to Rs. 5bn, delivering double-digit pre-Ind AS EBITDA margins. Management also plans to double Arrow and Flying Machine revenues over the next 3-4 years, supported by improving profitability.
Management reiterated its medium-term revenue growth guidance of 12-15 percent, with retail LTL in high single digits. Direct channels are expected to grow about 15 percent, while wholesale is likely to expand in high single digits. Arvind Fashions is targeting net retail area addition of 0.15 million square feet in FY26, through ~150 store openings.
The brokerage retained its “Buy” rating with a 12-month target price of Rs. 728. Based on today’s opening price of Rs. 513.50, this implies a potential upside of 41.78 percent.
Financial Snapshot
On a quarter-on-quarter basis, sales declined by 6.9 percent from Rs. 1,189 crore to Rs. 1,107 crore. Operating profit fell 16.4 percent from Rs. 159 crore to Rs. 133 crore. Profit before tax dropped 40.9 percent from Rs. 66 crore to Rs. 39 crore. However, the company turned profitable at the net level, reporting a Rs. 25 crore profit compared to a Rs. 72 crore loss in the previous quarter.
Year-on-year, the numbers paint a more positive picture. Sales grew 15.9 percent from Rs. 955 crore to Rs. 1,107 crore. Operating profit rose 14.7 percent from Rs. 116 crore to Rs. 133 crore. Profit before tax increased 62.5 percent from Rs. 24 crore to Rs. 39 crore. Net profit rose 78.6 percent from Rs. 14 crore to Rs. 25 crore, underscoring a strong recovery in profitability.
Outlook: With steady premiumisation, disciplined execution, and strong brand momentum, Arvind Fashions appears well placed to sustain growth across channels. While near-term challenges like seasonality and margin pressures remain, its long-term strategy and focus on direct channels position it as a potential value creator in India’s premium apparel space.
Written By Manan Gangwar
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