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Arvind Fashions Ltd. (AFL) continued to report revenue growth of mid-teens for 3rd consecutive quarter

ICICIdirect Research 22 Jul 2026 DISCLAIMER

News: Arvind Fashions Ltd. (AFL) continued to report revenue growth of mid-teens for 3rd consecutive quarter. It reported consolidated revenue growth of 15.5% YoY to Rs.1278.5cr. Mid teen revenue growth was driven by 18.1% YoY growth in retail business (LTL of 11.6%) and 39% YoY growth in online B2C business. LTL growth for the quarter stood at 11.6% in Q1FY27 vs 8% in Q1FY26 (LTL was at 7.8% in Q4FY26).. Gross margins witnessed 87bps YoY expansion to 56.7% led by full price sell through and reduced discounting. Higher gross margins and improving channel mix led to 43bps YoY improvement in EBITDA margins to 12.5% in Q1FY27. Consolidated EBITDA grew by 19.6% YoY to Rs.159.5cr. Depreciation continued to be higher (+15% YoY) led by continued store additions during the quarter. Interest cost was also higher 17.6% YoY. Other income halved to Rs.7cr in Q1FY27. Flow through of EBITDA to PAT was restricted due to lower other income and higher depreciation and interest cost. Adjusted PAT (after non-controlling interest) declined 21.2% YoY to Rs.10cr in Q1FY27. Reported PAT declined ~23% YoY to Rs.9.6cr (adjusted for discontinued business)

View: AFL continued to report strong performance led by consistent and robust execution across it D2C channels. LTL growth among 4 out of 5 brands remained strong during the quarter. US Polo and Flying Machine reported high-double LTL growth with US Polo’s share of revenues continued to increase in the portfolio. Tommy Hilfiger and Calvin Klien also continued their strong growth trajectory. Further adjacent categories continued to report mid-twenties growth of 25%+. The company continued to guide for 12-15% growth in revenues led by mix of strong brand wise performance and accelerated scale in adjacencies business while improving channel mix towards D2C channels and operating leverage will help the company improve its margin profile ahead. AFL also flagged cost pressures due to increased minimum wages and rising fuel cost and lower spends due to inflation in the near term. It has also taken cost efficiency measures to mitigate the same. We believe, with strong brand wise performance especially faster recovery in Flying Machine will help AFL sustain double-digit revenue growth trajectory ahead.

Impact: Positive

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