Good afternoon, everyone, and a very warm welcome to Arvind Limited's earnings call for the quarter ended December 2025. The financial results for the quarter and related presentations were uploaded to our website.

Hope you had time to go through it. Before we begin, let me introduce the leadership team with me.

Joining me today is Mr. Punit Lalbhai, our Vice Chairman; Mr.

Jayesh Shah, Whole-time Director and Group CFO; Mr. Gurpreet Singh Bhatia, CEO and President of AMD business; and Mr.

Nigam Shah, CFO of Arvind Limited. We will have the opening remarks by Punit, and then I'll take you through the financial performance, and then we'll go for questions.

I will now invite Punit to address you on the company's overall performance for the quarter and strategic path forward. Over to you.

Good afternoon, everyone. It's a pleasure to be here.

Thank you for being on the call. If I were to sort of summarize the quarterly performance in a nutshell, I would say that given the circumstances, we've had a reasonably good quarter.

There was growth on both the textile front and the advanced material front despite a very challenging trade environment, lots of geopolitical disruptions not just in the US, but also in South Asia and other parts of the world. I think the team has done a great job in driving or maintaining margins in the face of tariff-related discounts by good cost-saving initiatives.

Of course, macroeconomic conditions of the dollar, etc., have been favorable. Overall, we've been able to deliver a strong result.

I think the outlook is similarly cautiously optimistic. We have good demand, we should be able to continue the trajectory of the path that we are on currently.

We expect that the quarter four performance will be similar to quarter three. In terms of the challenges and opportunities, the challenge remains that we see this geopolitical volatility continuing.

I think on the opportunity side, both the UK and now very importantly the EU FTAs at least have been ratified, and there will be now of course the process of getting all the approvals at various levels of government on both sides. Sometime in the not too distant future, we should have duty-free access to this very important part of the world.

This will be a huge fillip for the entire apparel industry in India, but also for Arvind, because today it's one of the underrepresented segments in our overall portfolio, and there's great headroom to grow. Over the last 6 to 12 months, we've been having conversations with relevant customers to increase our presence in these markets.

We are looking forward to some growth there, and that will go a long way in derisking some of our US dependency. That's on the opportunity side as far as textiles and apparels goes.

On the advanced material side, we see enough momentum in the business to continue our 18% to 20% growth aspiration going forward. I think one other important update to give everyone is that our S&P 500 ESG score has been received for the last period, and there I'm happy to share that we have improved from 68 to 73, which puts us 6th in the world out of a participant number of 176 participants ranked, and it puts us ahead of 97% of the participants.

We are second in India. ESG is also a very important factor for our Europe-based customers.

It dovetails well with the FTA coming in, and it will help us go a long way. We are of course committed beyond an ESG score to achieving best-in-class performance on all things ESG.

With that, I close my general update. I'll see you again in the question-answer session, and I request Satya to take you through the details of the quarter.

Thank you, Punit. Let me share the key operational and financial highlight for the quarter.

Our denim fabric volume stood at 13.9 million meters, reflecting a growth of 16%, primarily driven driven by higher verticalization. Woven fabric volume came in at 36.7 million meters, marking a growth of 5%.

In garmenting, we have delivered our second consecutive quarter of 10 million pieces of full garment, representing 11% increase year on year. Coming to AMD division's performance, like Punit mentioned, as we have already guided and always guided, our growth aspiration for the advanced material division remains at over 20% on a CAGR basis.

However, this trajectory will naturally see some quarterly variability due to factors such as industry cycles and competitive dynamics. Accordingly, it it would be more appropriate to assess performance over a longer period of time rather than just expect uniform 20% growth every quarter, as illustrated by the current quarter results.

The division has reported revenue and EBITDA growth of 32% and 36% on account of a stellar performance across its subsegments. Revenue for the quarter stood at ₹2,373 crore, up 14% on a full year basis on a quarterly basis.

EBITDA for the same period stood at ₹286 crore, up 15%, achieved its first milestone of crossing 12% in terms of margin. This is the highest ever revenue and EBITDA reported by the company on a quarterly basis.

Profit after tax before exceptional items stood at ₹125 crores, reflecting a robust 17% year-on-year growth. Higher volumes and timely management action on costs helped us partially offset the tariff impact.

Excluding the tariff-related headwinds, our reported margins would have crossed a pre-designated trajectory of 13%, which remains fully aligned with our medium-term guidance. Textile division achieved a revenue of ₹1,717 crore, up 9%, with an EBITDA of ₹193 crore at a margin of 11.2%.

Garmenting division revenue at ₹493 crore, up 23%, backed by favorable product mix and better realization. AMD reported its highest ever quarterly revenue of ₹496 crore, just short of ₹500 crores, and EBITDA during the period reached ₹77 crore, a growth of 36%.

AMD EBITDA margin reached 15.5%, again on account of higher growth in more profitable segments and favorable operating leverage. Return on capital during the same period improved by 150 basis points to reach 16%.

This number is 19% if we adjust the EBITDA to normalize levels excluding one-offs and excluding the CWIP and capital employed. The company has spent about ₹348 crores in various road capex projects in the first nine months of FY26.

Coming on to the capital management, I'm pleased to share that our disciplined approach over the last several years have yielded another positive outcome. Arvind Advanced Material Limited, the entity housing our AMD business, has been rated AA rating with a stable outlook by India Ratings.

This is the highest rating achieved by an entity within the group and stands one notch above the rating of the parent company, Arvind Limited. This development underscores the strength of our business model, cash flows, and financial discipline.

Our consolidated net debt remains stable and broadly in line with March 2025 level. Our ability to remain agile, responsive, and customer aligned customer alignment has allowed us to navigate this uncertain times while continuing to deliver on our long-standing commitment on growth and value creation.

We continue to adapt to this changing landscape, and our performance over the past few quarters reflect the strength of this approach, guided by our long-standing values of partnership, discipline, and responsible decision-making. We remain focused on navigating volatility while consistently creating long-term value for our stakeholders.

With this, I request the operator to open the line for questions. Hello?

Thanks for the opportunity, sir. Sir, my first question is regarding the denim and woven segment.

In last two odd quarters, we have seen that denim exports and woven domestic business is continuously witnessing a double-digit sort of volume growth. What is driving this sort of growth and how sustainable it is in near to mid-term?

I think this reflects two things. One, on the denim side, it reflects the full capacity utilization.

For the first time in a long time, we have reached absolute full capacity utilization. I think if we are able to maintain this level of growth, it will be on volume.

If we are able to maintain this volume over the long term, I think that's a good objective to take. In terms of wovens, there is an impact also of product mix that keeps improving every year.

Some growth comes in terms of growth in realization, though of course if you look at realization, it is reasonably flat. That is because of then cotton price adjustments as well.

If you are correcting for raw material cost adjustment, I think our product mix in wovens has improved. I think in both segments, we should continue the product mix improvement journey going forward.

The capacity of course is finite, and once you hit 100% capacity, we are not aggressively investing in the fabric side of the business. We are only investing in innovation-based or differentiation-based capex and some debottlenecking capexes.

I think the growth we should look at is vertical growth, and I think the ability to fully utilize our denim fabric capacity has come because we have expanded our garment capacity in denim. That also reflects in the higher top line compared to last quarter or last few quarters, you will see an uptake in overall sales value of the garment piece.

That is coming because of a higher proportion of denim garments, which are higher FOB. I think the future growth should be seen vertically rather than thinking fabric and garment separate.

Got it. Just to reiterate this, we can expect some moderation into the volume growth, especially in these two subsegments, but your garmenting will continue to clock in a double-digit sort of growth.

Is the understanding correct?

Yes, broadly correct.

Noted, sir. Sir, my second question is follow-up to this.

This quarter, we have seen a decent sort of realization growth in your garmenting. As you highlighted, is just because of the product mix or is there something else as well?

Yes, it's product mix. It's mainly product mix.

There's another trend at play. We've produced more than we've sold, right?

We hit some cut-off related. I think quarter four, you will see the impact of that.

I think now we will see volume growth also going forward, plus I think the segment that has grown the fastest is denim. Then it will stabilize once we achieve the full, and we are close to now full utilization of our denim expansion.

There is still some upside left, after which we will become more steady state in terms of the product mix-related growth. The volume-related growth will keep continuing as new factories come online.

Noted, sir. Sir, my second question is on AMD.

Though the sir has highlighted that the 20% sort of CAGR will be possible in near to mid long term, but this quarter, is there any one-off because this is something extraordinary in terms of the growth rate?

No, I think it's project business, we had almost no defense orders for the first two quarters. A chunk of defense orders came in quarter two.

We had some good orders in the industrial and in composites, which were also chunky. That's why we've seen this growth.

I think overall, it's good to in our mind think that it will be around 18% to 20% if you look few quarters on average, and it will be this 14% to 15% EBITDA, even if we've had some very very profitable orders go out in Q3, we've exceeded that 15% mark on EBITDA as well. I think for long term, consistent growth over many quarters, we should consider 18% to 20% and 14% to 15% EBITDA.

That should be the thumb rule, and some quarters will be below that, some quarters will be better than that.

Got it. Sir, last question regarding the recent talk.

Yarn-side disruptions are getting a red flag into the Bangladesh. What can be the incremental opportunity does this create for the Indian market, and how Arvind is positioned to benefit from this?

It is both an opportunity and a risk. I think a destabilized Bangladesh is a risk, more a risk than an opportunity for us, because as our garment business is still relatively small compared to our fabric portfolio, Bangladesh is today an end market for our fabrics.

If there is disruption in the Bangladeshi market for whatever reason, it's not a great news for us. We want a stable Bangladesh.

That said, our business model is quite resilient. Over the last couple of years, we have reduced our dependency on Bangladesh, and almost all of our export denim used to go to Bangladesh.

Now it's fairly better distributed. Bangladesh is still important, but there are newer geographies where our denim is going.

To that extent, we are taking steps and have taken steps to reduce our dependence there. On the opportunity side, if it's only yarn that gets tariffed or taxed, then it's an opportunity because we are a net buyer of yarn.

We've hit some softness in price, and we should get advantage because of that. These are all gains or losses on the margin.

Our overall business model is quite resilient to all sorts of scenarios.

Got it, sir. Got it.

That's it from my end.

Thank you. Congratulations on good set of numbers, sir.

Few questions on macro. Just wanted to understand what is the progress on UK FTAs.

How are we leveraging the opportunity meanwhile till the time it gets operational?

I think the second question is the question that I will answer in detail. On the first part of the question, I think it's still in the process, and our corporate affairs team will know exactly where the process has progressed to, which we'll get back to you on, but it's in process, and generally these things take time.

All their previous FTAs also have taken upwards of a year to go from signing to being implemented, it is somewhere in that phase, and we'll get back to you on our opinion on that in writing. On the efforts, we are actually focused a lot on strengthening the teams.

We are hiring, and we are reallocating teams to these two new regions, and it's not just the UK. Now with EU, I think it's a really big deal for our industry.

All our competition has had duty-free access to both these geographies, and now suddenly we'll be on the level playing field from them. All countries, all customers are worried about overdependence on Bangladesh, and add to it all this instability, an election cycle coming up, conflict in the neighborhood, India suddenly starts looking much more attractive.

I think from a directional point of view, this is a big deal. The government has done a great job in fast forwarding this process, and we can look forward to some good growth as an industry in both these regions.

What are we doing? We are having conversations with customers, and we are reallocating a lot of internal marketing resources and sales resources to focus on these geographies so that we can build the pipeline before the implementation of the duty-free tariffs.

Understood. The second question on denim, you have been able to utilize your capacity to the fullest in the last two to three quarters.

Given the opportunity coming in garmenting with FTAs getting signed, do you think you will be allocating some expansion in denim or woven fabric also to expand capacity to support garmenting?

There's a lot of capacity available in the country and in the world. As we grow garmenting, we should tie up more and more capacities, and we will only invest if it's something that is unique in terms of capability or unique in terms of IP.

We don't want to grow our fabric footprint beyond a certain point, because we have a lot of work to do on growing the garment footprint, and we'd like to focus our financial and execution resources on a more robust vertical journey. Even at this current level, we are sub-20% verticalization, or just about approaching 20% now.

If we have a dollar to invest, it should be invested in garmenting, because garmenting is so much easier to sell, and all the customers want a vertical offering rather than selling fabric. The big opportunities in UK and EU, that whole market works on full package.

Nobody buys fabric in EU and UK. They only buy full package garment.

We have a lot of work to do in potentially growing up our garment. If I have a dollar to invest, I'll invest it in garmenting, and fabric I can get from various places.

There are so many good suppliers who can supply me fabric.

Understood, sir. Sir, now coming to garmenting, how has been the progress on improvement in margins in the garmenting, and what are your plans with respect to product expansions, like any new categories that you're planning to get into?

Because these are these markets commanding newer product category as well apart from your existing categories? Some color on that would really help.

Right now, I think our focus is on getting deeper in the categories that we have already opened. We have denim and knits, which are the two areas that are going to experience the most growth.

We also have shirts, but it's easier to sell fabric in wovens than any other place. Expansion there would be phase two.

Then phase three are the more aspirational categories of say activewear, where we've started a small facility, but there we have a lot of learning, and the market is starting from a smaller sort of addressable size than the other segments for us. Activewear and women's wear would be phase three.

Right now, we have a lot of work to do in phase one, which is growing denim and knits jersey, which is where the capacity expansions have been invested and currently being invested.

Understood. Sir, last question for AMD, superb growth in the quarter.

Could you help me understand whether it is from the split between domestic and export market in this growth?

We are at our usual, I think, 65-35 sort of mix in favor of exports. Not too different from previous quarters.

Understood, sir. Thank you, and I'll come back to the question queue.

All the best.

Thanks.

Hi, and thanks for taking my question. Congratulations on a very strong set of numbers on all fronts.

My first question would be on tariff-related discount impact. Last quarter, we called out this impact to be around ₹20, ₹23 odd crores.

This quarter, we are calling out a similar impact in terms of quantification, while last quarter was only partially impacted, probably 1, 1 and 1/2 month. This quarter, we have a full impact.

Why is there not increase? Have we scaled back our discounting, or am I missing something here if you can throw some?

I think most of the discounts got baked in fully. We were expecting perhaps we might have to pass on something extra this quarter, but it's now settled at this level.

It'll go a little bit up and down based on how the demand is sort of coming around and what level of patience the end consumer has. US, where we are still quite dependent directly with around 20% of our business on fabric, is where we look at where we can see some changes or not.

There is a lot of uncertainty around what exact tariff number will be looking forward. That number is always a placeholder.

Plus, the product cycles change. Once new products come in, then there is an online bidding process that brands have resorted to.

Instead of tariff, where there is a benchmark, you can ask for a discount. Where a new product is coming in for the first time, you don't have a benchmark.

Then you try and discover the lowest-price product. There's a lot of these things going on.

I would say this level of tariff, unless something changes or demand switches happen, we can expect good conservative assumption can be that it will be similar going forward till some trade deal happens with the US.

So ₹25 crores run rate for the quarter, full quarter?

I would think so. It can go up and down a little bit, but not significantly.

Sure, sure. Second question would be just a clarification on how are we placed on our garmenting expansions now that we also have EU FTA in our bag.

It's still early days, but if you can give us some ideas about how you're thinking about the expansions and what is our current nameplate garmenting capacity, any third-party capacity that is available for garmenting?

We do use third party very judiciously, because see, the compliance in our industry is a very important factor. We have created 55 million type of capacity, and that is moving towards the direction of 60, which we should complete over the next financial year.

That was the original plan, and I think the limitation is execution capability over and above rather than demand. I think demand is not an issue in garmenting at all.

If we are able to demonstrate good confidence in our execution, then in the context of EU, we can start to press the accelerator perhaps in the second half of next year. Till then, I would like to focus on this journey and ensure that we are doing a good job in reaching where we've committed to reach.

Sure. We have all the enabling resources in terms of land availability, etc.

No worries.

There are a lot of big factories that will come on stream. There is automation happening at the old factories.

We don't need to actually increase the footprint too much beyond the places where we've already begun. We have a Varanasi factory coming up.

We had a Bangalore facility that came up last year, which now is scaling up to full potential. Then we have automation in three of our existing facilities ongoing as we speak.

All this growth is going to come in this footprint only.

Sure. Thanks.

Thanks a lot. All the best.

Yeah. Thank you.

Thank you, sir. Most of the questions are answered.

One question actually just to your reply to one of the person that the worst condition of Bangladesh will be not good for India. Just to understand that when the minister is saying

No, no, no, that is a misunderstanding. In the short term, disruption in Bangladesh is not good for Arvind.

For India, it is a huge opportunity. I'm a patriot, I want India to grow.

I don't want Bangladesh to suffer also, but it's the short term because we have a high Bangladesh dependency today. Any disruption there can be a negative, right?

That's the limited point I was trying to make. It could be an opportunity on the yarn side because yarn prices will go down, but that's not good for India, because we have a lot of yarn capacity that has come up in India.

Sometimes, what is good for the whole industry and what is good for an individual player is not the same thing. In the long term, it is good for everybody that India develops its own garmenting capacity.

We have to take market share from all our neighbors, and we have been punching under our weight as an industry in the garment field, and we have to grow aggressively. I think now the government has done everything in its power to help us.

Now the ball is in the industry's court, and we have to bat on the front foot and become a world force in garmenting, and not be in competition with Bangladesh, but carve our own very impressive journey that can be much larger than what Bangladesh is today.

No, but if you see the yarn, for example, those are actually established with a view that no, which should be serving external market and particularly Bangladesh and other countries, majorly Bangladesh. In this context when Bangladesh facing it, don't you think that India should be thinking more inward, and because the minister is saying that no, India can capture the Bangladesh position very quickly.

If that was the case, then we should be developing more facilities in the RMG segments rather than thinking of again external supply chain issues like yarn should be supplied and more yarn things should be coming up rather than RMG. In the RMG, if you see in the listed space, adult segments hardly around 500 million

I completely agree with you that we should be doing the best to grow our garmenting industry. If we are successful in doing that, then we will not need to sell yarn to Bangladesh.

We can sell yarn to our own garment units and our own fabric units. I think the only question is that it takes time to set up all these capacities at that scale.

In the short term, there is already a dependency. I think in the long term, what you're saying is exactly what our government wants and what our industry should be working for.

Sir, the industry and the government are not at all in the same pace what we are

No, no, I don't think so. I think the government is doing a very good job.

I have a view that PM MITRA Park is coming. We're constantly improving on all reforms.

Our labor laws have undergone a great change from the very restrictive labor laws in the past. We have great policies at the state level to encourage investment, and now we have FTAs.

What else can the government do?

No, if you see the given the productivity difference between the Bangladesh and India, no to the tune of 50% labor productivity, definitely

No, no, no. I think there is no difference in labor productivity.

We only have an absenteeism, attrition, and availability problem where our garment sectors are. I think with PM MITRA Park, with automation, with digitization, I don't think Indian productivity is second to any in the world if done right.

I think it is up to our industry to solve those problems, and those solutions exist.

Sir, if you see in the industry, hardly around 500 million pieces of adult one of garment pieces or let's say around 300 to 400 pieces of million pieces of kids wear are there. It is not in the growing, and the individual companies are also dithering to expand.

Even in our case also, we are actually trying to build up the capacity by 5 million or 10 million pieces per year, not beyond that. How do you think that India will be able to cope up with the demand that is emerging out of the current situation when EU FTA things will be settled maybe after one year, EU and UK.

In that case, again another point is that the way the European Unions consider Bangladesh as underdeveloped countries and still they are ready to extend some sort of concessions. Don't you think that the industry is thinking something or let's say expecting some benefits from the government, which is not available in terms of maybe in the waste side or labor side.

That is what actually hindering the progress of building up the capacity in the RMG.

No, no, it's just we have to focus more as an industry. It's just that our textile industry, because of historical factors, has invested in the upstream, and this change takes some time, but I'm sure that in the medium term, we'll catch up.

This is my view on it.

Second, we are

Thanks.

Thank you for the opportunity. Congratulations on a great set of numbers in a challenging environment.

Just one question, this is more from the AMD perspective. Sir, is it possible for you to break the AMD performance into say what was our underlying volume growth, what was the currency-led benefit that was there, and what was the benefit because of the favorable product mix if you could break it up, sir?

That's a very complex answer to give on a call. Satya can I think send you that details offline, right?

It's a very sort of involved question that you've asked.

Sure, not a problem, sir. Thank you.

Yeah. Hi, sir.

Congratulations on a good set of numbers. Sir, my first question is on debt level, that what's your outlook on the debt level going forward?

Because currently the total debt is around ₹1,200, ₹1,300 crores. Do you expect this trajectory to broadly sustain, or is there any scope for further reduction in leverage over the medium term?

See, we are very comfortable on leverage, we are not worried about this level of leverage. I think we have enough cash flow to finance our growth without increasing the leverage ratio from this level onwards.

We don't want to sacrifice growth to further reduce leverage, nor do we want to take more leverage and increase risk. I think we are at the ideal mix, and this ratio should continue, and we should be able to manage all our growth ambitions keeping this ratio intact.

Okay. Sir, my second question is on working capital, what's your current working capital requirement as a percent of sales?

Assuming if our top line is around will be around ₹10,000 to ₹12,000 crores, then what level of working capital will be required, and how do you plan to fund this requirement?

We have to think about working capital turns, and we are at six six just above six times turns, which is a good level of working capital turns in the business, and that will continue. To that extent, the ratio of the leverage will remain the same, right, with the earning power provided our margins are broadly intact.

Okay. Thank you, sir.

Thank you very much.

Good afternoon.

Good afternoon.

Just I was looking on the breakup of our fabric sale. How much is exported directly, how much is domestic B2B, and how much is domestic B2C?

Now we have tied up with this Killer also.

That would still be domestic B2B. Broadly in our fabric business, it is slightly in favor of exports, but there is a big domestic component as well.

Out of the domestic component, it's about ₹1,000 crores of fabric and a little bit of Arvind branded ready-made, which happens in Arvind Store, is part of that ₹1,000 crore kind of revenue. B2C is about ₹1,000 crores now, which is our sale to over-the-counter fabric suppliers, our own Arvind Store, and a little bit online.

How much is Arvind Store?

Arvind Store and Arvind Store would be, it is about ₹30 to ₹40 crores a quarter.

About 120, 150 crores per year.

Yes, but that's primary sale,

right?

The secondary sale will be higher because that is

converted to garment.

No, it is sold by the franchise. Franchisee,

okay, okay. Second thing is intersegment is only ₹92 crores, correct?

Out of this quarter, out of ₹1,100 crores of fabric what we are making, only ₹92 crores is used for our own consumption. Garmenting, there is a big scope to grow it.

What is your view on that?

Yes, that is exactly why we are restricting our investment in fabric and increasing our investment in garmenting.

Only 10 less than 10% is being used in-house now, around 10%.

In terms of volume, it'll be higher. There are segments where it is a fabric-first business, and it will remain a fabric-first business.

We have to get to higher utilizations in specifically two segments, which are denim and knits, where the customer requires more verticality, and it is difficult to sell just fabric. Whereas in wovens, we have no urgency to increase garmenting because we have a lot of virtual vertical partners where we go together to the end consumer, and we have deep relationships with such people in Bangladesh, in Sri Lanka, some in Indonesia, some now starting in Africa, and some in India also.

We have those virtual verticals in place in the wovens division, the urgency to start our own garmenting there is not there. That will always be a low vertical integration.

Say in knits, we have already touched close to 50%, and that number has to go up. In denim, we are approaching that 20% mark.

Okay. Capex for FY27, it's still you had indicated around ₹400, ₹500 crores a year.

Are we still on track?

You should consider ₹400-ish plus minus 50, I think. Maybe plus 50 if things are going well.

Okay. Thank you very much.

Thank you.

Thank you.

Thank you once again everyone for joining the call today. We trust most of your questions are addressed.

Should you need any more assistance or any more explanations on the results today, please feel free to reach out to me and my colleague Himanshu. We are just a phone call or an email away.

We look forward to engaging with you in our upcoming engagement efforts. Thank you, and wish you a pleasant day ahead.