Arvind Fashions (ARVINDFASN) Q2 24/25 earnings summary

Executive summary

• Achieved highest ever quarterly sales and EBITDA in Q2 FY25, with 8.5% revenue growth and 19% EBITDA growth year-over-year, despite muted demand environment.

• EBITDA reached a record ₹170 crores, up 18% year-over-year, with margin expansion of over 110 basis points due to cost control.

• PAT grew 37% to ₹30 crores compared to Q2 FY24, driven by higher sales and improved operating leverage.

• Direct channels (retail and online B2C) drove robust double-digit growth, while wholesale remained flat due to strategic pruning of low-margin points.

• Strategic investments in brand campaigns and premiumization led to new customer acquisition and market share gains.

Financial highlights

• Q2 FY25 revenue: ₹1,273 crores (Q2 FY24: ₹1,174 crores); H1 FY25 revenue: ₹2,228 crores (H1 FY24: ₹2,040 crores).

• EBITDA grew 19% to ₹170 crores, with margin expansion of over 110 basis points year-over-year.

• Q2 PAT: ₹30 crores (Q2 FY24: ₹22 crores); H1 PAT: ₹31 crores (H1 FY24: ₹9 crores).

• Inventory levels reduced by INR 100 crore year-over-year, with stock turns above 4x.

• Net cash from operating activities for H1 FY25 was ₹251.71 crore, a significant increase from ₹133.73 crore in H1 FY24.

Outlook and guidance

• Expect continued growth momentum in H2, supported by festival and wedding seasons.

• Committed to 15% annual retail square footage expansion, with accelerated store openings and format innovations.

• Targeting 100 basis points annual EBITDA margin improvement at company level, and 200 basis points for Arrow and Flying Machine.

• Aim to become debt-free in 2-3 years, prioritizing growth and debt repayment.

• Focus on scaling five core brands, expanding retail network (mainly FOFO), and driving profitability through cost optimization.