Arvind (500101) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 saw a strong recovery with 14% year-over-year revenue growth to ₹2,188.31 crore, driven by robust volume increases across all business segments and the highest revenue in nine quarters.

• Garments achieved over 9 million units for the third consecutive quarter, with denim volumes at a nine-quarter high and all segments showing positive trends in volume, realization, and EBITDA.

• Margins remained stable, with EBITDA at ₹221 crore and an adjusted EBITDA margin of 10.6%, though profitability was impacted by higher deferred tax and air freight costs.

• Profit before tax increased 20% to ₹135 crore; adjusted profit after tax was ₹97 crore after accounting for a one-time deferred tax impact.

• Unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2024, were approved by the Board and reviewed by independent auditors with no material misstatements.

Financial highlights

• Consolidated revenue for Q2 FY25 was ₹2,188.31 crore, up from ₹1,921.73 crore year-over-year; standalone revenue was ₹2,022.88 crore.

• EBITDA (excluding other income) increased 7% to ₹221 crore; consolidated EBITDA for H1 FY25 was ₹303.75 crore.

• Consolidated net profit for Q2 FY25 was ₹62.77 crore, up from ₹51.22 crore year-over-year; adjusted PAT (excluding one-time tax) would have been ~₹97 crore.

• Textile Division revenue reached ₹1,633 crore with an EBITDA of ₹168 crore and a margin of 10.3%; Advanced Materials Division (AMD) reported revenue of ₹388 crore and EBITDA of ₹60 crore, with a margin of 15.3%.

• CapEx spend in H1 was ₹167 crore (standalone) and ₹244.62 crore (consolidated), about 40% of the annual plan, focused on garmenting, AMD capacity expansion, and sustainability initiatives.

Outlook and guidance

• Both Textiles and AMD divisions expect strong demand in H2, with Textiles likely to see all-time high demand rates and AMD targeting 18-20% growth for the nine-month period.

• Garmenting volumes are expected to be slightly below 40 million pieces for FY25, with a run rate approaching 60 million pieces targeted for the year after next.

• Margin expansion of 200 basis points is targeted over the next 1-2 years through automation, efficiency, and product mix improvements.

• Capex projects exceeding ₹400 crore are progressing as planned, and the company is undergoing a Scheme of Arrangement to transfer the AMD division to a wholly owned subsidiary.

• Operations at the Santej plant have normalized after a strike in Q1 FY25.