Summary
Arvind Fashions Limited - Q3 FY 2026 Earnings Call Summary Thursday, January 29, 2026 12:30 P.M. IST
Event Participants
Executives 3 Amisha Jain (MD & CEO), Girdhar Kumar Chitlangia (CFO), Kulin Lalbhai (Vice Chairman)
Analysts 8 Andrey Purushottam, Ashutosh, Avinash K, Kaustubh Pawaskar, Niraj, Palash Kawale, Pooja, Priyank, Shreyans J
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue (NSV) | ₹1,377 crores | +14.5% YoY, driven by healthy LTL growth and robust online B2C performance. |
| EBITDA | ₹195 crores | +18% YoY; growth fueled by gross margin expansion and operating leverage. |
| EBITDA Margin | 14.2% | +40 bps YoY; expansion achieved through better channel mix and cost efficiencies. |
| Adj. PAT | ₹44 crores | +65% YoY (adjusted for one-time wage code charge); reflects strong operational flow-through. |
| LTL Growth | 8.2% | Driven by U.S. Polo Association (+11%) and Flying Machine (+17%) in retail channels. |
| Gross Margin | ~53.3% | +50 bps YoY; improved via sourcing efficiencies, premiumization, and lower discounting. |
| Net Square Feet | 1.5 lakh sq. ft. | Targeted annual addition for FY26; 41,000 sq. ft. added in Q3 alone. |
Geographic & Segment Commentary
- U.S. Polo Association (USPA): The brand grew 25% YoY, crossing a ₹2,000 crore run rate, led by 11% LTL growth and strong traction in adjacent categories like footwear and kids. Management credited product elevation and premiumization for sustaining demand despite a high base.
- Flying Machine (FM): Reacquired a 31.25% stake from Flipkart to reposition it as a Gen Z-focused unisex brand. Recorded 17% LTL growth in stores and 40% growth in B2C online, with plans for a dedicated D2C platform in FY27.
- PVH Brands (Tommy Hilfiger/Calvin Klein): Performance was temporarily impacted by the GST rate hike (12% to 18%) and supply chain issues. Sales have since stabilized, with PVH remaining a key contributor to the premium portfolio.
Company-Specific & Strategic Commentary
- Direct-to-Consumer (D2C) Pivot: D2C channels (Retail + B2C Online) now account for 63% of total sales, a 260 bps increase YoY. The company targets a 75% D2C share long-term to improve pricing control and customer data intelligence.
- Online B2C Strategy: Online B2C grew nearly 50% YoY, representing 17% of total sales. This shift away from B2B marketplaces has improved channel margins and allowed for better control over discounting.
- Adjacent Categories: Footwear, innerwear, and kids grew in excess of 20%, now contributing roughly 25% of the total portfolio. Footwear recovered strongly following the resolution of BIS norm disruptions.
- Operating Leverage: Management highlighted that EBITDA is growing faster than revenue (18% vs 14.5%) as fixed costs stay stable while LTL productivity increases.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Revenue Growth | 12% - 15% (FY26/27) | Confident in maintaining current double-digit trajectory led by D2C and retail expansion. |
| Retail Expansion | 1.5 lakh sq. ft. (FY26) | Focus on top-tier cities and improving “size of the box” for better consumer experience. |
| Flying Machine | EBITDA Breakeven (FY27) | Expected to reach profitability within 2-3 quarters as the new Gen Z strategy matures. |
| Inventory Turns | 3.8 to 4.0 turns | Management expects inventory levels to normalize post-mitigation of Bangladesh supply risks. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical/Supply Chain | 15% of product sourcing is from Bangladesh; management increased inventory in Q3 to derisk against election-related disruptions. |
| Regulatory/Taxation | The GST increase from 12% to 18% on premium apparel caused initial “sticker shock” and volume blips in the PVH portfolio. |
| Segment Profitability | Flying Machine remains a work-in-progress and is currently 2-3 quarters behind Arrow in its turnaround journey to EBITDA profitability. |
Q&A Highlights
Growth Drivers in USPA
- Question: What drove 25% growth in a ₹2,000 crore brand? (Avinash K)
- Answer: Growth was fueled by product elevation, premiumization, and high-performing adjacencies (innerwear, footwear, kids) all growing 25%+, along with 50% growth in online channels (Amisha Jain).
Flying Machine Strategy
- Question: How long until Flying Machine adds materially to growth/profit? (Kaustubh Pawaskar)
- Answer: Brand is being repositioned for Gen Z with a unisex focus. Green shoots are visible (17% LTL growth), and it should reach mainstream growth and EBITDA breakeven in 2-3 seasons (Amisha Jain/Girdhar Chitlangia).
Operating Leverage & Margins
- Question: When will gains come from operating leverage rather than just gross margin? (Priyank)
- Answer: EBITDA is already growing faster than revenue (18% vs 14.5%). Leverage is coming from sourcing scale, high LTL productivity against fixed store costs, and controlled corporate overheads (Amisha Jain/Kulin Lalbhai).
Inventory Levels
- Question: Why has inventory grown faster than revenue? (Tejash Shah)
- Answer: This is a conscious, transitory buildup to derisk 15% of sourcing coming from Bangladesh due to local elections. Inventory freshness remains at an all-time high (Girdhar Chitlangia).
Key Takeaway
Arvind Fashions Limited delivered a robust Q3 FY26, characterized by 14.5% revenue growth and an 18% jump in EBITDA, marking its highest YoY growth in several years. The performance was anchored by the flagship U.S. Polo Association brand, which grew 25%, and a strategic pivot toward Direct-to-Consumer (D2C) channels, which now represent 63% of the business. Strategic reacquisition of the Flying Machine stake highlights a shift toward Gen Z youth fashion, aiming for EBITDA breakeven by FY27. Despite macro-headwinds like GST hikes affecting premium brands and supply chain risks in Bangladesh, the company maintained a healthy 8.2% LTL growth and expanded margins by 40 bps through premiumization and sourcing efficiencies. Management remains confident in sustaining a 12-15% growth trajectory while focusing on profitable scale and inventory normalization.
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