01 — At a Glance
The Apparel Comeback That’s Actually… Happening?
- Q3 FY26 Revenue (₹ Cr)1,377
- YoY Revenue Growth+14.5%
- Q3 EBITDA (₹ Cr)195
- EBITDA Margin %14.2%
- PAT (₹ Cr) ex. One-time44
- Book Value (₹)74.3
- Price to Book5.17x
- ROCE (Latest)16.9%
- ROE 3-Year Avg3.11%
- Promoter Stake35.1%
The Setup: Arvind Fashions was the stock your broker recommended when they ran out of sensible ideas. U.S. Polo kept growing but nobody else was listening. Now suddenly — double-digit growth in the worst consumer environment since 2008, EBITDA up 18% YoY, PAT excluding one-time charges up 65% YoY, and the stock down 32.5% in the calendar year. Indian equities in a nutshell. The company bought back Flipkart’s stake in Flying Machine for ₹135 crore. Spoiler: nobody asked for this, but it’s happening anyway.
02 — Introduction
The Brand You Didn’t Know You Needed. For Every Festival Season, Ever.
Arvind Fashions is what happens when a 100-year-old textile family looks at the fashion market and decides, “Maybe we’ll just buy everyone’s brand and see what sticks.” It’s part of the Lalbhai group — the Ahmedabad people who also run Arvind Limited, a textile behemoth that makes the fabric your U.S. Polo shirt is made from (and then sells you the finished shirt at the retail end). It’s vertical integration, or — as your grandmother calls it — “Apne hee noi hain to kya karoge?”
The portfolio is a who’s who of global brands: U.S. Polo Assn. (the growth engine), Tommy Hilfiger (the premium play), Calvin Klein (the hope-to-God bet), Arrow (the turnaround charity case), and Flying Machine (the Gen Z reinvention nobody asked for). In Q3, they exited the discussion about whether anyone would buy Flying Machine from Flipkart by simply… buying it back themselves for ₹135 crore. That’s the sound of a company that’s either very confident or has zero respect for shareholder capital. Could be both.
Q3 FY26 revenue hit ₹1,377 crore, up 14.5% YoY — the highest growth “in several years,” per management. EBITDA climbed 18% YoY. PAT (stripping out the one-time Labour Code charge) jumped 65%. The concall was genuinely upbeat. The stock tanked 32.5% year-to-date anyway. Welcome to fashion retail, where numbers mean nothing and the colour of the season’s palette is apparently more important than earnings growth.
The Concall Says: Management framed Q3 as “demand environment was stable” with “reasonably confident” growth momentum into Q4. They’re also targeting online sales to reach 25–30% of revenue in the medium term (currently ~24%). Flying Machine will launch its dedicated D2C platform (flyingmachine.com) in FY27. This is investor-speak for “we’re praying Gen Z shows up.”
03 — Business Model: Premium Brands. Fashion Cycles. Prayers to Durga Mata.
Selling Dreams (And Occasionally, Shirts)
The business is elegantly simple: import licences for global brands (U.S. Polo, Tommy Hilfiger, Calvin Klein), own brands (Flying Machine, Arrow — kind of), then distribute through a network of ~977 exclusive brand outlets (EBOs), ~9,000 multi-brand outlets (MBOs), department stores, and online. Revenue splits roughly 43% retail, 28% wholesale, 29% online-and-others. They’ve built a “Club A” format (all brands under one roof), “Stride” (footwear), and “Megamart” (outlets). It’s omni-channel with a dash of desperation.
The historical grind: company earned almost zero return for five years (ROE averaged 3% per annum), exited five loss-making brands (Gap, Sephora, Hanes, Ed Hardy, The Children’s Place), and watched U.S. Polo drag the entire portfolio up the stairs single-handedly. Now, post-refocus, the plan is straightforward — U.S. Polo leads, Tommy Hilfiger holds, Calvin Klein compounds, Arrow turns around, and Flying Machine becomes… something. Management’s words: “Gen Z-focused unisex fashion brand anchored in on-trend expression with denim at its core.” Translation: they have no idea what Flying Machine is, but the Gen Z part tested well in focus groups.
The concall revealed that U.S. Polo grew at over 25%, with premiumization working and store-level productivity (LTL) at 11%. D2C is now 63% of sales, up 260 bps YoY, with an aspiration to reach 75%. Online B2C is the new religion, up ~50% in Q3. Arrow, the formal wear anchor, grew in “early single digits” due to supply chain hiccups from Bangladesh. But here’s the kicker: management says Arrow is now profitable post-Ind AS and could hit mid-single-digit EBITDA margins within a year. Spoiler: we’ll believe it when we see the numbers.
💬 Real talk: Have you ever bought from U.S. Polo or Arrow? Or are they brands that exist only in traffic jams on airport roads?
04 — Financials Overview
Q3 FY26: The Numbers. (Yes, They’re Real.)
Result type: Quarterly Results | Q3 FY26 EPS: ₹1.91 | Annualised EPS (Q3×4): ₹7.64 | Full-year FY25 EPS: ₹-1.33 (negative due to one-off)
| Metric (₹ Cr) |
Q3 FY26
Dec 2025 |
Q3 FY25
Dec 2024 |
Q2 FY26
Sep 2025 |
YoY % |
QoQ % |
| Revenue | 1,377 | 1,203 | 1,418 | +14.5% | -2.9% |
| EBITDA | 195 | 165 | 187 | +18.2% | +4.3% |
| EBITDA Margin % | 14.2% | 13.7% | 13.2% | +50 bps | +100 bps |
| PAT (Reported) | 36 | 47 | 56 | -23.4% | -35.7% |
| PAT (ex. one-time) | 44 | N/A | N/A | +65% vs Q3 FY25 normalized | — |
| EPS (₹) | 1.91 | 2.00 | 2.81 | -4.5% | -32.0% |
The Real Story: Revenue growth of 14.5% YoY is solid. EBITDA +18% is better. But reported PAT is down 23% because the company took a ₹29 crore one-time Labour Code provision. Strip that out, and PAT grew ~65%, which is what management keeps emphasizing on the concall. QoQ revenue dipped 2.9% because Q2 had an extra week (52 vs 13 weeks), but sequentially, this is tracking fine. The real concern: ROCE is 16.9%, which is fine-to-decent but nowhere near the “premium brand” levels of Trent (30.7%) or Vedant Fashions (25.9%). P/BV at 5.17x is expensive for a company earning 16.9% ROCE.
05 — Valuation: Is This a Bargain or a Trap?
Fair Value Range
