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Motilal Oswal Report
Domestic brokerage firm Motilal Oswal has reiterated its Buy rating on Arvind Fashion with an SOTP-based target price of Rs 680, implying a potential upside of 58% from the current market price of Rs 430 on better growth, higher returns, and lower valuation. The brokerage models 12%/16%/20% revenue/Ebitda/PAT CAGR over FY26-29E.
Motilal Oswal highlighted that Arvind Fashion is delivering steady operating momentum, with performance reflecting strong execution across retail, online, and brand portfolios despite a subdued demand environment.
Growth is increasingly led by direct channels, improving mix, and supporting margin expansion through better sell-through and tighter inventory control.
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Aditya Fashion outpaced Aditya Birla Lifestyle Brands on growth, with revenue rising 14% vs 7%, while also delivering higher RoIC (24.1% vs 17.3%) and Pre-Ind AS Ebitda margin (8.6% vs. 7.7%), despite a ~500 bp lower gross margin and 4.2% royalty burden, highlighting better cost absorption and capital efficiency.
Despite the stronger earnings profile, Arvind Fashion trades at ~11x EV/Ebitda and 26x FY28E EPS, a 20–30% discount to Aditya Birla Lifestyle (14x/37x).
Unlike the earlier earnings profile, where profitability was largely supported by the PVH JV, USPA has now emerged as the primary growth and profitability driver. The brokerage believes the current valuation does not fully reflect this shift.
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