Motilal Oswal Assigns Target Price of Rs 620 for Arvind Fashions

Motilal Oswal Maintains BUY Rating for Arvind Fashions

Arvind Fashions (AFL) concluded its fiscal year 2026 on a strong note, with a 4Q/FY26 like-for-like (LFL) growth of 8%. This growth was primarily driven by the robust performance of its US Polo and Flying Machine brands. The company's online business-to-consumer (B2C) sales saw a significant increase of 46% year-over-year (YoY) in the fourth quarter, with a corresponding growth of 48% in the fiscal year 2026.

The company's focus on its owned channels has led to a substantial increase in direct-to-consumer (D2C) mix, rising by 340 basis points to 56.8%. This strategic move has further contributed to the expansion of the company's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin by approximately 50 basis points YoY to 13.9% in the fourth quarter. This expansion in EBITDA margin has driven a 19% growth in EBITDA to INR1.9 billion.

AFL's Attractive Valuation and Reiteration of BUY Rating

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Despite similar profitability, Arvind Fashions currently trades at an attractive price-to-earnings ratio of approximately 36 times its estimated profit after tax (PAT) for fiscal year 2027. This is in contrast to its peer, ABLBL, which trades at a significantly higher price-to-earnings ratio of approximately 47 times. Motilal Oswal maintains its BUY rating for Arvind Fashions and has revised its share price target to INR620, based on a sum-of-the-parts (SOTP) valuation.

Note: The table above presents a comparison of the price-to-earnings ratios of Arvind Fashions and ABLBL for fiscal year 2027.