Arvind FY26: Record year, steady leverage improvement, and a big step into the US

Arvind Limited closed FY26 with a record set of consolidated numbers, even as it flagged tariffs, disruptions, and higher input costs as ongoing headwinds. The company reported revenue from operations of INR 9303 crore for FY26, up 12% year on year. EBITDA rose 15% to INR 1061 crore and the consolidated EBITDA margin improved to 11.4%, up 37 basis points. Profit after tax before exceptional items grew 21% to INR 444 crore.

Q4FY26 extended that momentum. Revenue from operations came in at INR 2553 crore, up 15% year on year. EBITDA was INR 327 crore, up 19%, and the quarter delivered the highest ever EBITDA margin of about 12.8%. PAT before exceptional items was INR 158 crore.

Beyond the headline growth, Arvind highlighted a meaningful improvement in free cash generation after capex. Net debt reduced by INR 112 crore to INR 1172 crore at March 31, 2026. Leverage indicators improved as well, with net debt to EBITDA reported at 1.0 versus 1.4 in FY25.

FY26 in numbers: higher scale, slightly better margins

Arvind’s FY26 narrative was built around two ideas: volume-led growth in Textiles and a strong rebound in Advanced Materials through the second half of the year.

The company said it achieved full year guidance on revenue, EBITDA and margin. It also noted that margin expansion was partly impacted by tariff, and it booked a one-time provision related to the new Labour Code. The presentation quantified this provision as INR 23.5 crore net of tax.

The company also reported an improvement in ROCE to 13.8% for FY26 versus 12.6% in FY25, and an increase in EPS to 15.8 from 13.5.

Segment performance: Textiles delivers scale, Advanced Materials delivers returns

Arvind’s segment reporting showed a familiar split: Textiles remains the largest business by revenue, while Advanced Materials contributes a smaller share but stronger profitability and return ratios.

For FY26, Textiles revenue (as presented in the segment table) was INR 6897 crore with EBITDA of INR 709 crore, implying an EBITDA margin of 10.3%. Advanced Materials revenue was INR 1839 crore with EBITDA of INR 277 crore, and a margin of 15.1%. The company also disclosed “Others” at INR 754 crore revenue and INR 75 crore EBITDA.

Textiles: volumes supported revenue growth

Arvind highlighted double digit volume growth across Denim and Garments in Q4. It also pointed to a favourable product mix and realisation gains that supported a 14% increase in both revenue and EBITDA in the quarter, with a margin maintained at 11.2%.

The operational data in the presentation showed that Denim volumes grew 19% in Q4FY26 versus Q4FY25, driven by higher exports, while garments volumes grew 13% in the quarter. For the full year, garments production stood at 41.6 million pieces versus 37.2 million pieces in FY25.

The company also noted that the garmenting division delivered its third consecutive quarter of 10 million plus pieces and crossed INR 2000 crore in annual topline.

Advanced Materials: record quarter and a stronger second half

Advanced Materials (AMD) delivered one of the clearest positives in the presentation. In Q4FY26, the segment reported record revenue of INR 546 crore and EBITDA of INR 95 crore, translating to 21% and 37% growth respectively versus Q4FY25. The EBITDA margin improved by about 200 basis points to 17.3%.

Management attributed the margin improvement to favourable product mix, operating leverage, and reversal of earlier expense provisions including tariff-related provisions made in the previous quarter.

For the full year, AMD revenue rose 19.1% to INR 1839 crore and EBITDA increased to INR 277 crore. The segment’s ROCE was reported at 28.8% for FY26. The presentation also stated that the segment achieved the guided growth trajectory of 18 to 20% supported by better performance in the second half.

Balance sheet and leverage: debt metrics moved in the right direction

On the balance sheet, Arvind reported closing cash and cash equivalents of INR 284 crore at March 31, 2026 versus INR 117 crore in the prior year. Total borrowings (long term plus short term) were INR 1441 crore, with lease liabilities of INR 219 crore. Shareholders’ funds increased to INR 4141 crore.

The key message from management was that net debt reduced by INR 112 crore due to improved free cash generation. That improvement also flowed through to leverage ratios, with net debt to equity at 0.26 and net debt to EBITDA at 1.0.

The strategic pivot: Dalco-GFT acquisition takes Advanced Materials into the US

One of the most significant strategic developments mentioned in the FY26 presentation was Arvind’s entry into the US market through the acquisition of Dalco-GFT via its wholly owned subsidiary AAML. The enterprise value was disclosed at about USD 136 million.

The separate investor call transcript on the deal added operational and financial details. Management described Dalco-GFT as a company established in 1988 with two manufacturing units in South Carolina and North Carolina. It stated that capacity is 75 million pounds and utilisation is around 85%.

Arvind disclosed that it acquired a 61% stake in Dalco-GFT at a valuation of 7.75 times CY2025 reported EBITDA. Management stated the deal is margin accretive and EPS accretive at the Arvind consolidated level.

Funding was described as a combination of debt at both AAML and the target company to optimise taxation in both geographies. On the call, management indicated the US debt cost was around 5.5% based on SOFR at that time, while AAML debt cost was around 6%. It also stated the intent is to pay down debt over the next couple of years.

Operationally, the management commentary positioned Dalco-GFT as a needle-punch nonwoven technology business, adjacent to Arvind’s filtration capability. The stated logic was speed and scale: management suggested building such scale organically would take close to a decade. Arvind also emphasised a low-touch integration approach, retaining the existing management team and avoiding disruptive restructuring.

FY27 outlook: growth with a near-term margin caution

For FY27, Arvind’s outlook remained constructive but balanced. On demand, the company stated that while the global trade environment remains uncertain amid disruptions, demand for Textiles and Advanced Materials has stayed resilient. It also said the order book is at healthy levels with a robust inquiry pipeline for the upcoming season.

The company expects to grow at double digits, supported by high double digit growth in Advanced Materials and mid teen growth in Garments. However, it cautioned that demand could face disruption in the second half due to inflation and other global uncertainties impacting discretionary consumption.

On margins, Arvind guided that sharp input cost increases could put pressure on profitability in H1FY27, with recovery expected in H2 subject to easing geopolitical tensions.

Capex guidance for FY27 was INR 450 to 500 crore, focused on growth-oriented capex across Garmenting and Advanced Materials, funded within the free cash flow envelope. The company also clarified that the FY27 outlook does not include the financial impact of consolidating the newly acquired Dalco-GFT.

Takeaways

Arvind’s FY26 performance reflected stronger scale and incremental margin expansion, with notable improvement in leverage metrics and net debt reduction. Textiles delivered volume growth, while Advanced Materials delivered the guided rebound and continued to show stronger margin and ROCE characteristics.

The Dalco-GFT acquisition is the most important strategic update around Advanced Materials, giving Arvind a direct manufacturing footprint in the US in a technology platform it claims to know well. FY27 guidance points to continued growth, but also signals that input costs and geopolitical uncertainty will shape near-term margins.