Motilal Oswal has issued a buy rating on Arvind Fashions with a target price of ₹500 in its research report dated November 03, 2026. According to the brokerage firm's assessment, the company demonstrated strong operational performance in the second quarter of FY27, with revenue growth of 10% year-on-year supported by robust retail execution and strategic business model shifts. Despite recent earnings miss, the brokerage maintains confidence in the company's long-term prospects.
The company sustained double-digit growth in Q2FY27, with revenue increasing 10% YoY (approximately 15% adjusted for festive season). As reported by Motilal Oswal, this growth was driven by strong retail execution, lower discounting strategies, and broad-based brand performance across the portfolio. The retail like-for-like (LTL) growth reached 7.3% (approximately 10% adjusted), contributing to overall retail growth of 15.4%. However, recent earnings call transcripts reveal the company missed Q2 2026 estimates, with stock performance reflecting investor concerns about the quarterly results.
The company achieved significant margin expansion during Q2FY27, with EBITDA excluding other income reaching ₹216 crores versus ₹187 crores in the previous year, representing a 67 basis points improvement and 15.5% growth in absolute terms. PAT came in at ₹48 crores versus ₹37 crores in Q2 last year, marking a 29% growth. On a pre-Ind AS basis, EBITDA and PAT grew by 18% and 38% respectively, demonstrating strong operational leverage. The focus on cost optimization and strategic investments in marketing contributed to these improved profitability metrics.
Online B2C sales demonstrated exceptional performance with 28% growth during the quarter, according to Motilal Oswal's analysis. The company's direct channels contributed 53% of total revenue, representing an increase of 380 basis points year-on-year. This shift toward direct-to-consumer (D2C) channels supports the company's strategy to move toward a higher-margin business model. Recent earnings call transcripts confirm the D2C engine continues to perform strongly, reinforcing the company's successful channel diversification strategy.
The company maintained stable working capital management with GWC days at 157 days, unchanged from the previous quarter closing. NWC days remained flat at 65 days, indicating effective inventory and receivable management. While inventory days have increased, this was offset by a corresponding decline in receivable days, maintaining overall working capital efficiency. This stable working capital position supports the company's ability to fund growth while maintaining financial flexibility.
