Arvind Ltd Q3 net down 30% to Rs 25 cr, textile business rebounds

Textile and branded apparel player Arvind Ltd has posted a 30 per cent dip in consolidated net profit, to Rs 24.91 crore for the third quarter ended December 31, 2020, from Rs 35.77 crore in the said quarter last year.

The company’s consolidated revenue from operations dipped nearly 19 per cent year-on-year in the quarter to Rs 1,514 crore, from Rs 1,869 crore in the corresponding period last year. Sequentially, however, the company’s consolidated revenue from operations rose 16 per cent in Q3 from Rs 1,305 crore in the second quarter ended September 30, 2020.

In its presentation to the stock exchanges, Arvind Ltd stated that its earnings were lower on account of the Covid-19 pandemic.

However, its business had returned to 80 per cent of October-December 2019-20 quarter with its margins too “almost fully” recovering.

For instance, Arvind Ltd’s textile business had bounced back despite rise in cotton cost and other raw material, led by cost management and modest price increases. On the other hand, its denim revenues recovered to about 81 per cent in Q3 with volumes being at 88 per cent amid an average price realization of Rs 184 per meter as compared to Rs 188 per metre a year ago.

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The quarter also saw its garment business stand at 89 per cent in terms of revenues along with 90 per cent volumes, especially those for jeans and knitwear recovering well. Whereas woven revenues stood at 66 per cent with 77 per cent volumes and a average price realization of Rs 146 per metre as against Rs 167 per metre last year. The company stated in its presentation that the business mix in wovens had shifted towards lower price point products.

Going forward, domestic demand is expected to continue its recovery momentum, with likely traction in key markets in European Union, UK and US depending on how the pandemic unfolds. The company stated in its presentation that it expected a cost push due to higher cotton, yarn and other input prices to keep pressure on margins even after increased price realization.

Meanwhile, Arvind Ltd. expected revenues to improve sequentially in Jan-Mar quarter, with earnings before interest, tax, depreciation and amortization (EBITDA) margins for textiles likely at 12 per cent and for advanced materials at 14 per cent. The company also expected its net debt to further reduce by about Rs 100 crore in the fourth quarter of current fiscal 2020-21.

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