Arvind Limited, one of the largest integrated textile and branded apparel players, reported an improved set of results for the Jan-Mar quarter, boosted by strong revenue growth.
Pretax profit rose by Rs 32 cr (29%) on year to 142 cr. This was also 57% higher compared to the preceding quarter.
Higher tax expenses (Rs 26 cr vs Rs 12 cr) restricted PAT to Rs 115 cr, up from Rs 98 cr last year.
The higher profitability was due to a 21% jump in operating revenue to Rs 2,990 cr from Rs 2,466 cr a year ago and Rs 2,708 cr in the preceding quarter.
However, expenses too grew almost as fast, especially non-operating items.
Against the 21% jump in revenue, profit from operations, or EBIDTA, rose by 29% to Rs 292 crore. The company ascribed this to “improved profitability in the brand business and strong growth in the engineering business.”
The strongest revenue growth was seen in branded apparels and ‘others’.
In branded apparel, revenue rose to 1,071 cr from Rs 840 cr last year, while in the mainstay textiles business, it rose to Rs 1,596 cr from Rs 1460 cr.
In ‘others’, revenue rose to Rs 245 cr from Rs 129 cr, with the unit also reporting an EBIT of Rs 10 cr against a lost of Rs 1.6 cr last year and a loss of Rs 14 cr in the preceding quarter.
Engineering products contributed Rs 25 cr to the EBIT compared to Rs 14 cr last year and Rs 10 cr in the preceding quarter.
EBIT improved in the branded apparel business to Rs 50 cr from Rs 14 cr a year ago and Rs 29 cr in the preceding quarter.
However, it was the textiles division that contributed two-thirds of the total EBIT, chipping in Rs 152 cr. This, however, was lower than the Rs 155 cr it had contributed a year ago and Rs 173 cr it had contributed in the preceding quarter.
Despite this, total earnings before tax and interest rose to Rs 225 cr from Rs 164 cr a year ago and Rs 187 cr in the preceding quarter.
“The fourth quarter was a good quarter for our business with strong growth in both revenue and margins on the back of sharp improvement in our brands business profitability,” said CFO Jayesh Shah.
He said the company saw “weak demand trends” in apparel industry especially towards the beginning of the quarter.
“However, demand started picking up in March and we expect similar growth trend to continue in the coming months.”
He said the textile business remains on “a firm footing” and delivered good results in line with expectations.
“While there have been shorter term challenges an account of reduction in duty drawback rates and other export incentives, the medium term outlook of the business remains strong,” he added.
He added that the process of demergering the various units of the company is proceeding as per expectations. “We expect the three companies to list separately within next 4-5 months,” he said.