Arvind Ltd is Rated Hold by MarketsMOJO

Current Rating and Its Significance

MarketsMOJO’s 'Hold' rating for Arvind Ltd indicates a neutral stance on the stock, suggesting that investors should maintain their existing positions rather than aggressively buying or selling. This rating reflects a balanced view of the company’s prospects, where strengths in certain areas are offset by challenges or uncertainties in others. The rating was revised on 24 November 2025, when the Mojo Score decreased from 74 (Buy) to 58 (Hold), signalling a more cautious outlook based on evolving market and company conditions.

Quality Assessment

As of 29 January 2026, Arvind Ltd maintains a good quality grade. The company has demonstrated healthy long-term growth, with operating profit expanding at an annualised rate of 35.42%. This robust growth trajectory is supported by strong operational cash flows, with the latest annual operating cash flow reaching ₹762.88 crores. Additionally, the company’s return on capital employed (ROCE) for the half-year period stands at a high 12.99%, reflecting efficient utilisation of capital to generate profits. These quality metrics underscore Arvind’s solid business fundamentals and operational strength within the garments and apparels sector.

Valuation Perspective

Arvind Ltd’s valuation is currently assessed as very attractive. The stock trades at an enterprise value to capital employed (EV/CE) ratio of 1.8, which is below the historical average valuations of its peer group. This discount suggests that the market is pricing the stock conservatively relative to its capital base and earnings potential. Despite the stock’s negative returns of -11.04% over the past year, the company’s profits have grown by 41.9% during the same period, resulting in a low price/earnings to growth (PEG) ratio of 0.5. Such a valuation profile may appeal to value-oriented investors seeking exposure to a fundamentally sound company trading below its intrinsic worth.

Financial Trend and Profitability

The financial trend for Arvind Ltd remains positive. The company reported a profit after tax (PAT) of ₹156.64 crores over the latest six-month period, reflecting a strong growth rate of 58.17%. This improvement in profitability is complemented by the highest recorded ROCE in recent periods, signalling enhanced capital efficiency. However, despite these encouraging financial results, the stock has underperformed the broader market benchmark, with a 12-month return of -12.10% compared to the BSE500’s positive 8.14% return. This divergence highlights a disconnect between the company’s improving fundamentals and market sentiment, which may be influenced by sector-specific or macroeconomic factors.

Technical Outlook

From a technical standpoint, Arvind Ltd is currently rated as mildly bearish. The stock has experienced downward price pressure in recent months, with a 3-month decline of 9.15% and a 6-month drop of 10.54%. The one-day change as of 29 January 2026 was -0.47%, indicating modest selling interest. This technical weakness may reflect short-term market caution or profit-taking, which investors should monitor closely. While the fundamentals support a positive medium to long-term outlook, the technical signals suggest a need for prudence in timing new investments.

Institutional Interest and Market Position

Institutional investors hold a significant stake in Arvind Ltd, with 35.82% of shares owned by entities with advanced analytical capabilities and resources. This level of institutional ownership often provides a stabilising influence on the stock and indicates confidence in the company’s underlying business model. Nevertheless, the stock’s recent underperformance relative to the market suggests that broader market dynamics or sector-specific challenges may be weighing on investor sentiment.

Summary for Investors

In summary, Arvind Ltd’s 'Hold' rating reflects a nuanced view of the company’s current position. The stock offers strong quality fundamentals and an attractive valuation, supported by positive financial trends and solid profitability metrics. However, the mildly bearish technical outlook and recent underperformance relative to the market temper enthusiasm. Investors should consider maintaining existing holdings while closely monitoring market developments and technical signals before initiating new positions. The current rating advises a balanced approach, recognising both the company’s strengths and the risks inherent in the prevailing market environment.

Performance Recap

Reviewing the stock’s recent price performance as of 29 January 2026, Arvind Ltd has experienced a 1-day decline of 0.47%, a 1-week drop of 1.87%, and a 1-month fall of 3.67%. Over the past three and six months, the stock has declined by 9.15% and 10.54% respectively, while the year-to-date return stands at -6.29%. The one-year return is negative at -12.10%, contrasting with the broader BSE500 index’s positive 8.14% return over the same period. This relative underperformance highlights the importance of considering both absolute and relative returns when evaluating the stock’s investment potential.

Outlook and Considerations

Looking ahead, investors should weigh Arvind Ltd’s strong operational metrics and attractive valuation against the current technical caution and market underperformance. The company’s ability to sustain profit growth and capital efficiency will be key drivers of future stock performance. Additionally, monitoring sector trends within garments and apparels, as well as broader economic conditions, will be essential for assessing risk and opportunity. The 'Hold' rating encourages a measured approach, favouring portfolio stability while remaining alert to potential catalysts that could shift the stock’s outlook.

Conclusion

Arvind Ltd’s current 'Hold' rating by MarketsMOJO, last updated on 24 November 2025, reflects a comprehensive evaluation of quality, valuation, financial trends, and technical factors as of 29 January 2026. For investors, this rating suggests maintaining existing positions with a cautious eye on market developments. The company’s solid fundamentals and attractive valuation provide a foundation for potential upside, but technical signals and recent price trends counsel prudence. This balanced perspective aims to help investors make informed decisions aligned with their risk tolerance and investment horizon.

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