Arvind Ltd Upgraded to Strong Buy on Robust Financials and Bullish Technicals

Quality Assessment: Sustained Operational Excellence

Arvind Ltd’s quality rating remains a cornerstone of its upgraded status. The company has demonstrated a healthy long-term growth trajectory, with operating profit expanding at an annualised rate of 41.04%. This robust growth is complemented by a strong return on capital employed (ROCE) of 12.99% for the half-year ended December 2025, marking the highest level in recent periods. Such figures underscore the company’s efficient capital utilisation and operational strength.

Profit after tax (PAT) for the latest six months stood at ₹217.14 crores, reflecting a 33.10% increase year-on-year. Additionally, the operating profit to interest coverage ratio reached 6.54 times, indicating a comfortable buffer to service debt obligations. These metrics collectively reinforce Arvind Ltd’s quality credentials, justifying the upgrade in its Mojo Grade from Buy to Strong Buy with a current Mojo Score of 81.0.

Valuation: Attractive Pricing Relative to Peers

From a valuation standpoint, Arvind Ltd presents a compelling case for investors. The stock trades at an enterprise value to capital employed ratio of just 2, which is considered very attractive within the textile and garments industry. This valuation discount relative to peers’ historical averages suggests that the market has yet to fully price in the company’s growth potential.

Moreover, the company’s price-to-earnings-to-growth (PEG) ratio stands at a modest 0.6, signalling undervaluation given its earnings growth rate. Over the past year, while the stock price has appreciated by 8.26%, the company’s profits have surged by 39.8%, highlighting a disconnect that investors may find favourable. This valuation profile supports the upgraded rating and indicates potential upside as the market re-rates the stock.

Financial Trend: Positive Momentum in Profitability and Returns

Arvind Ltd’s recent quarterly results for Q3 FY25-26 have reinforced its positive financial trend. The company reported a healthy uptick in operating profit and net earnings, with PAT growth of 33.10% over the last six months. This momentum is supported by a strong ROCE of 12.99%, which is among the highest in the sector, reflecting efficient capital deployment and profitability.

Institutional investors hold a significant 35.82% stake in the company, signalling strong confidence from sophisticated market participants who typically conduct rigorous fundamental analysis. This institutional backing often acts as a stabilising factor and can drive further price appreciation as these investors accumulate shares.

Comparatively, Arvind Ltd has outperformed the Sensex over multiple time horizons. For instance, its three-year return stands at an impressive 341.78%, vastly exceeding the Sensex’s 38.32% over the same period. Even over five years, the stock has delivered a 339.30% return versus the Sensex’s 67.51%, highlighting its long-term growth credentials.

Technicals: Shift to Bullish Momentum

The most significant catalyst for the upgrade has been the improvement in Arvind Ltd’s technical indicators. The technical grade has shifted from mildly bullish to bullish, reflecting stronger price action and momentum signals. Key technical metrics include:

• MACD on a weekly basis is bullish, although monthly remains mildly bearish, indicating short-term strength with some longer-term caution.
• RSI readings on both weekly and monthly charts show no extreme signals, suggesting room for further upward movement without being overbought.
• Bollinger Bands are mildly bullish weekly and bullish monthly, signalling expanding volatility in favour of upward price trends.
• Daily moving averages are firmly bullish, supporting the near-term price strength.
• KST (Know Sure Thing) indicator is bullish weekly but mildly bearish monthly, again reflecting short-term momentum gains.
• Dow Theory analysis shows mildly bullish trends on both weekly and monthly timeframes, reinforcing the positive technical outlook.
• On-balance volume (OBV) is bullish on both weekly and monthly charts, indicating strong accumulation by investors.

Despite a day-on-day price decline of 1.08% to ₹353.20 on 27 February 2026, the overall technical picture remains constructive. The stock’s 52-week range of ₹271.55 to ₹404.95 provides ample room for upside, especially given the positive momentum signals.

Comparative Performance and Market Context

Arvind Ltd’s performance relative to the broader market further validates the upgrade. While the Sensex has delivered modest returns over the short term, Arvind’s stock has outpaced the benchmark significantly over the medium to long term. For example, the stock’s one-month return of 18.64% dwarfs the Sensex’s 0.87%, and its year-to-date return of 11.44% contrasts with the Sensex’s negative 3.49%.

However, the stock’s one-week return was negative at -3.34%, compared to the Sensex’s -0.30%, reflecting some short-term volatility. This dip is not unexpected given broader market fluctuations but does not detract from the overall positive trend.

Longer-term returns remain impressive, with a ten-year return of 38.59% for Arvind Ltd, albeit below the Sensex’s 255.22%. This discrepancy is largely due to the company’s more recent growth acceleration, which has propelled its three- and five-year returns well above the benchmark.

Outlook and Investment Implications

The upgrade to Strong Buy by MarketsMOJO, reflected in the Mojo Grade improvement from Buy to Strong Buy, is a clear endorsement of Arvind Ltd’s improving fundamentals and technical outlook. The company’s strong financial performance, attractive valuation, and bullish technical indicators combine to present a compelling investment opportunity in the Garments & Apparels sector.

Investors should note the high institutional holding of 35.82%, which often correlates with greater stock stability and informed market participation. While short-term price fluctuations may occur, the medium- to long-term prospects appear favourable given the company’s operational efficiency and growth trajectory.

Overall, Arvind Ltd’s upgrade is well justified by a confluence of factors across quality, valuation, financial trends, and technical momentum, making it a stock to watch closely in the coming quarters.

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