India Ratings and Research (Ind-Ra) has assigned a rating of IND AA/Stable/IND A1 to Arvind Advanced Materials Limited's (AAML) bank loan facilities worth INR 5,850 million. This rating reflects the strong strategic and operational linkages between AAML and its parent company, Arvind Limited.

Key Highlights

• Rating Assigned: IND AA/Stable/IND A1
• Facility Amount: INR 5,850 million
• EBITDA Margin: 14.34%

Factors Supporting the Rating

1. Strong Parent Company Support: AAML benefits from its strong strategic and operational linkages with Arvind Limited, a well-established player in the textile industry.

2. Healthy Business Profile: The parent company, Arvind Limited, demonstrates a robust business profile, which positively influences AAML's rating.

3. Comfortable Financial Metrics: Both AAML and its parent company maintain comfortable financial metrics, contributing to the strong rating.

4. High Value-Added Product Portfolio: AAML's focus on high value-added products has resulted in an EBITDA margin of 14.34%.

Financial Performance

To provide context on the financial strength backing this rating, let's look at some key financial metrics of Arvind Limited (consolidated):

The financial data shows a growth trend across key metrics, indicating a strong financial foundation that supports the assigned rating.

Implications for Investors

The IND AA/Stable/IND A1 rating suggests that AAML's bank loan facilities have a high degree of safety regarding timely servicing of financial obligations. This rating could potentially lower borrowing costs for AAML and may be viewed positively by investors and stakeholders.

As the textile industry continues to evolve, AAML's strong backing from Arvind Limited and its focus on high-value products position it well for future growth. However, investors should continue to monitor industry trends and the company's ability to maintain its financial metrics.

Note: All financial figures are in Indian Rupees (INR) crores.

Arvind Limited , a leading textile manufacturer, has disclosed that recent tariffs imposed by the United States are expected to impact its direct business operations in the US market. The company estimates this will result in an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) impact of ₹25-30 crores for the quarter.

Tariff Impact and Strategic Response

Arvind reported that India faces a disadvantageous position due to US tariffs reaching 50% in the first quarter, the highest among competing markets. To navigate this challenging tariff regime, the garment manufacturer has implemented a multi-pronged strategy involving:

1. Supply chain realignment
2. Expansion into non-US markets
3. Cost optimization

Financial Implications

The estimated EBITDA impact of ₹25-30 crores represents a notable financial consideration for Arvind. To put this in perspective, it's helpful to look at the company's recent financial performance:

The anticipated impact represents approximately 9.5-11.5% of the company's Q2 FY26 EBITDA, indicating a significant effect on quarterly earnings.

Performance and Outlook

Despite tariff pressures compressing margins, Arvind delivered a good second quarter performance, attributed to marquee clients and product diversification. Vice Chairman Punit Lalbhai indicated that tariff mitigation measures are progressing well, with expected improvements in cost position through efficiencies.

The company maintains a positive outlook for the coming quarter, reporting a healthy Q3 order book. Arvind anticipates garment volume growth in the mid-teens range due to increased capacity, which could help offset some of the challenges posed by the US tariffs.

Mitigation Strategies

Arvind is actively implementing several measures to counter the impact of US tariffs:

1. Collaborating with customers and vendor partners to reset the supply chain
2. Adjusting pricing and sourcing strategies
3. Focusing on improving operational efficiency
4. Re-engineering costs to improve margins
5. Maintaining strong customer relationships
6. Implementing structural cost savings

Management Commentary

Sanjay Lalbhai, Chairman of Arvind Limited, commented on the situation in the company's recent investor presentation: "We are closely monitoring recent developments concerning the imposition of tariffs by the United States Government. The company will continue to assess the situation and make necessary adjustments in its financial statements, if required."

Future Plans

Arvind remains committed to its growth strategy, with plans for capital expenditure of ₹400-450 crores for FY26, of which ₹220 crores has already been invested. The company is also accelerating efforts to onboard new discerning customers, potentially to diversify its market presence and mitigate risks associated with tariffs.

As the situation evolves, investors and stakeholders will be keenly watching how effectively Arvind can implement its mitigation strategies, leverage its expanded capacity, and navigate the challenges posed by the new tariff environment.