Arvind share price jumps 3% after workers call off strike at Santej plant

Arvind shares rise: Shares of Arvind rose as much as 3.48 per cent to hit an intraday high of Rs 389 per share on Thursday. 

However, the stocks were off highs and were trading 0.29 per cent higher at Rs 377 per share, at 11:27 AM. In comparison, BSE Sensex was trading 0.19 per cent higher at 76,755.36 levels.

The uptick in share price came after the company announced that the strike at Santej plant by workers demanding wage hike has been called off. 

In an exchange filing, Arvind said, “We wish to inform you that the strike has been called off by the workers and operations of the company at Santej plant which were partially impacted due to strike are getting to normalcy.” 

 

“The company has estimated potential loss of revenue of around Rs 180-200 crores (about 2 per cent of consolidated revenue of FY 2024) and reduction in Ebitda of about Rs 60-65 crore (about 7 per cent of consolidated Ebitda of FY 2024),” Arvind said in a statement.

The strike, Arvind said, was declared illegal by the Labour Court vide an order dated 

June 6, 2024.

On May 22, the company had intimated that the operations of one of the plants of the company situated at Santej, Gujarat were partially affected due to strike by workers demanding higher wages etc. 

Founded in 1931 by Kasturbhai Lalbhai, Arvind is a textile to retail conglomerate with focus on textiles, apparels, advanced materials, environmental solutions, telecom and Omni-channel commerce. The company manufactures cotton shirting, denim, knits and bottomweight fabrics. 

It is the flagship company of the Lalbhai Group and is headquartered in Ahmedabad, Gujarat. 

Financial performance
 

Arvind’s profit after tax (PAT) grew 19 per cent on a year-on-year (Y-o-Y) basis to Rs 99 crore in Q4FY24. The overall revenues stood at Rs 2,075 crore during the same period, marking a growth of 10 per cent.

Earnings before interest, taxes, depreciation and amortisation (Ebitda), grew 27 per cent to Rs 243 crore in the March quarter of FY24. Consequently, Ebitda margin zoomed 156 basis points (bps) to 27 per cent.

The company’s net long-term debt stood at Rs 399 crore.

FY25 outlook

Based on our current order book and pipeline, the company anticipates FY25 to deliver impressive results across key parameters such as volume and revenue, leading to growth in Ebitda with healthy margins and returns. 

Its traditional textile business is set for steady growth aligned with gross domestic product (GDP), while we anticipate a 20 per cent compound annual growth rate (CAGR) for its AMD business.

“We are embarking on a new phase of growth with a focused Capex program for the next three years until FY27,” the company said.  For FY25, Arvind has budgeted Rs 400 - 450 crore for this purpose. 

These investments will primarily target capacity expansion in AMD and garments, as well as enhancing product differentiation capabilities and maintaining our fabric business. 

Additionally, the company is prioritising sustainability initiatives, including investments in renewable energy, with the aim of increasing our share of renewable power from the current 47 per cent to nearly 90 per cent.

The Capex plan will primarily be funded from internal accruals, while our long-term debt levels will remain consistent. 

With renewed investments in growth, we anticipate incremental profitability, improved margins, and a stronger financial position. Arvind is set to achieve a ROCE profile of over 20 per cent, and aims to create major value for all stakeholders as we ascend to new heights.

The market capitalisation of Arvind is Rs 9,905.33 crore, according to Bombay Stock Exchange (BSE).

The 52-week high of the stock is Rs 393.35 per share while its 52-week low is Rs 124.70