Arvind Limited's Credit Rating Upgraded to AA (Stable) by CARE Ratings

Arvind Limited has announced that CARE Ratings Limited has upgraded its long-term credit rating to AA (Stable) from AA- (Stable). This upgrade reflects the company's superior operational and financial performance, a well-diversified business model, and maintained financial discipline. The revised ratings include Long-Term Bank Facilities at ₹492.90 crore rated CARE AA; Stable, Long-Term / Short-Term Bank Facilities at ₹1,549.98 crore rated CARE AA; Stable / CARE A1+ (long-term upgraded, short-term reaffirmed), and Short-Term Bank Facilities at ₹1,001.01 crore rated CARE A1+ (reaffirmed). Commercial Paper of ₹300.00 crore also received a reaffirmed CARE A1+ rating.

The upgrade is attributed to Arvind's resilient and diversified business model, strong financial profile, improved return on capital employed (ROCE), and a strengthened balance sheet. The company's advanced materials and technical textile business, bolstered by the acquisition of Dalco, is expected to contribute significantly to future revenue and profitability. Garmenting volumes have also shown healthy growth. The rating also acknowledges the company's established track record, vertically integrated operations, and strong relationships with global brands.

Key strengths include the growing contribution from advanced materials and garmenting, diversifying the business away from the cyclical denim segment. Operational efficiencies, capacity additions, and the benefits from various free trade agreements (FTAs) are expected to drive future growth. Despite a debt-funded acquisition of Dalco, the company raised ₹500 crore via QIP to strengthen its financial flexibility. The company's liquidity is considered adequate, supported by healthy cash accruals and financial flexibility. Arvind's ESG initiatives, including reduced water usage, renewable energy sourcing, and sustainable cotton sourcing, are also noted.