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News Topical, Digital Desk : Stocks To Buy: Brokerage firm Motilal Oswal initiated coverage on Arvind Fashions Limited on Tuesday, December 16, and predicted a strong upside potential for the stock. According to the brokerage's bull case scenario, the stock could see an upside of up to 114% from current levels. Motilal Oswal has a 'Buy' rating on Arvind Fashions and has set a target price of ₹725 per share. This target implies a potential upside of approximately 47% from Monday's closing price.
Strong brand portfolio becomes strength
Lalbhai Group company Arvind Fashions has been listed by the brokerage as one of the leading branded apparel companies in India. The company has a strong portfolio of large and established brands like US Polo Assn., Arrow, Tommy Hilfiger, Calvin Klein and Flying Machine.
Company at turning point According to Motilal Oswal, Arvind Fashions is currently at an inflection point where the company is moving from a phase of consolidation to a phase of profitable scale-up. The company is now intensifying its focus on its five key power brands, which will form the mainstay of future growth. This next growth phase will be driven by the following factors.
- Scale-up of core brands
- Beneficial expansion into adjacent categories
- Advantages of Operating Leverage
- Double digit growth projected in FY26–FY28
- The brokerage estimates that these initiatives could lead to a revenue CAGR of approximately 13% between FY26 and FY28. Margins could improve by up to 190 basis points during the same period.
Balance Sheet and Capex Discipline
Motilal Oswal also stated that Arvind Fashions is entering this growth phase with a strong balance sheet and disciplined working capital management. The company's capital expenditure (Capex) is expected to remain limited and will primarily focus on high-visibility flagship stores. Furthermore, a significant portion of the retail expansion will be funded through the Franchise Owned-Franchise Operated (FOFO) model. The brokerage believes this will enhance capital efficiency and improve return ratios.
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