The agency has reaffirmed the company's short-term rating at 'CARE A1+'.

CARE Ratings stated that the upgrade in the long-term rating assigned to bank facilities and instruments of Arvind factor in the sustained improvement in its business risk profile considering growing share of its advanced materials/technical textile business in overall business mix and profitable scale-up of its garment business.

The advanced materials business is characterised by specialised and industrial applications, large addressable market, growing demand, healthy profitability, and lower susceptibility of margins to cyclicality and raw material price fluctuations. The acquisition of Dalco-GFT (Dalco) significantly strengthens the advanced materials business by adding scale, specialised needle-punched non-woven capabilities and access to the US filtration and geotextile markets.

Arvind’s garmenting volume grew by 12% yea-on-year (YoY) and 13% (YoY) in FY26 and Q1FY27, respectively, and are expected to sustain healthy growth in near-to-medium term supported by improving efficiency and increasing verticalization. Despite global headwinds, performance of Arvind’s textile and advanced materials business remained resilient in FY26 and Q1FY27, providing comfort to ratings.

The operationalisation of various free trade agreements (FTAs; UK, Australia, etc.), reduction in US tariff since February 2026 and expected implementation of FTA with European Union (EU) by FY28 also provide medium-term growth visibility.

The upgrade also factors sustained improvement in Arvind’s financial risk profile considering growing cash accruals and controlled net-debt levels in last few years.

The ratings also derive strength from Arvind’s established track record, vertically integrated operations, large scale with presence across textile value chain, diversified geographical business mix and strong relationships with global brand and retailers.

The rating strengths are partially offset by Arvind’s working capital intensive operations and relatively higher reliance on supplier credit resulting in low current ratio.

The rating strengths also remain constrained considering profitability susceptible to cotton price and foreign-exchange volatility. Arvind is also exposed to trade related uncertainties, especially for US market and government policies related to import duties on cotton and export incentives on textile products.

Arvind’s exposure to the cyclical denim segment, intense industry competition, and risks related to compliance with stringent environmental regulations further constrain its ratings.

Arvind, the flagship company of the Ahmedabad-based Lalbhai group, is a diversified conglomerate having presence in textiles, branded apparel retailing, engineering, waste-water treatment plants, and real estate businesses among others at a group level.

The scrip fell 1.50% to currently trade at Rs 531.50 on the BSE.