Setback to Arvind Ltd; stock drops despite strong market, know why!

The stock of Arvind Ltd opened at the level of Rs 120.75 and touched a high of Rs 123.40 during the day. However, it has slipped significantly lower from the day’s high, and currently, it is trading down by 1.2 per cent i.e. near its day’s low.   

So, I’m sure many of you would like to know what’s happening in the stock, which has resulted in a roller-coaster ride in the stock. 

Here is the reason: The order of Gujarat High Court to close all the units discharging water effluent in the sewage lines of Ahmedabad/Amdavad Municipal Corporation (AMC), the effluent discharge connection of about 141 units including that of Ankur unit of the company were disconnected. Ankur unit has requisite approvals from relevant authorities to discharge treated industrial effluent. The company has filed a petition in the high court against such closure and the next hearing is likely to take place on December 3, 2021.  

Revenue as well as EBIDTA of Ankur unit, which manufactures voiles and other fabric primarily sold in the domestic market, stood at Rs 232 crore & Rs 28 crore for FY 20-21, which constituted 5 per cent as well as 6 per cent of the consolidated revenue and EBIDTA, respectively.   

Efforts are being made to resume normalcy but given the uncertainty of the situation, it is difficult to ascertain the impact on the production/operations at this point in time.