It was led by a 37 per cent growth in the branded business, which made an operating profit of Rs 23 crores against Rs 1 crores last year. Total net profit was down by 19 per cent due to weak performance of the textile division.

The demerger of its branded apparels and engineering businesses is expected to unlock the value of the branded apparel business which is growing at a faster rate than the rest of the business and hence can command higher valuation.

There has been a 25 per cent jump in Arvind's stock since the past six weeks.

A key factor to watch out for would be the growth rate of Arvind’s apparel business in the coming quarters. It has been growing at over 25 per cent for the past five years. The company has guided for a sales growth of 22 per cent to 24 per cent and ebidta growth of 3540 per cent for the next five years.

With no other pure-play branded apparel maker in the listed space, this business could command premium valuation.

However, valuation in subsequent quarters will depend upon the business growth.