Sharekhan's research report on Aditya Birla Fashion and Retail
Aditya Birla Fashion & Retail Limited (ABFRL) registered a mixed bag of numbers in Q2FY2023 as a strong 48% y-o-y revenue growth on standalone basis was mitigated by 75 bps y-o-y contraction in EBITDA margin due to normalisation of rental expenses and higher empolyee cost. Lifestyle brands and Pantaloons brands grew by 45% and 64% y-o-y, respectively. Ethnic brands’ revenue grew by ~90% y-o-y, while inner-wear & athleisure segment grew by 27% y-o-y. ABFRL eyes a 3x revenue growth in the medium term led by aggressive store expansions, category extensions, channel expansion, and enhanced digital capabilities. Profitability would improve led by economies of scale from larger brands and a scale-up in smaller brands.
Outlook
Stock currently trades at 18.5x/14.9x its FY2023E/24E EV/EBITDA. We maintain Buy with a revised SOTP-based PT of Rs. 386.
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