Buy Aditya Birla Fashion and Retail: target of Rs 191: Sharekhan

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Sharekhan's research report on Aditya Birla Fashion and Retail

Aditya Birla Fashion & Retail Ltd (ABFRL) clocked a good recovery in the festive season with its core business Madura Fashion & Lifestyle and Pantaloon Retail saw business recovering to 75-80% (better than a 45% recovery witnessed in Q2FY2021). Company will reduce debt by Rs. 1,750 crore (to ~Rs. 900 crore) by FY21-end by raising Rs. 1500 crore from a stake sale to Flipkart and a Rs. 250 crore partial payment of rights issue. Recovery in footfalls, strong store expansion, focus on increasing private label contribution (67% currently) and scale-up of lifestyle business (innerwear) will be key growth drivers in the near to medium term. Focus on deleveraging balance sheet and improving growth prospects of core businesses augur well for the company in the near term.

Outlook

We maintain a Buy with an unchanged price target of Rs. 191.

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