Neutral Aditya Birla Fashion and Retail; target of Rs 90: Motilal Oswal

Motilal Oswal's research report on Aditya Birla Fashion and Retail

Aditya Birla Fashion and Retail (ABFRL) reported a weak 2Q as higher A&P spends (up 200bp YoY) and losses in TMRW led to a 14% decline in reported EBITDA (37% miss). Pre-Ind AS EBITDA for 1HFY26 declined ~12% YoY. Pantaloons delivered 7% LFL growth, driven by the boost from early festive, revamped retail identity and growth in OWND (+43% YoY, on a low base). However, EBITDA margin declined 120bp YoY due to higher A&P spends and continued losses in OWND.

Outlook

We ascribe EV/sales multiples of 1x/0.9x/1.5x to ABFRL’s premium ethnic/TMRW/Luxury Retail portfolio to arrive at our revised TP of INR90. Reiterate Neutral rating.