ICICI Securities is bullish on Aditya Birla Fashion and Retail has recommended buy rating on the stock with a target price of Rs 130 in its research report dated May 28, 2020.
ICICI Securities research report on Aditya Birla Fashion and Retail
Key takeaways from Aditya Birla Fashion and Retail (ABFRL)’s Q4FY20 results: 1) focus on cost reduction through aligning rental cost in-line with revenues, curtailing discretionary spends by 50-70% and optimise employees/other costs; 2) preserving cash through rationalising capex (by ~60-70%) and optimising working capital; 3) proposing Rs10bn rights issue to de-leverage balance sheet; 4) ABFRL’s >1,300 stores (out of 3,041 stores) have started partial operations as of now.
Outlook
Factoring-in higher demand impact due to Covid-19, we reduce our FY21E and FY22E EBITDA by 29% and 11% respectively, target multiple to 18x (earlier 20x) and target price to Rs130/sh (earlier Rs180/sh) based on 18x FY22E EV/E. Maintain BUY, as concerns around weak H1FY21E seems adequately priced-in.
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