Buy Aditya Birla Fashion and Retail; target of Rs 225: Sharekhan

Sharekhan's research report on Aditya Birla Fashion and Retail

ABFRL’s Q4FY2023 consolidated results lagged ours as well as the street’s expectation as margins plunged by 964 bps y-o-y due to sluggish sales in Q4 and higher media investments. Adjusted loss stood at Rs. 197 crore versus reported PAT of Rs. 30.8 crore in Q4FY2022. Weak demand hit growth in Lifestyle brands and Pantaloons. Both businesses are expected to post good recovery prior to the festive season. New businesses have crossed revenues of Rs. 2,000 crore in FY2023. New businesses including ethnic (largely Tasva) and TMRW are in investment mode and will take around two years to post better profitability.

Outlook

Stock has corrected by 39% in past six months and is currently trading at 15.4x/10.8x its FY2024E/25E EV/EBITDA. In view of long-term growth prospects, we maintain Buy with a revised PT of Rs. 225.

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