Buy Aditya Birla Fashion and Retail; target of Rs 240: Motilal Oswal
Motilal Oswal is bullish on Aditya Birla Fashion and Retail recommended buy rating on the stock with a target price of Rs 240 in its research report dated May 28, 2021.
June 10, 2021 / 11:33 AM IST
Motilal Oswal's research report on Aditya Birla Fashion and Retail
Aditya Birla Fashion and Retail (ABFRL)'s revenue fell 2% YoY (in-line). However, healthy 200bp gross margin improvement (better than even pre-COVID levels) and strong cost management (aided by rent/employee cost savings) drove a 65% YoY EBITDA jump. Nevertheless, the company posted net loss of INR1.3b (in-line) on tax and other income impact. Given the lockdowns amid the second COVID wave, we cut our FY22 revenue/EBITDA estimate by 29%/74%, marginally above FY21 levels. However, we expect swift recovery in FY23E, keeping the revenue/EBITDA estimate intact at 13%/16% above FY20 stable-state financials. Maintain Buy.
We value ABFRL on an SOTP basis and assign an EV/EBITDA of 18x to the lifestyle brands and Pantaloons segment and EV/sales of 1x to other business - slightly upping our multiple given its better balance sheet position to bolster growth. Subsequently, we arrive at TP of INR240 (v/s INR220 earlier). Maintain Buy.
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