ICICI Direct is bullish on Aditya Birla Fashion and Retail has recommended buy rating on the stock with a target price of Rs 250 in its research report dated February 06, 2019.
ICICI Direct's research report on Aditya Birla Fashion and Retail
ABFRL reported robust topline growth of 23% YoY to Rs 2281.6 crore (I-direct estimate: Rs 2147.5 crore) with healthy growth across all key segments. Healthy festive season resulted in strong LTL sales growth • EBITDA margins for the quarter improved marginally by 20 bps YoY to 7.6% I-direct estimate: 8.0%)• Higher other income (up 91% YoY to Rs 13.3 crore) further boosted PAT growth. Subsequently, PAT for the quarter doubled to Rs 70.2 crore (I-direct estimate: Rs 55.0 crore).
Focus on profitable growth through cost optimisation, constant improvement in product portfolio and increased share of private labels has been a vital strategy for ABFRL to script a turnaround with EBITDA margins expanding 160 bps YoY and reporting PAT of Rs 119 crore vs. Rs 6 crore in YTDFY19. We maintain our estimates and expect revenue and EBITDA to grow at a CAGR of 14% and 24%, respectively, in FY1-21E with significant enhancement in RoCE from current 8.5% in FY18 to 15.7% in FY21E. We reiterate our BUY rating on the stock with a target price of Rs 250 (FY21E 2.0x EV/sales).
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