Buy Aditya Birla Lifestyle Brands; target of Rs 170: Emkay Global Financial

Emkay Global Financial' research report on Aditya Birla Lifestyle Brands

However, we expect ABLBL’s growth to improve as the slow growth was on account of a mismatch between primary and secondary sales due to GST revision during Q2. The same was reflected by muted trends in B2B channels (wholesale/e-commerce), while LTL growth for the retail channel continued to be robust at 10-20% for Lifestyle, Reebok, and VH Innerwear. Gross store additions have been healthy, with 125 gross additions in H1 for ABLBL. ABLBL is a relatively mature business (vs ABFRL), with a lowdouble-digit growth profile and margin turnaround in emerging segments; FCF growth and debt reduction are key triggers for the business.

Outlook

We have a BUY on ABLBL, with a TP of Rs170 (25x Sep-27E EBITDA). ABLBL’s Q2 EBITDA was in line with expectations, albeit the performance was muted with 4% topline growth.