Global brokerage house CLSA has maintained its buy rating on Aditya Birla Fashion & Retail as it believes the network expansion of retail chain brand Pantaloon should help drive growth for the company.
It expects the stock to hit a target price of Rs 197 per share, implying 29.3 percent upside from Friday's closing level.
According to the research house, improving in supply chain capabilities, sharpening price points, shift to four-season cycle and rationalisation of its store network are expected to lead to 4-5 percent same-store-sales growth going ahead.
CLSA feels innerwear segment may see a healthy growth in coming days as the segment has been growing rapidly and management sees a large opportunity in that space.
Management is aiming to turnaround Madura by FY21, the research house said.
Madura segment, which contributed 62 percent to total revenue, registered a 4 percent decline in Q2 revenue due to fall in lifestyle brands business while Pantaloons segment (which added 38 percent to total business) showed a 2 percent growth YoY.
Aditya Birla Fashion posted a loss of Rs 10 crore for July-September quarter on GST impact, against a profit of Rs 65 crore in same quarter last fiscal.
Revenue in Q2FY18 declined to Rs 1,804 crore from Rs 1,886 crore in Q2FY17, mainly due to July phenomenon.
"Sales declined in July due to early EOSS in June and the depressed consumer sentiment post GST, but sales picked up in August and September posted strong growth," Aditya Birla Fashion said.
Shortfall in revenues resulted in operating EBITDA of Rs 126 crore, lower compared with Rs 172 crore in year-ago.
After providing for one-time GST impact of Rs 26 crore, the reported EBITDA was Rs 100 crore, it said.
At 11:54 hours IST, the stock price was quoting at Rs 153.35, up Rs 1.05, or 0.69 percent on the BSE.
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