Motilal Oswal's research report on Aditya Birla Fashion and Retail
Revenue growth was soft at 26% YoY (in line) on a low base of last year (due to Omicron). Consolidated EBITDA declined 48% YoY (13% miss), dragged down by higher opex attributed to ad spends and losses in TMRW. As a result, ABFRL posted a net loss of INR2b (est. net loss of INR1.5b). Management stated that the overall demand scenario remains weak in both value and premium categories, which may affect SSSG and new store openings, particularly for Pantaloons. Besides, heavy investments in new businesses may also put pressure on earnings. Subsequently, we have cut FY24E/FY25E EBITDA by 4%/9%, building in a 27% CAGR over FY23-25E. Retain Neutral rating.
We value ABFRL on the SoTP basis, assigning EV/EBITDA of 10x to Lifestyle Brands, 10x to Pantaloons, and EV/sales of 1x to other businesses on FY25E. Subsequently, we retain our Neutral rating with a TP of INR205.
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