Neutral Aditya Birla Lifestyle Brands; target of Rs 190: Motilal Oswal

Motilal Oswal's research report on Aditya Birla Lifestyle Brands

Aditya Birla Lifestyle Brands (ABLBL) will be listed on 23rd Jun’25. ABLBL was demerged from Aditya Birla Fashion and Retail (ABFRL) in May’25 and comprises four industry-leading lifestyle brands (Louis Philippe, Van Heusen, Allen Solly and Peter England) and emerging brands such as Van Heusen Innerwear, Reebok and American Eagle. We expect ABLBL to deliver ~10% revenue CAGR over FY25-28E, driven by 1) acceleration in retail store additions in lifestyle brands, 2) improvement in store productivity, and 3) scale-up of emerging brands. Driven by lower discounting, an improved channel mix and operating leverage benefits, we expect gross/EBITDA margin to expand ~80bp/~140bp to 59%/16.6% by FY28E. Further, ABLBL could generate cumulative FCF of INR11b over FY25-28E, which should help ABLBL to become a net-cash company (excl. leases).

Outlook

We ascribe a TP of INR190/share (vs. ~INR171/sh implied price on demerger), premised on 15x FY27E EV/EBITDA for lifestyle brands and ~1x FY27E EV/sales for emerging brands. We assume coverage on ABLBL with a Neutral rating.

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