Reduce Aditya Birla Fashion and Retail; target of Rs 190 : HDFC Securities

HDFC Securities recommended reduce rating on Aditya Birla Fashion and Retail with a target price of Rs 190 in its research report dated August 04, 2023.

Broker Research

August 09, 2023 / 11:57 IST

Reduce

26 Aug, 2025 12:21

Volume

Todays L/H

HDFC Securities' research report on Aditya Birla Fashion and Retail

ABFRL's Q1FY24 print disappointed on profitability. The bigger concern is the rising debt and elevated inventory (net debt: INR21bn; likely to inch up to INR28bn by exit FY24) amid slowing demand. This position often lends itself to accidents. Q1 revenue grew 11.2% YoY to INR31.96bn (in-line). Sales densities continue to normalize downwards; in fact, remain weak in Pantaloons. Margins were sub-optimal courtesy (1) lower retail throughput driven by normalizing demand, (2) continued investments in new forays and (3) brand investments. GM/EBITDAM contracted 109/715bps YoY to 54.8/9.1% (HSIE: 55.8/9.2%). Investments are likely to continue.

Outlook

Consequently, we cut our FY25/26 EBITDA estimates by 2-3% each and maintain our REDUCE rating with a DCF-based TP of INR190/sh; implying 22x Sep-25 EV/EBITDA.

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