Motilal Oswal has given Buy recommendation for Aditya Birla Fashion and Retail recommended buy rating on the stock with a target price of Rs 380 in its researc with a target price of Rs. 380 in its research report issued on May 24, 2022

Motilal Oswal’s research report on Aditya Birla Fashion and Retail

FY22 saw a partial recovery in the business, with the management focusing on Retail expansion, along with Balance Sheet discipline, a key focal point, given the challenges faced in FY20. Hit by the second COVID wave, consolidated revenue recovered, yet remained 7% below pre-COVID levels (FY20). EBITDA margin remained stable at 13.5% on strong cost control. On a pre-Ind AS 116, EBITDA margin was 2.2% v/s 5.1% in FY20. Revenue from the Lifestyle segment remained resilient, reaching pre-COVID levels (ASP/volumes at 5%/-7%). Revenue from Pantaloons stood 25% below pre-COVID levels (ASP/volume at +9/-32%) as its large format stores and its higher presence in malls was severely affected by the COVID-19 pandemic. EBITDA contribution from Ethnic Wear and Other segments grew to 4% from -5%, led by a recovery in Fast Fashion, Innerwear, and its recent Ethnic Wear foray.


We value ABFRL on a SoTP basis to arrive at our TP of INR380, assigning an EV/EBITDA ratio of 20x to the Lifestyle brands, given the strong recovery and improved profitability; 17x to Pantaloons; and an EV/sales ratio of 1x to Other businesses on a FY24E basis. On a pre-Ind AS 116 EBITDA of INR10.6b for FY24E, this works out to be EV/EBITDA of ~34x. An improved Balance Sheet, healthy cash flows, and a strong overall performance remain key tailwinds for the stock to perform going forward. We maintain our Buy rating.

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At 09:52 hrs Aditya Birla Fashion & Retail was quoting at Rs 301.95, up Rs 3.55, or 1.19 percent.

It has touched an intraday high of Rs 303.80 and an intraday low of Rs 301.00.

It was trading with volumes of 13,424 shares, compared to its thirty day average of 101,723 shares, a decrease of -86.80 percent.

In the previous trading session, the share closed up 1.67 percent or Rs 4.90 at Rs 298.40.

The share touched its 52-week high Rs 321.95 and 52-week low Rs 197.25 on 07 April, 2022 and 26 August, 2021, respectively.

Currently, it is trading 6.21 percent below its 52-week high and 53.08 percent above its 52-week low.

Market capitalisation stands at Rs 28,334.15 crore.

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