Sharekhan has given Buy recommendation for Aditya Birla Fashion and Retail with a target price of Rs. 200 in its research report issued on Feb 08, 2021

Sharekhan’s research report on Aditya Birla Fashion and Retail

Aditya Birla Fashion & Retail Limited (ABFRL) saw an 81% recovery in Q3FY2021 as footfalls and e-Commerce sales improved. Lifestyle and Pantaloons recovered to 80% and 75% respectively compared to pre-covid levels. Rental negotiations, employee cost-savings and discretionary cost cuts led to overall cost savings of Rs. 157 crore in Q3 and Rs. 1,029 crore in 9MFY2021. ABFRL posted an operating profit of Rs. 365 crore in Q3. Stable working capital management, rights issue funds of Rs. 1,000 crore and strategic fundraising of Rs. 1,500 crore through Flipkart will help reduce debt o Rs. 250 crore (prior to investment in Sabyasachi) by Q4FY2021 from Rs. 2,500 crore in Q4FY2020.

Outlook

Digitalisation, higher sales from private brands, store expansions and relevant new launches would benefit ABFRL in near to medium term. We retain a Buy with a revised PT of Rs. 200.

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