Sharekhan has given Buy recommendation for Aditya Birla Fashion and Retail with a target price of Rs. 370 in its research report issued on May 24, 2022
Sharekhan’s research report on Aditya Birla Fashion and Retail
Aditya Birla Fashion & Retail Limited (ABFRL) registered a strong growth of 22% and 45% y-o-y in standalone revenue and EBITDA despite the impact of the third wave of the pandemic in January. Lifestyle brands and Pantaloons registered a y-o-y growth of 34% and 13%, respectively. Ethnic brands’ revenue grew by 2.7x y-o-y. The board of the company approved raising of up to Rs. 2,195 crore (Rs. 295 crore through preferential allotment and Rs. 1,900 crore through warrant issue) to an affiliate of GIC, Singapore’s sovereign wealth fund, which will largely be utilised for future growth prospects.
ABFRL is focusing on achieving strong earnings growth aided by category extensions, channel expansion, and enhanced digital capabilities. The stock has corrected by 18% from its recent high and currently trades at 19.1x/14.8x its FY2023E/24E EV/EBITDA. We maintain Buy with an unchanged PT of Rs. 370.