Sharekhan has given Buy recommendation for Aditya Birla Fashion and Retail with a target price of Rs. 255 in its research report issued on May 28, 2021

Sharekhan’s research report on Aditya Birla Fashion and Retail

Aditya Birla Fashion & Retail Limited’s (ABFRL) business recovered to ~100% in Q4FY2021. Lifestyle and Pantaloons recovered to 94%-95% each compared to pre-COVID levels. OPM improved by 580 bps to 14.4%. Despite disrupted FY2021 (revenue down by 41%), the company managed to reduce cost by Rs. 1,221 crore due to rental negotiations and other cost savings. Some benefits are likely to continue in FY2022. Management remains focused on strengthening balance sheet; working capital reduced by Rs. 785 crore by liquidating old inventory, while debt was reduced by Rs. 1,939 crore to Rs. 654 crore in FY2021.

Outlook

Digitalisation, higher sales from private brands, store expansion, and relevant new launches would benefit ABFRL in the near to medium term. We retain Buy with an unchanged PT of Rs. 255.