Aditya Birla Fashion & Retail Ltd (ABFRL) clocked a good recovery in the festive season with its core business Madura Fashion & Lifestyle and Pantaloon Retail saw business recovering to 75-80% (better than a 45% recovery witnessed in Q2FY2021). Company will reduce debt by Rs. 1,750 crore (to ~Rs. 900 crore) by FY21-end by raising...

Aditya Birla Fashion & Retail (ABFRL) reported 55% YoY drop in revenue to INR 1,028 crore

We cut our revenue estimates by 13%/4% and EBITDA estimates by 38%/7% for FY21E/FY22E due to sluggish recovery in the Apparel category, factoring in FY22E revenue/EBITDA 10% below FY20 levels. Nevertheless, strong...

Aditya Birla Fashion and Retail (ABFRL) has announced fund raising of INR 1,500 crore via preferential issue to Flipkart group's investment vehicle - Flipkart Investments Private Limited (FIPL).

Revenue from Lifestyle brands de-grew 81% YoY to | 190.0 crore. It reached 30% of pre-Covid sales in June (LTL: 50%). Aligning with the current demand scenario, it tweaked its product portfolio by launch of work from home collections, merchandise focused on around health & safety and protective masks (~50 lakh branded masks sold). The company fortified its digital presence as sales in June from e-commerce channel grew 166% YoY (share of e-commerce rose to 21% in Q1FY21 vs. 6%). Revenue from other business (that includes innerwear & athleisure) de-grew 77% YoY to | 47.0...

Yet, the ABFRL stock is down 53% (decline much higher than other retailers) from its peak in Feb20, which could largely be pinned on its high leverage. Our broad workings indicate that at revenue of INR60b, ABFRL would reach EBITDA break-even on the back of 50% gross margin and 25% reduction in existing operating cost of IN40b in FY21. Our expectation of ~20-25% operating cost reduction is achievable as (a) rental cost negotiations with landlords are on with good success, especially as some high street properties have already granted rental waivers for the lockdown period and lowered rent for FY21, (b) employee cost could be reduced across the front end, factory and head office with savings from variable pay, repositioning of employees to other verticals and some natural churn, (c) SG&A; may see >25% savings coming from multiple discretionary and non-core variable costs, including traveling, training, etc.

Despite the novel coronavirus or COVID-19, led lockdown, Aditya Birla Fashion & Retail (ABFRL) reported a 4.3% YoY drop in revenue

We downgrade ABFRL to an ADD (Earlier BUY) with a DCF-based TP of Rs. 120/sh (earlier Rs. 180/sh) -implying 23x FY22 EV/EBITDA. The TP cut largely tracks EBITDA cuts. ABFRL delivered a reasonable FY20 (pre-COVID). Normalized revenue/EBITDA grew 12/15% to Rs. 90.8/7.1bn resp as both Madura and Pantaloons performed well. Rep. Revenue/Adj. EBITDA, however grew 7.7%/declined 16% YoY to Rs. 87.4/4.7bn resp. as the lockdown disrupted demand in Mar-20. For 4Q, Revenue declined 5% to Rs. 18.2bn (HSIE: Rs. 17.63bn). However, margins disappointed (-3.1% vs HSIE: -1%).

28 May 2020 Revenue decline of 5% was in-line, while EBITDA loss of INR569m was a big miss v/s the expectation of INR736m in profit. This was due to a lower-than- expected reduction in fixed cost during the COVID-19 lockdown in Mar20. We cut our revenue by 9%/11% in FY21E/FY22E, building the impact of the extended lockdown and its repercussion on the slow-moving Apparel industry. Expect revival in FY22E, with EBITDA of INR6.3b, 35% growth over FY20. Revenue was down 5.1% YoY to INR18.2b (in-line) as operations were impacted due to COVID-19. Management indicated that normalized growth without the COVID-19 impact would be 13% YoY. The gross margin shrank 180bp YoY to 51.3% (220bp miss); EBITDA (pre-Ind- AS 116) turned to loss of INR569m (v/s expectation of INR736m and INR1.3b in 4QFY19). Normalized EBITDA without the COVID-19 impact should increase 1% YoY. PBT too turned to loss of INR1.

Revenue from lifestyle brands de-grew 5% YoY to | 1072.0 crore in Q4FY20. The division continued its healthy growth momentum in January-February with revenue growth of 7% YoY (LTL: 10%) but a weak March derailed trajectory. EBITDA fell 61% YoY to | 66.0 crore. ABFRL capitalised its own retail channel to fuel growth by adding record number of stores in FY20 (273 stores) taking total count to 2253 stores. Revenue for FY20 grew 7% YoY (YTD-February: 11%). ABFRL has aggressively rolled out Peter England...

Strong focus on retail and a shift to the 12 season model is likely to help improve assortment freshness footfall enabler; ergo sustain growth momentum across anchor formats. We continue to prefer strong Brands and value fashion plays and ABFRL is well placed to milk both categories. We revise our DCF-based TP to Rs. 290/sh (earlier Rs. 250). Revision is a function of 1. Revision in our EBITDA estimates (1.5-2%) for FY21/22 respectively and 2. DCF-roll-over to FY22. ABFRL's revenue grew 12.3% YoY to Rs. 25.6bn (3.5% above estimated Rs. 24.76bn) as both anchors - Madura and Pantaloons performed well and beat expectations. Adj. EBITDA margins (Pre-IND-AS) stood at 8.4% (vs est: 7.1%). The beat was a function of 1. GM trickle down effect, 2. Improved profitability in Pantaloons and 2. Reducing losses in the fast fashion biz. The company reported losses for the quarter (Rs. Rs. 334mn) primarily due to a higher tax outgo (courtesy a one-time deferred tax charge of Rs. Rs. 1.43bn)

With liquidity stress persisting in wholesale channels, ABFRL has capitalised its own retail channel to fuel growth in its lifestyle brand division (Allen Solly, Van Heusen, Louis Philippe, Peter England). ABFRL added a record number of stores in a quarter (91 stores) taking the total store count to 2187. Furthermore, robust SSSG (15% YoY) led retail sales to grow 30% YoY to | 642.0 crore. However, a decline in wholesale channel (down 4% YoY to | 394 crore) led overall revenue from lifestyle brands to increase 14% YoY to | 1295.0 crore. Apart from its core portfolio of men's category, growth...

6 February 2020 ABFRL delivered a strong beat v/s expectations on all fronts in a challenging demand environment, led by healthy same store performance for both Lifestyle and Pantaloons. We have largely maintained our revenue/EBITDA estimates to deliver CAGR of 14%/25% over FY19-21E. Lifestyle/Pantaloons is expected to deliver 11%/25% EBITDA CAGR driven by healthy store adds, SSSG coupled with improving margins and reducing losses in Fast Fashion and innerwear segment. 3QFY20 revenue was up 12.3% YoY to INR26b (in-line) on the back of strong performance across businesses. EBITDA increased 25% YoY to INR2.2b (12% beat) with margin improvement of 80bp to 8.4%. Gross margin expanded 210bp YoY to 52% (150bp miss). Revenue/EBITDA of Lifestyle brands grew 14%/4.5% YoY to INR13b/INR1.4b due to strong 15% SSSG in the retail segment and focus on womens/kids- wear (growth 35%/21%). Revenue/EBITDA for Pantaloons grew 12.7%/24% YoY to INR10.

Inspite of a moderate macroeconomic environment, ABFRL has reported a strong growth of 13% YoY on a strong base of 23% against estimates of 12% growth driven by growth across segments.

13 November 2019 ABFRL reported strong 2QFY20 performance, backed by healthy SSSG in both Lifestyle/Pantaloons of 7%/10.4%. Overall, revenue was up 14.4% YoY to INR23b (in-line) on the back of strong revenue growth of Lifestyle brands/Pantaloons at 15%/16.3% to INR12.5b/INR9.2b. EBTDA grew 15% YoY to INR1.6b (in-line) on pre IND-AS 116 basis with flat 7.1% margin due to higher mix of low-margin Pantaloons/other businesses, which saw healthy margin improvement. PAT declined 28.7% to INR305m due to deferred tax of INR247m; adjusted PAT stood at INR551m. For 1HFY20, against OCF of INR6.8b, working capital increased by INR3.5b, with INR3.

Category extension fuelling growth for lifestyle brands Lifestyle brands (Allen Solly, Van Heusen, Louis Philippe, Peter England) grew 15% YoY to | 1254.0 crore driven by healthy like to like (LTL) sales growth of 7.0%. Growth was witnessed across all distribution channels with e-commerce growing at a rapid pace. Store addition pace remained robust, with ABFRL adding 39, 116 stores in Q2FY20, H1FY20 (2096 stores, 2.7 million sq ft), respectively. Apart from its core portfolio of men's category, growth was fuelled by category expansion, with women's wear and kids...

Inspite of a moderate macroeconomic enviorment, ABFRL has surprised positively with a strong growth of 15% YoY against estimates of 9-10% growth driven by growth across segments.